Trademark and Copyright Litigation

Does the Lanham Act Prohibit Allegedly False Claims of Authorship? – Gensler v. Strabala

July 16, 2012 | Peter S. Lubin and Patrick Austermuehle

Claims for trademark infringement and false advertising under the Lanham Act do not apply to allegedly false assertions of “authorship of a creative work,” according to the U.S. District Court for the Northern District of Illinois. In M. Arthur Gensler, Jr. & Associates, Inc. v. Jay Marshall Strabala, the court dismissed a Lanham Act suit based on claims of authorship of architectural designs, but suggested that a copyright claim might be more appropriate.

The plaintiff, M. Arthur Gensler, Jr. & Associates, Inc. (“Gensler”) is a design firm with offices in multiple countries. It employed the defendant, Jay Marshall Strabala (“Strabala”) as an architect from 2006 to 2010. Gensler sued Strabala under the Lanham Act and two Illinois deceptive trade practice statutes. Strabala moved the court to dismiss Gensler’s suit for failure to state a claim for which relief may be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The court agreed and dismissed the case.

In considering a 12(b)(6) motion, a court must consider all of a plaintiff’s “well-pleaded factual allegations” as true. While Strabala was an employee of Gensler, he worked on multiple high-profile projects, including the Shanghai Tower in China and multiple buildings in Houston, Texas. Strabala left Gensler in February 2010 and began practicing under an assumed business name, 2DEFINE Architecture. While based in Chicago, he advertised offices in Shanghai, China and Seoul, South Korea. Strabala set up a website and a page on the photo-sharing site Flickr to market his business. His Flickr site included claims that he designed the Shanghai Tower and several of Gensler’s Houston buildings. Gensler sued to stop Strabala from claiming primary responsibility for the design of these buildings.

Gensler alleged that Strabala’s claims constituted “false designation of origin” and “false advertising” under the Lanham Act. The court considered whether a claim of authorship of a creative work could be considered a “false designation of origin,” and concluded that it cannot. In Dastar Corp. v. Twentieth Century Fox Film Corp., a 2003 Supreme Court case involving a film studio and a video publisher, the Supreme Court considered whether “origin of goods” included the author/producer of the films themselves, or just the actual physical videotapes. It specifically interpreted the “origin of goods” provision to refer to actual tangible goods, not creative works. Because Gensler could not cite any authority that overruled the Dastar holding, the Illinois district court found its claim unpersuasive. The court did note, however, two federal appellate cases that applied Dastar but allowed the possibility of copyright claims.

CNN reports: Designer Loses First Round of Trademark Lawsuit on Red Soled High Heels — Lawyer Vows to Continue the Fight on Appeal and Lambasts Judge’s Decision

August 14, 2011 | Peter S. Lubin and Patrick Austermuehle

CNN reports that French Shoe Designer Christian Louboutin lost the first round of a trademark lawsuit seeking to protect his iconic red soled high heels. Louboutin’s lawyer blasted the Court’s decision and vowed he would fight on in an appeal. The story explains that many designers want to use red soled shoes and don’t think they should be excluded from doing so with one designer receiving a monopoly on that color. The story states:

“Everyone sees the flash of red and associates the red with Louboutin,” attorney Harley Lewin said Thursday about his client.
In fact, Louboutin’s red soles have graced many a red carpets, adorning the feet of celebrities Oprah Winfrey, Heidi Klum and Sarah Jessica Parker. …
In his decision Wednesday, U.S. District Judge Victor Marrero acknowleded that in choosing a red sole for his shoes, Louboutin had “departed from longstanding conventions and norms of his industry,” to create a product, “so eccentric and striking that it is easily perceived and remembered.”
However, Marrero went on to say that, “Louboutin’s claim to the ‘the color red’ is, without some limitation, overly broad and inconsistent with the scene of trademark registration.”
“This was a trademark that never should’ve been issued,” David Bernstein, attorney for the defendant, Yves Saint Laurent said. …
Judge Marrero’s decision drew parallels between painters and fashion designers, calling them both members of a creative industry where no one should be barred from using color to achieve their aesthetic. Doing so could, “interfere with creativity and stifle competition.”
Bernstein agrees. “No designer should be able to monopolize a color.” …
Lewin says his client “separated his shoes from everyone else’s by using a red sole.”
Lewin said he’s never had such an outpouring from his fellow attorneys, law professors and members of the fashion industry, telling him, “This [verdict] is an abomination. Tell your client to appeal.”

You can read the full story by clicking here.

The Wall Street Journal Reports: “Lars Johnson Has Goats on His Roof and a Stable of Lawyers to Prove It “

September 19, 2010 | Peter S. Lubin and Patrick Austermuehle

“Lars Johnson Has Goats on His Roof and a Stable of Lawyers to Prove It —
Having Trademarked the Ungulate Look, Restaurateur Butts Heads With Imitators.”
By JUSTIN SCHECK And STU WOO
The article discusses how a simple marketing idea of goats on a roof (which is simply a typical practice in some countries can be trademarked as a restaurant marketing symbol. The restaurant has filed lawsuits to enforce these claimed trademark rights against other restaurants which it claims copied its idea. The article states:

Any other business thinking of putting goats on the roof will have Mr. Johnson’s lawyers to contend with. A goat named Flipper stood on the grass roof of Al Johnson’s Swedish Restaurant.
Some patrons drive from afar to eat at the restaurant and see the goats that have been going up on Al Johnson’s roof since 1973. The restaurant 14 years ago trademarked the right to put goats on a roof to attract customers to a business. “The restaurant is one of the top-grossing in Wisconsin, and I’m sure the goats have helped,” says Mr. Johnson, who manages the family-owned restaurant. …

Last year, he discovered that Tiger Mountain Market in Rabun County, Ga., had been grazing goats on its grass roof since 2007. Putting goats on the roof wasn’t illegal. The violation, Al Johnson’s alleged in a lawsuit in the U.S. District Court for the Northern District of Georgia, was that Tiger Mountain used the animals to woo business. …

Danny Benson, the offending market’s owner, says that “legally we could fight it, because it is ridiculous.” But it would have been too expensive to fight, he says.

To read the full article which gives insight into how even what appears to be a less than novel concept can lead to litigation click here.

AP reports: “Judge: Movie Studios Can Subpoena Internet Users’ Names, Data In File-Sharing Cases”

September 12, 2010 | Peter S. Lubin and Patrick Austermuehle

Movie Studios Can Subpoena Internet Users’ Names, Data In File-Sharing Cases

AP reports:

A federal judge on Friday allowed the holder of a movie copyright to subpoena the names of people accused of illegally downloading and distributing a film over the Internet.

Generic Drugs Not Misbranded Under Lanham Act, Seventh Circuit Rules

July 14, 2010 | Peter S. Lubin and Patrick Austermuehle

A recent decision by the Seventh Circuit caught the notice of our Illinois trademark infringement litigators. Schering-Plough Healthcare Products Inc. v. Schwarz Pharma, Inc. et al, Nos. 09-1438, 09-1462, 09-1601 (7th Cir. Oct. 29, 2009) is a dispute between the original maker of a laxative whose patent has expired and the companies that now manufacture a generic version. Schering, the original patent holder, sued four companies for claiming that the drug’s active ingredient is not available over the counter, when Schering does manufacture an over-the-counter version. The trial court in the case dismissed Schering’s complaint, a decision the Seventh Circuit upholds here.

The laxative in question was originally sold as the prescription drug MiraLAX. After its patent expired, the four defendants were authorized to sell generic prescription versions, either as GlycoLax or under the chemical name polyethylene glycol 3350. All four defendants’ drugs have labels stating that the active ingredients in their drugs are sold only by prescription. This is a requirement of the federal Food, Drug and Cosmetics Act, but it is no longer entirely true. After the generic versions were approved, Schering won approval for an over-the-counter version of MiraLAX. It brought a trademark lawsuit against the defendants, claiming their labeling makes false and misleading statements that misrepresent the nature of their own and Schering’s products, and constitute misbranding under the FD&C Act.

Importantly, the FDA is conducting its own investigation into whether the generic drugs are now misbranded. Simultaneous sales of the same active ingredient in generic and over-the-counter versions violates federal law, which the FDA is also trying to resolve. The Seventh Circuit noted that the FDA may resolve Schering’s lawsuit by finding that the generic drugs may no longer be sold, or that their labels are not false and misleading under the FD&C Act. In either case, the court wrote, it would rather defer that decision to the FDA. This was also the decision of the trial court in the case, which dismissed Schering’s case without prejudice, suggesting that the company re-file after the FDA’s decision, if necessary. Schering appealed, asking for a judgment in its favor rather than a trial. The defendants cross-appealed, arguing that the case should have been dismissed with prejudice.

The Seventh started by noting that a dismissal without prejudice is appealable unless the defect leading to it is immediately curable. It then turned to the merits of Schering’s claim. Letters from FDA regulators the company cited are irrelevant, the court said, because they did not determine the final outcome of the agency’s review. It also dismissed Schering’s argument that the generic drugs were misbranded under the FD&C Act because their labels say “prescription only,” noting that prescription drugs are required to carry this warning. And it noted that federal courts have previously resolved conflicts between FDA labeling requirements and intellectual property law, including in SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharmaceuticals, Inc., 211 F.3d 21 (2d Cir. 2000).

Schering has been “coy” about what kind of labeling it would find sufficient on the generic drugs, the court wrote, leaving suggested wording out of its briefs entirely and agreeing with suggested wording only under pressure at oral arguments. That reticence, the court wrote, made it believe this is not a matter that “can be resolved intelligently without a decision by the FDA.” Because it has more experience with how consumers interact with drug labeling, the court said, the FDA should decide on proper labeling before a Lanham Act claim is filed. Thus, the Seventh Circuit upheld the trial court’s decision to dismiss Schering’s claim in anticipation of the FDA’s ruling. For the same reason, however, it also upheld the district court’s decision to dismiss without prejudice — so Schering can re-file its claim, if necessary, in the future.

Name of Start-Up Business Sparks Trademark Infringement Suit

June 24, 2010 | Peter S. Lubin and Patrick Austermuehle

A recent article in the Wall Street Journal reported on the perils faced by start-up business when faced with a trade mark infringement lawsuit filed against it by a large established corporation:

Jimmy Winkelmann started a clothing company several years ago to mock fellow students who wore the outdoorsy The North Face brand, despite having no inclination to venture into the wilderness. He dubbed his company “The South Butt” and flipped The North Face’s half-dome logo to look like buttocks.

But at least one party wasn’t amused: The North Face.

Google Sues for Declaratory Judgment That Keyword Advertising Does Not Infringe

December 9, 2009 | Peter S. Lubin and Patrick Austermuehle

Google, the target of multiple online trademark infringement lawsuits, made a preemptive strike back in early August when it countersued the named plaintiff in a pending case against it. According to law professor Eric Goldman’s Technology & Marketing Law Blog, Google sued John Beck Amazing Profits, LLC, in the Northern District of California on July 27. The suit was a response to an Eastern District of Texas filing against Google on May 14, which was a putative class action led by John Beck. The web search giant seeks a declaratory judgment that it is not infringing on John Beck’s trademarks as well as damages for an alleged breach of its AdWords contract by John Beck when it sued in Texas — in a district with a reputation as advantageous for intellectual property complaints — rather than California.

In the first lawsuit, John Beck — a Los Angeles company that sells real estate investment advice– sued Google as well as several companies that use its technology for selling its trademarks as keywords using Google AdWords. The proposed class was very large, including all trademark holders in the United States whose trademarks have been sold as a keyword or AdWord for the past four years. However, according to Google’s countersuit, the complaint in that case had not been served to Google as of August 2, even though it was filed May 14.

Google responded with its suit for declaratory judgment, which targeted only John Beck. Its complaint alleges that John Beck’s original lawsuit was anti-competitive and subverted trademark law’s goal of preventing deception of consumers. It asked the court for declaratory judgments that it did not infringe John Beck’s trademark, contribute to such infringement, vicariously infringe it or falsely designate the origin of its mark. It also made a claim for damages from John Beck’s alleged breach of Google’s own AdWords contract, which it entered into as an AdWords customer. That contract included a provision that disputes should be settled in the Northern District of California, Google’s home jurisdiction, making John Beck’s choice to file in East Texas a breach of contract. As Professor Goldman observed, Google is probably also trying to move the venue of the original East Texas suit to the Northern District of California.

The original John Beck lawsuit was one of multiple lawsuits with similar trademark-infringement allegations against Google for its AdWords program. At Lubin Austermuehle, our Chicago online trademark infringement lawyers and Wheaton, Waukegan, Joliet and Chicago trial lawyers have investigated, and pursued similar claims. As of early August 2009, no court has ruled on the substance of these claims, although rulings on related matters have been slightly favorable to trademark holders. As with all trademark claims, the plaintiffs in cases like John Beck’s class action can ultimately win only if they show that Google’s advertisements create a likelihood of confusion among consumers looking for their products online, which can depend heavily on the circumstances and details of each case. Our Illinois Internet trademark attorneys work hard to prove those claims on behalf of clients.

In Wake of Successful Lawsuit Against Reseller, Mary Kay Sues Yahoo! for Trademark Infringement

December 2, 2009 | Peter S. Lubin and Patrick Austermuehle

Our Chicago Internet trademark infringement litigation lawyers were interested to see a recent lawsuit with a new twist on the trademark infringement claims corporations are bringing against online companies. According to the Dallas Business Journal, Mary Kay v. Yahoo!, a pending lawsuit filed July 6 in Dallas federal court, does not allege that Yahoo! violated the cosmetics seller’s trademarks by selling keywords in advertisements. Instead, Mary Kay claims its copyrights are violated when its independent sales associates send email to clients with Yahoo! email accounts, because Yahoo! adds advertisements for competitors and third-party resellers into the messages. Mary Kay claims dilution, trademark infringement and unfair competition in its lawsuit, and seeks damages and an injunction against the practice.

The case comes shortly after a victory for Mary Kay in a related case. In Mary Kay v. Weber, the defendants were not advertisers, but a reseller of Mary Kay products that authorized sales consultants couldn’t sell. As David Johnson’s Digital Media Lawyer blog explained, Amy and Scott Weber sell Mary Kay cosmetics (along others) at touchofpinkcosmetics.com, often at a discount because they are discontinued or expired. Mary Kay sued them on several legal theories and won on its trademark claims, although the judge in that case did make a summary judgment ruling favorable to the Webers on nominative fair use grounds.

Nominative fair use allows businesses to use another’s trademark in a way that’s not likely to cause confusion, such as a car repair shop advertising that it focuses on fixing Volvos. As Johnson explains, a nominative fair use defense can be used in the Fifth Circuit if the alleged infringers had only used as much of the trademark as necessary to identify the products and did not do anything to suggest that they were sponsored by, endorsed by or affiliated with the trademark holder. However, the jury ultimately found that the Webers’ use of Mary Kay’s trademarks went beyond fair use, in part because their advertisements did suggest sponsorship by Mary Kay. Importantly for Illinois online trademark infringement litigators like us, however, the judge found that the Webers’ purchase of Google keyword ads using Mary Kay’s trademarks did not inherently make a fair use defense unavailable.

Keyword issues will come up more explicitly in Mary Kay’s current suit against Yahoo! Mary Kay alleges that Yahoo! is violating its trademarks by allowing them to be used as keyword ads in text and pop-up ads for third parties, inserted into messages to Yahoo! users. As with all trademark infringement lawsuits, Mary Kay will have to prove that this creates a likelihood of confusion among consumers. Similar lawsuits against Google, largely based on its Google AdWords program, were pending when this was filed. Trademark infringement lawyers interviewed in a Dallas Business Journal thought the makeup seller’s claim was weak, but Johnson suggested that a fair use defense might be difficult for Yahoo! because the sponsored ads show up in emails, which could legitimately confuse consumers not accustomed to seeing them there. Ultimately, a jury will decide whether consumers could realistically be confused by the practice.

New Jersey Man Sued and Criminally Charged for Alleged Theft of Domain Name

November 18, 2009 | Peter S. Lubin and Patrick Austermuehle

As Illinois online trademark infringement attorneys, our interest was piqued when we saw an Aug. 4 article in the New Jersey Star-Ledger about civil and criminal charges against a man accused of outright stealing a domain name. P2P.com, LLC v. Goncalves et al, pending in New Jersey federal court, accuses Union, N.J. man Daniel Goncalves of hacking into an email account owned by Albert and Lesli Angel in order to illegally gain control of three of their domain names. These are p2p.com, drugoverdose.com and profreedom.com, which are co-owned by investor Marc Ostrofsky. Goncalves, a 25-year-old who runs a Web hosting business, was arrested in late July for the same alleged actions, in what the newspaper said may be the first criminal case over the theft of a domain.

A domain name is the unique identifier for a Web site — for example, chicagobusinesslawfirm.com is the domain name for one of our own Web sites. Some investors buy domain names they believe will be in demand and therefore valuable someday. That was the case when the Angels and Ostrofsky bought p2p.com for $160,000 from a Wisconsin company called Port 2 Print, believing they could resell it to a business related to peer-to-peer software. On the Internet, peer-to-peer software is frequently referred to as p2p. Similar thinking went into the purchases of profreedom.com and drugoverdose.com. They paid to register and “lock” p2p.com for ten years with registrar GoDaddy.com.

But in 2006, the investors’ complaint alleges, Goncalves and possible others intentionally and knowingly gained illegal access to the Angels’ AOL email account, allowing them to transfer the domains from the Angels’ GoDaddy hosting account to another hosting account they controlled. They then allegedly re-registered the domains under false names and addresses and redirected traffic away from the sites. A few months later, the complaint says, the defendants put p2p.com up for sale on auction Web site eBay, where NBA player Mark Madsen paid more than $111,000 for it. Drugoverdose.com has also been resold. The complaint also accuses Goncalves of falsifying records showing that the Angels sold the domains to Goncalves. An attorney for Goncalves told the Star-Ledger that Goncalves bought p2p.com for $1,500, through a third party he believed represented the Angels.

The lawsuit accuses Goncalves and others of breaking state and federal racketeering laws with their conspiracy to steal the domains; fraud; tortuous interference in the investors’ business opportunities and unauthorized access prohibited by the federal Computer Fraud and Abuse Act. More recently, the plaintiffs asked to add GoDaddy.com as a defendant for allegedly allowing Goncalves to transfer the domain. In addition to financial damages, the investors seek the return of all three domains and an order stopping the defendants from selling their domains. The new owners of the allegedly stolen domain names were named as defendants in the original suit, but according to news reports, Madsen claims to be a good faith buyer and the Star-Ledger said he has had civil discussions with the investors.

As Chicago online trademark infringement attorneys, we are very interested in the outcome of this case. As we noted, this may be the first case of criminal charges in a domain name theft. According to DomainNameNews.com, it may also break new ground if it holds GoDaddy legally liable for allowing the theft. According to that article, the Angels claim GoDaddy stonewalled their attempts to investigate and blamed them for inadequate security — despite evidence implicating Goncalves in earlier domain name thefts. Registrars are generally not found liable for allowing domain name theft, though there are notable exceptions. The decision(s) in this case could change that, at least in cases with clear negligence.

Federal Circuit Rules Hotels.com May Not Have Trademark Because Name is too Generic

October 28, 2009 | Peter S. Lubin and Patrick Austermuehle

Our Chicago trademark litigation lawyers noticed a recent trademark law decision that underscores the difficulty of protecting a mark in the emerging world of Internet commerce. The Federal Circuit Court of Appeals ruled July 30 that the hotel review and search Web site Hotels.com may not trademark its name because “Hotels.com” is a generic term. In Re Hotels.com, L.P., 08-1429 (Fed. Cir., July 30, 2009). Hotels.com had argued that it is distinct from the generic word “hotels” because it is not a hotel that provides lodging; it is a Web site that provides information about finding lodging at a discount, travel agency services and related services. The Federal Circuit disagreed, saying the addition of “.com” was not enough to remove the generic nature of the name.

To get to the appeals court, the Hotels.com application was first denied by a trademark examiner, then by the Trademark Trial and Appeal Board (TTAB). The examiner denied the application because the name “Hotels.com” was “merely descriptive of hotel reservation services,” meaning that it fails the distinctiveness requirement laid out by the Lanham Act. In doing so, the examiner rejected evidence Hotels.com offered to show that it had acquired distinctiveness, including surveys showing that the majority of respondents associated the name “Hotels.com” with its business. On appeal, the TTAB agreed that the term was too generic to trademark, but said acquired distinctiveness may be enough to support registration if the site succeeded on appeal.

In its appeal to the Federal Circuit, Hotels.com argued that its proposed mark is not generic because it is not a hotel in the business of providing lodging; it is a Web site in the business of providing information about hotels. It also argued that its surveys show that consumers associate the name “Hotels.com” with its business and do not see it as generic. Relying largely on the TTAB’s analysis, the court rejected these claims.

Addressing the issue of genericness first, the Federal Circuit found that the TTAB did not err when it considered the word “hotels” for genericness separate from the “.com” suffix. That board found that both “hotels” and “.com” were generic, and Hotels.com did not have the only URL that combined the two words. They do not produce a new meaning in combination or indicate source, the TTAB said, and thus the combination is generic. Furthermore, the TTAB argued, the existence of other sites incorporating “hotels” and “.com” shows that there’s a need to protect competitors who would use the proposed mark in their own names. The appeals court agreed, pointing out a similar decision in the case of Lawyers.com, In re Reed Elsevier Props., Inc., 482 F.3d 1376, 1378 (Fed. Cir. 2007).

The circuit court next tackled the evidence of distinctiveness offered by Hotels.com. This includes 64 declarations by the company’s customers, competitors and vendors that Hotels.com is not a generic name. The TTAB dismissed these outright as form letters. While the Federal Circuit found that rejected “unwarranted,” it said they were negated by the totality of other evidence. It next turned to a survey commissioned by Hotels.com, which found that 76% of respondents believed “Hotels.com” was a brand name. The TTAB criticized the design of this study, saying it was skewed in the company’s favor. It also said that respondents may associated a domain name with a brand name. The Federal Circuit took it one step further, suggesting that the TTAB could easily have made its decision on the basis of the genericness evidence alone. Thus, it concluded, the TTAB met its burden of proof and should not be overturned.