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American Intellectual Property Law Association

GEORGE W. LEWIS

JACOBSON HOLMAN PLLC

AIPLA Mid-Winter Institute

IP Practice in Japan Committee Pre-Meeting Seminar

Tampa, FL

January 29, 2013

RECENT CASES IN US TRADEMARK LAW

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TRADE DRESS

• National Football Scouting, Inc. v. Rang, Case No. 11-cv-5762-RBL (W.D. Wash., Dec. 13, 2012

• PROTECTION OF AN EXPERT’S PREDICTION

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FACTS

• The member teams of the National Football League jointly subscribe to the National Football Scouting author’s biographical annual reports on several hundred graduating senior football players for use in the player draft. The reports are several hundred pages and include multiple page reports on each college pro-player prospect. The reports are sold for $75,000 to 21 NFL teams. Every subject receives a numeric grade reflecting the reports subjective opinion of the players likelihood of success in the NFL. The reports were shared only with the teams and a computer consultant all of whom signed confidentiality agreements — and the extent to which the grades had economic value by reason of not being generally known.

• The Defendant publication obtained copies of the reports and published in an article the numeric grades for 18 players. No other information from the report was included in the published article. This material was accompanied by other information available in the public domain concerning the players.

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PARTIES CLAIMS

• Plaintiff sued for violation of its Trade Secret rights (and copyright infringement).

• The Defendant argued that only facts can constitute trade secrets and that the numeric grades are subjective opinions, not facts.

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APLPICABLE LAW AND HOLDING

• “[I]nformation . . . that (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means, by other persons who can obtain economic value from its disclosure or use, and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

• The court held that the assignment of specific grades to particular prospects are facts with independent significance that could be trade secrets.

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COVENANTS NOT TO SUE

• ALREADY, LLC, DBA YUMS v. NIKE, INC. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT No. 11–982. Argued November 7, 2012—Decided January 9, 2013

• whether a covenant not to enforce a trademark against a competitor’s existing products and any future “colorable imitations” moots the competitor’s action to have the trademark declared invalid.

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PROCURDAL BACKGROUND

• Nike filed suit, alleging that Already’s athletic shoes violated Nike’s Air Force 1 trademark. Already denied the allegations and filed a counterclaim challenging the validity of Nike’s Air Force 1trademark.

• Nike issued a “Covenant Not to Sue,” promising not to raise any trademark or unfair competition claims against Already or any affiliated entity based on Already’s existing footwear designs, or any future Already designs that constituted a “colorable imitation” of Already’s current products. The covenant is (1) unconditional and irrevocable; (2) prohibits Nike from filing suit or making any claim or demand; (3) protects Already and Already’s distributors and customers; (4) and covers current and previous designs, and colorable imita tions thereof.

•  • Nike moved; (1) to dismiss its claims with prejudice: and (2) to dismiss

Already’s counterclaim without prejudice on the ground that the cov enant had extinguished the case or controversy. Already opposed dismissal of its counterclaim, contending that Nike had not established that its covenant had mooted the case.

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HOLDING OF THE COURT

• Court held that as a consequence of the covenant-not-to-sue, Already lacked standing to maintain an action to cancel the Nike’s registration and to invalidate Nike’s alleged rights. Since the covenant encompasses all of Already’s allegedly unlawful conduct, it Already demonstrate that it engages in or has sufficiently concrete plans to engage in activities that would arguably infringe Nike’s trademark that are not covered by the Nike’s asserted trademark.

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SIGNIFICANCE

• Plaintiffs can safely assert infringement claims on questionable trademarks with the knowledge that any challenges to the trademarks can be mooted by abandoning the claims thereafter

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TRADEMARK LICENSES IN BANKRUPTCY

• Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC. The Seventh Circuit’s opinion is published at 686 F.3d 372 (7th Cir. 2012), and the bankruptcy court’s opinion is published as 459 B.R. 306 (Bankr. N.D. Ill. 2011)

• Whether rejection of a trademark license in bankruptcy deprives the licensee of the right to use the licensed mark

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FACTS

• Lakewood Engineering & Manufacturing (“Lakewood”), was forced into an involuntary chapter 7 proceeding. The bankruptcy trustee rejected a supply contract between Lakewood and Chicago American Manufacturing, LLC (“CAM”), a provision of which permitted CAM to use Lakewood’s trademark. Lakewood’s assets, including its trademark, to Jarden Consumer Solutions (“Jarden”) were sold to another party. CAM continued to sell products bearing Lakewood’s trademark despite the bankruptcy trustee’s rejection of CAM’s contract with Lakewood.

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PLAINTIFFS/BANKRUPTCY TRUSTEE’S STANCE

• The bankruptcy trustee and a secured creditor (subsequently replaced by Jarden) sued CAM for trademark violations. The bankruptcy court determined that CAM’s license to use Lakewood’s trademark survived the rejection of the supply contract.

• Jurisdictions are split on this, but Supreme Court denied a petition for certiorari requesting that the Court determine such rights. As a consequence the Decision of the 7th Circuit is continued and the Jurisdictions remain split.

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HOLDING

• The Seventh Circuit affirmed, holding that § 365 of the Bankruptcy Code does not provide a means to terminate a licensee’s existing right to use a trademark. Under Section 365(g) of the Bankruptcy Code, rejection constitutes a breach of the contract, not a termination. The debtor's unfulfilled obligations are converted to damages, but nothing about this process implies that any rights of the other contracting party have been vaporized.

• (The Fourth Circuit case that reached the opposite conclusion regarding rejected intellectual property licenses is Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985).)

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LACK OF A BONA FIDE INTENT TO USE

• SMITHKLINE BEECHAM CORP. V. OMNISOURCE DDS, LLC, 97 U.S.P.Q.2d 1300 (T.T.A.B. 2010) (PRECEDENTIAL)

• Whether a showing of bad faith is required to prove a lack of bona fide intent.

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BACKGROUND AND HOLDING

• Applicant filed an intent-to-use application to register the mark AQUAJETT for “dental instruments, namely, oral irrigators.” The Board found for the Opposer on the ground that the application was void ab initio because the Applicant lacked a bona fide intent to use the mark.

• According to the TTAB the record was “devoid of any evidence such as manufacturing efforts licensing efforts, test marketing, correspondence with prospective licenses [sic], preparation of marketing plans or business plans, creation of labels, marketing or promotional materials, and the like.”

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ADDITIONAL FACTORS

• In so ruling, the TTAB also noted that the record showed that:– (1) the Applicant’s principal owned two patents for dental

irrigators owned by its principal (although the patents did not mention the AQUAJETT mark);

– (2) Applicant attends trade shows where oral irrigators are marketed by others;

– (3) Applicant’s statements that he contemplated how and to whom the goods would be marketed;

– (4) although the minutes of Applicant’s annual meeting included references to business plans and research and development in the relevant field.

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LACK OF USE AT TIME OF FILING

• Shutemdown Sports, Inc. v. Lacy, 102 U.S.P.Q.2d 1036 (T.T.A.B. 2012) [Precedential]

• In the absence of use at the time that a used based application is filed, the application the application is void ab initio. IT IS NOT NECESSARY TO SHOW FRAUD.

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• Pro se applicant sought registration for the mark SHUT IT DOWN for 113 clothing items. Applicant had not used the mark for 109 of the goods at the time of filing and there was no evidence of use of the mark for the remaining goods subsequent to the date of registration/

• In the absence of use at the time that a used-based application is filed, the application is void ab initio for the goods that were not in use and abandoned for other goods since the registrant failed to establish sales prior to the issuance of the registrations and therefore failed to rebut the presumption on abandonment.

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THANK YOU