United States: Inside IP Quarterly Newsletter - Winter 2012

IN THIS ISSUE

  • Trademarking Colors in the Fashion Industry
  • Avoid Inadvertent Abandonment of Your Trademark
  • When Does "News" Really Fall Under the "News" Exemption
  • FTC'S Revised "Green Guides" Provide Instruction On Environmental Marketing Claims

TRADEMARKING COLORS IN THE FASHION INDUSTRY IS NOT BLACK AND WHITE

By Pamela M. Miller

The other shoe has finally dropped in the widely publicized Louboutin v. Yves Saint Laurent case, with the Second Circuit rejecting a bright line rule that a single color can never serve as a trademark in the fashion industry.1 Although this decision has been declared a victory by both parties, as well as the fashion industry, which often argues that United States law does not protect fashion design adequately, is this decision truly a victory for all?

Louboutin and Yves Saint Laurent ("YSL") are well-known fashion houses that both manufacture high end shoes. Louboutin's shoes are best known for their trademarked red lacquered outsoles on women's footwear ("Red Sole Mark").2 After discovering that its competitor, YSL, was making shoes with red soles as well as red uppers (i.e., monochromatic), Louboutin sued YSL for trademark infringement.3 YSL counterclaimed, seeking cancellation of Louboutin's Red Sole Mark, and contending that it was functional, and thus not protectable.4 Under applicable law, if an aspect of a product gives a producer a competitive advantage that is not related to its source identification purposes, then it cannot be trademarked as it is deemed functional.5 Using this framework, the district court sided with YSL, finding that in fashion, color is always functional because color is a useful aesthetic feature to which all designers should have access.6

If the case would have ended here, Louboutin would have essentially lost all protection over its signature red soles, essentially allowing competitors to begin making knock-offs without fear of trademark infringement — with similar implications for other fashion houses using color as a source identifier. Luckily for Louboutin, the case did not end here. On appeal, the Second Circuit held that the Supreme Court specifically forbade the implementation of a per se rule denying protection for the use of a single color as a trademark in the fashion industry.7 The court determined that an analysis of functionality necessarily requires an individualized fact-based inquiry to determine if that single color is used so consistently and prominently by a particular designer that it becomes a symbol, the primary significance of which is to identify the source of the product rather than the product itself — meaning that it has acquired secondary meaning.8 Because the court determined that Louboutin had only demonstrated that secondary meaning in products where the red sole contrasted in color with the upper part of a shoe, the court narrowed Louboutin's Red Sole Mark accordingly.9 Based on this narrowed scope of protection, the court determined that YSL did not infringe the Red Sole Mark as modified because YSL's shoes were monochromatic, and thus had no color contrast between the sole and the upper.10

This case is a good reminder that trademark owners put their own brands at issue when they assert infringement claims against others and, as a result, should carefully consider the implications before asserting such claims. Here, prior to the court's narrowing of the Red Sole Mark, Louboutin had broad trademark protection covering red soles on footwear for women. This mark likely prevented any number of Louboutin's competitors from using red on the outsole of a woman's shoe, essentially giving Louboutin the monopoly on this color in the fashion industry. As narrowed, the Red Sole Mark only covers shoes with red soles that contrast in color with the upper. Based on this narrowing, its competitors are now free to start making monochromatic shoes like YSL and may even begin to test the scope of what it means to "contrast" the color red. Would a shoe's pink upper be found to be contrasting with a red sole, for example? Because the court did not give any clear guidance as to what colors are deemed to contrast with Louboutin's red soles, it is an open question that may be left for another lengthy court battle. One might wonder if the result would have been better for Louboutin if it would have sued a company making a shoe with a black upper and a red sole, most akin to Louboutin's iconic brand. This is a question that Louboutin should have considered before taking on one of its biggest competitors and putting one of Louboutin's most valuable assets on the line — its trademark.

Footnotes
1. Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding Inc., 696 F.3d 206, 228 (2d Cir. 2012).
2. Id. at 213; see also U.S. Trademark Registration No. 3,361,597.
3. Louboutin, 696 F.3d at 213.
4. Id. at 214.
5. See Id. at 215-16.
6. Id. at 214 (internal citations omitted).
7. Id. at 223 (citing Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 161 (1995)).
8. Id. at 226 (internal citations omitted).
9. Id. at 228.
10. Id. at 228-29.

AVOID INADVERTENT ABANDONMENT OF YOUR TRADEMARK

By Shoko Naruo

One of the challenges trademark owners face in maintaining their trademark is the risk of inadvertently abandoning their trademark when there is some period of non-use of the mark. Unbeknownst to many trademark owners, abandonment of a trademark can easily happen due to matters of ordinary practice, such as a temporary cessation of production, a failing product line, or low level of sales.

The Lanham Act, which is a federal trademark law, provides that abandonment of a trademark occurs when (1) the legal owner ceases to use the mark (non-use), and (2) the owner lacks intent to resume use of the mark in the reasonably foreseeable future.1 As demonstrated below, the key to securing the rights to a registered trademark with the United States Patent and Trademark Office is to continue using the mark, and, possibly more importantly, to preserve evidence that the owner intends to resume use of the mark, if for any reason they cease use of the mark.

What Constitutes Non-Use?

The determination of non-use occurs on a case-by-case basis and is often confusing for trademark owners. Some courts (mainly Ninth Circuit and California district courts) offer a bright line rule that even a single instance of use prevents abandonment if such use is made in good faith. For example, in Electro Xource, LLC v. Brandess-Kalt-Aetna Group, Inc., the Ninth Circuit held that the Lanham Act requires complete discontinuance of use for abandonment.2 On the contrary, other courts have held that token use or sporadic use is not a bona fide use under the Lanham Act.3 For example, in Continental Grain Co. v. Strongheart Products Inc., the Trademark Trial and Appeal Board held that token annual sales of KIT KAT cat food for the purpose of maintaining trademark rights was sufficient to warrant a finding of abandonment.4 Similarly, in Del-Rain Corporation v. Pelonis USA, Ltd., the Second Circuit held that low-level sales, such as sales of the remaining stock of an abandoned line of merchandise, do not constitute a bona fide use in the ordinary course of trade that suffices to defeat a finding of abandonment.5

Courts do not have a uniform approach to determining what constitutes non-use; however, they have been consistent in putting great emphasis on the trademark owner's intent. As discussed below, a trademark owner may be able to avoid abandonment by proving his or her intent to resume use of the trademark.

Intent to Resume Use of the Mark: Is Objective Evidence or Subjective Evidence Required?

Interestingly, courts tend to prevent abandonment when the trademark owner can provide objective evidence that the owner intends to resume use of the mark. Even courts that seem lenient in finding non-use due to low level of sales prevent abandonment of the mark when the owner shows such intent.6

Note that the majority of courts now require the trademark owner's "intent to resume use" rather than "intent not to abandon" to prevent abandonment of the mark.7 In the landmark case Exxon Corp. v. Humble Exploration, the Fifth Circuit explained that "stopping at an intent not to abandon tolerates an owner's protecting a mark with neither commercial use nor plans to resume commercial use. Such a license is not permitted by the Lanham Act."8

To prove a trademark owner's intent to resume use of a mark, the trademark owner needs to present objective evidence. Objective evidence includes actual and concrete plans to resume use in the reasonably foreseeable future. On the other hand, self-serving subjective evidence, such as the owner's self-serving testimony that he or she never had any intent to abandon the mark, would not suffice.9 If courts look solely at the owner's subjective intent, no mark would ever be held abandoned in contested cases. Courts have repeatedly held that the Lanham Act was not intended to provide a warehouse for unused marks.10

Understanding the concept of abandonment of a trademark is crucial as abandonment may easily happen once the mark is not used for any reason. For the purposes of maintaining your trademark, the most important thing to keep in mind is to preserve objective evidence that demonstrates your intent to resume use of the mark, regardless of the period of non-use of the mark.

Footnotes
1. 15 U.S.C. § 1127.
2. Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931 (9th Cir. 2006).
3. See Metropolitan Life Insurance Company v. O'M & Associates LLC, No. 06 C 5812, 2009 WL 3015210 (N.D. Ill. Sept. 16, 2009); MB Financial Bank, N.A. v. MB Real Estate Services, L.L.C., No. 02 C 5925, 2003 WL 21462501 (N.D. Ill. June 23, 2003).
4. Continental Grain Co. v. Strongheart Products Inc., 9 USPQ2d 1238 (TTAB 1988).
5. Del-Rain Corporation v. Pelonis USA, Ltd., 29 Fed. Appx. 35, 37 (2d Cir. 2002).
6. See e.g., Grocery Outlet v. Albertsons, Inc., No. C 06-02173 JSW, 2008 WL 5245962 (N.D. Cal. Dec. 17, 2008) (finding that the trademark owner did not abandon the mark because the grocery store chain had continued to sell off inventory with the intent to resume use of the trademark within the reasonably foreseeable future); see also Emergency One, Inc. v. Am. FireEagle, Ltd., 228 F.3d 531, 537 (4th Cir. 2000); Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387 (Fed. Cir. 2010).
7. Exxon Corp. v. Humble Exploration Co., Inc., 695 F.2d 96, 102 (5th Cir. 1983).
8. Exxon Corp., 695 F.2d at 102.
9. Natural Answers, Inc. v. SmithKline Beecham Corp., 529 F.3d 1325, 1330 (11th Cir. 2008); Gen. Healthcare Ltd. v. Qashat, 364 F.3d 332, 337 (1st Cir. 2004).
10. Imperial Tobacco Ltd., Assignee of Imperial Group PLC v. Philip Morris, Inc., 899 F.2d 1575, 1581 (Fed. Cir. 1990); see also AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1550, 1 USPQ2d 1161, 1177 (11th Cir.1986), cert. denied, 481 U.S. 1041, 107 S. Ct. 1983, 95 L. Ed. 2d 822 (1987).

WHEN DOES "NEWS" REALLY FALL UNDER THE "NEWS" EXEMPTION OF THE COPYRIGHT "FAIR USE" DOCTRINE?

By Jennifer Visintine

Copying another's work is generally copyright infringement — unless it qualifies as "fair use." Determining whether the fair use doctrine applies is no simple task. In 1939, the prominent Judge Learned Hand called the "fair use" doctrine "the most troublesome in the whole law of copyright."1 Most would agree that this statement remains true today, more than 70 years later.

Federal law provides examples of "fair use," including use of a work for criticism, news reporting, teaching and research.2 Falling within one of these categories does not mean that the fair use exception automatically applies. Instead, whether a use is "fair" must be determined on a case-by-case basis, considering factors such as (1) the purpose and character of the use (e.g., whether the use was commercial, and whether it was "transformative" in that it added something new to the work); (2) the nature of the copyrighted work (e.g., factual vs. creative, published vs. unpublished); (3) the amount of the work used; and (4) the effect of the use upon the potential market for or value of the copyrighted work.3

Several federal courts have recently faced defenses based upon the "news reporting" aspect of the fair use doctrine, and, decided that it does not apply, even when the use arguably relates to "news reporting."

In Monge v. Maya Magazines, Inc.,4 the Ninth Circuit considered whether the copying and publication of wedding photographs was fair use. A professional singer married her manager but then kept the marriage a secret for more than two years, until the couple's driver (who also happened to be a paparazzo) found photographs of the secret wedding.5 The driver sold the photographs to Maya Magazines, which then published five of the six pictures taken on the couple's wedding night.6 The court considered the "fair use" factors set forth above, and concluded that each weighed against a finding of fair use.

The purpose and character of the use: Although the coverage of the wedding qualified as news reporting, the photographs themselves were not the subject of the story, and were not necessary to prove that the wedding occurred.7 Additionally, the copying of the photographs was for commercial purposes, and was "minimally transformative" because Maya Magazines essentially reproduced the photographs in their entirety.8

The nature of the copyrighted work: The photographs were not highly artistic in nature, but they were unpublished. Under ordinary circumstances, an author's right to control the first publication of a work will outweigh a claim of fair use.9

The amount and substantiality of the portion used: Every single photograph of the wedding and almost all of the photographs of the wedding night were published, and in each case Maya Magazines copied the entire photograph.10 Thus, Maya Magazines used more than was necessary to corroborate its story regarding the wedding.

The effect of the use upon the potential market for or value of the copyrighted work: The court refrained from presuming that harm had occurred, but concluded that the demand for the photographs significantly decreased upon Maya Magazine's first and exclusive publication.11

Another recent case Balsley v. LFP, Inc.12 arrived at the same conclusion. In that case, the Sixth Circuit considered whether the publication in an adult magazine of a photograph of a television news reporter participating in a wet t-shirt contest was fair use.13 The court concluded the use did not qualify as fair use even though there was allegedly a "news reporting" aspect to the case.

The purpose and character of the use: In that case, the Defendant's use of the photograph was commercial, and was no longer newsworthy because the photograph had been published online several years prior. Further, the photograph was published in its entirety so the Court considered the use non-transformative.14

The nature of the copyrighted work: The photograph possessed a mixed nature of both fact (which receives a narrow scope of copyright protection) and creativity (which enjoys broader protection), so this second factor weighed slightly against a finding of fair use, or was neutral.15

The amount and substantiality of the portion used: The defendant essentially copied the photograph in the entirety.16

The effect of the use upon the potential market for or value of the copyrighted work: The court applied a presumption that the defendant's publication of the photograph was unfair exploitation because it was for commercial purposes, and the defendant failed to show otherwise.17

Decisions such as these suggest that it may be difficult to claim, in the context of "news reporting," that the copying of another's work qualifies as fair use, unless the original work: (i) is truly required to convey the "news" story; (ii) is the primary subject of the news reporting, criticism, or other commentary; and (iii) creates a work that provides some form of new expression, meaning or message.

Footnotes
1. Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661, 662 (2d Cir. 1939).
2. 17 U.S.C. §107.
3. Id.
4. Monge v. Maya Magazines, Inc., 688 F.3d 1164 (9th Cir. 2012).
5. Id. at 1169-70.
6. Id.
7. Id. at 1173.
8. Id.
9. Id. at 1178.
10. Id. at 1179.
11. Id. at 1180-81.
12. Balsley v. LFP, Inc., 691 F.3d 747 (6th Cir. 2012).
13. Id. at 755-76.
14. Id. at 758-59.
15. Id. at 759-60.
16. Id. at 760.
17. Id. at 760-61.

FTC'S REVISED "GREEN GUIDES" PROVIDE INSTRUCTION ON ENVIRONMENTAL MARKETING CLAIMS

By Hadi Al-Shathir

The Federal Trade Commission recently issued revised Guides for the Use of Environmental Marketing Claims, commonly known as the "Green Guides."1 The Green Guides provide instruction to companies on environmental marketing claims, whether such claims are directed to individuals or are business-to-business (a clarification from the previous version), and whether such claims are asserted through words, symbols or logos. The Green Guides were last revised in 1998, and the 2012 version includes updates to the previous guides and new sections on various subjects, including the use of carbon offsets and "green" certifications. While the Green Guides are not binding rules or regulations, they provide guidance on the types of claims that the FTC may find deceptive under Section 5 of the FTC Act, which gives the FTC authority to bring enforcement actions against deceptive marketing claims. In recent years, the FTC has brought several actions involving allegedly deceptive environmental marketing claims. Moreover, some states incorporate the Green Guides into their law, and the National Advertising Division of the Council of Better Business Bureaus uses the Green Guides in assessing advertising disputes.

The Green Guides provide general principles for all environmental marketing claims. Not surprisingly, environmental marketing claims should be truthful, substantiated and non-deceptive. Companies should not overstate an environmental benefit or attribute of their products or services. Qualifications and disclosures should be "clear, prominent and understandable." An environmental marketing claim should specify whether it refers to the product, its packaging, a service, or a portion thereof, unless already clear to the consumer.

The Green Guides also provide guidance on specific topics. One significant revision to the previous guides is directed at "general environmental benefit claims." The FTC is now cautioning marketers to avoid broad, unqualified general environmental benefit claims such as "green" or "eco-friendly." The FTC believes such claims are difficult to interpret and convey a wide range of meanings that are difficult to substantiate. The FTC recommends qualifying such general claims with clear and prominent language that limits the claim to the specific environmental benefit.

The revised Green Guides contain new sections on various topics that were not in vogue when the Guides were last reviewed, including: (1) certifications and seals of approval; (2) carbon offsets; (3) free-of claims; (4) non-toxic claims; (5) made with renewable energy claims; and (6) made with renewable materials claims.

In the case of "free-of claims," for example, the FTC warns that companies should not make claims that a product is "free-of" a particular substance if the product contains another substance that poses a similar environmental risk. Moreover, a "free-of claim" may be deceptive when the substance is generally not associated with the particular product category and thus generally is not concerning to consumers of that product.

Of note, the revised Green Guides do not address use of the terms "sustainable," "natural" and "organic." The FTC felt it lacked sufficient information to provide meaningful advice on some of these terms, and it did not want to contradict or duplicate guidance or rules of other agencies, such as the U.S. Department of Agriculture, which has authority over "organic" claims for products that are agriculturally-based.

The FTC appears to be taking a tougher stance on environmental marketing claims, and companies should therefore pay special attention to the Green Guides before touting the environmental benefits of their products or services.

Footnote
1. The "Green Guides" are currently available on the FTC's website at http://business.ftc.gov/advertising-and-marketing/environmental-marketing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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