When the going gets tough….Rule 36!

It’s not often that I get upset over an adverse result in court.  It goes with the territory, and the only way never to lose is never to accept a challenge in the first place.

However, my equanimity in this regard is being tested — sorely.  And the source of my vexation is the Federal Circuit and its reliance on Federal Circuit Rule 36.  This little gimmick enables the court to issue a “summary affirmance” that lets it sidestep difficult issues on appeal and simply affirm a decision it likes without actually having to explain why the decision is correct.  This comes in handy — particularly when the lower decision isn’t correct, but the court likes the outcome anyway.

Last week I delivered an oral argument to the court in connection with our appeal in Hangartner v. Intel (CAFC Case No. 15-1293).  Fewer than 48 hours later we received a Rule 36 summary affirmance telling our client he lost but never explaining why.

What is troubling is that the panel apparently agreed during oral argument that the lower court’s stated basis for the claim construction it adopted was grammatically incorrect and contrary to well established cannons of  claim construction.  Undeterred by that minor inconvenience, the panel then began speculating whether the prosecution history — that was not in the record and was not before the court — might nevertheless support a construction that would let Intel off the hook.  In short, the panel started exploring arguments that even Intel never made.

Now to get to the point I’m trying to make:  We have a case here where all are apparently in agreement that the lower court’s stated basis for its decision is wrong. Nevertheless, the Federal Circuit elected to uphold that decision, despite recognizing the error below.  While it is entirely possible that alternate grounds might support the lower court’s decision, is it asking too much that the Federal Circuit simply write down and tell us what those alternate grounds are?  Or are these people too important and busy to do the job they were appointed to do? (At our expense, no less.)

Not only is my client kept in the dark as to why he lost, there is no way for us to assess whether the panel’s apparent finding of alternate grounds is, in fact, sound.  Nor can we seek meaningful review, either by the court in banc, or at the Supreme Court.  A cynic might suspect that the outcome had more to do with who the players are, and what the court’s agenda is, than with facts and what purports to be “the law.” Widespread use of Federal Circuit Rule 36 does little to allay such suspicions.

So what do you think?  Anyone else think the court has gone too far with this Rule 36 business?  This is not the first time it’s happened to us, though it is perhaps the most blatant abuse.  Hence my decision to speak up.

Recognizing that as participants and advocates in the case our views might be slightly biased, links to the opening, response and reply briefs are provided.  A link to the oral argument appears above.  You are of course free to draw your own conclusions.

 

 

Federal Circuit Holds Trademark Office’s Ban on “Disparaging” Marks Unconstitutional

Credit: redskins.com

Credit: redskins.com

THE SLANTS, THE REDSKINS, STOP THE ISLAMISATION OF AMERICA, AMISHHOMO, THE CHRISTIAN PROSTITUTE, AMISHHOMO, MORMON WHISKEY, KHORAN for wine, HAVE YOU HEARD THAT SATAN IS A REPUBLICAN?,  RIDE HARD RETARD, ABORT THE REPUBLICANS, HEEB,  SEX ROD, MARRIAGE IS FOR FAGS, DEMOCRATS SHOULDN’T BREED, REPUBLICANS SHOULDN’T BREED, 2 DYKE MINIMUM, WET BAC/WET B.A.C., URBAN INJUN , SQUAW VALLEY, DON’T BE A WET BACK, FAGDOG, N.I.G.G.A. NATURALLY INTELLIGENT GOD GIFTED AFRICANS

Offensive? Racist? Most certainly. Protectable? You bet.

Regardless of your politics or sensibilities, all of these words were previously denied federal trademark protection because they were all “disparaging” marks, under the Lanham Act 15 U.S.C. § 1052(a). However, in a fairly bold move, the Federal Circuit in its opinion, issued December 22, 2015 held that this aspect of Section 2(a) of the Lanham Act is unconstitutional under both “strict” and “intermediate scrutiny” standards.

The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny
review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional. Because the government has offered no legitimate interests justifying § 2(a), we conclude that it would also be unconstitutional under the intermediate scrutiny traditionally applied to regulation of the commercial aspects of speech…

In Re Tam, p. 4. The CAFC took the time to track the purpose and the history of the Lanham Act, which was essentially passed to further the two goals of (1) consumer protection and (2) protecting business investment from ” misappropriate by pirates and cheats.” With this backdrop, the CAFC held that Section 2(a)’s restrictions preventing deceptive marks is permissible, but that its prohibitions on “expressive aspects” of marks, or whether the marks are “immoral or scandalous” merely amounted to nothing more than a judgment call by a single trademark examiner:

A single examiner, with no input from her supervisor, can reject a mark as disparaging by determining that it would be disparaging to a substantial composite of the referenced group.

"The Yellow Album" from The Slants

“The Yellow Album” from The Slants

Id. at p. 10. It would seem that this same analysis would apply to other aspects of Section 2(a). In other words, it would seem that the Court would have used the same logic to invalidate the ban on “immoral” or “scandalous” marks, or marks that would otherwise promote violations of federal law. But the Court unfortunately limited its decision:

“We limit our holding in this case to the constitutionality of the § 2(a) disparagement provision. Recognizing,
however, that other portions of § 2 may likewise constitute government regulation of expression based on message, such as the exclusions of immoral or scandalous marks, we leave to future panels the consideration of the § 2 provisions other than the disparagement provision at issue here.”

Id. at p. 8 (emphasis added). As a result, if you’re one of the many people attempting to obtain registrations on “immoral” or “scandalous” goods and services, you will still have to side-step this issue until the CAFC receives a direct challenge to it. Thus, if you’re attempting to obtain federal registration on, say, marijuana-related goods and services (which are still listed as a Schedule I drug under the Controlled Substances Act), you will still face these objections from the Trademark Office.

Could this be a sign from the CAFC that it will deplete the Trademark Office’s ammunition within Section 2(a)? It seems like we just need the right case to find out.

Cannabis Trademark Litigation: Promotion of Cannabis Use Lawful for Trademark Purposes

Cannabis legalization is getting a lot of attention in the country, and many legal commentators have touched on some of the issues at the intersection of trademark law and cannabis-related goods & services. But what happens when cannabis-related trademarks end up in court?

Last year, we talked about Hershey’s Chocolate, Inc. lawsuit (Case No. 2:14-cv-00815-RSL) for Trademark Infringement against Conscious Care Cooperative (Seattle CCC). That case subsequently settled on July 29, 2014 without addressing many of the fun trademark issues some of us were hoping to play out.

But the publisher of the well-known High Times Magazine Trans-High Corp., Inc. has not been shy about asserting its trademark rights in an uneasy area of trademark law (six, as of this writing):

  • Trans-High Corp. v. 420 Eyewear, Inc. et al, 1:2003-cv-03053
  • Trans-High Corporation, Inc. v. Western et al, 2:2013-cv-01155
  • Trans-High Corporation, Inc. v. North West Harvest Fest et al, 2:2013-cv-01551
  • Trans-High Corporation Inc. v. Mile High Times LLC et al, 1:2014-cv-02039
  • Trans-High Corp. v. Reimers, 2:2014-cv-00279
  • Trans-High Corporation. Inc. v. Kerawala et al, 4:2014-cv-00752

All but one of these cases, again, settled without addressing many substantive trademark issues. However, in Trans-High v. Reimers (2:2014-cv-00279), Trans-High successfully deflected Reimers’ counterclaim attempting to cancel Trans-High’s federal trademarks.

In granting Trans-High’s motion to dismiss, U.S. district court judge Lonny Suko on January 12, 2015 provided two very helpful tips for trademark litigators in this area:

Specifically, a registration may be vulnerable to cancellation if the goods and services for which the registration has been issued, are proven to be unlawful. None of the goods and services for which the registrations have been issued are unlawfulThe Controlled Substances Act expressly excludes from its scope a party’s mere advertisement or “promotion” of controlled substances and drug paraphernalia. See 21 U.S.C. § 843(c)(1) (“The term `advertisement’ does not include material which merely advocates the use of a similar material, which advocates a position or practice, and does not attempt to propose or facilitate an actual transaction in a Schedule I controlled substance.”)

Having alleged no illegality (nor any other cognizable basis for cancellation), the Court finds Defendants’ legal theory is not cognizable as a matter of law.

(emphasis added)

[1] None of the goods and services for which the registrations have been issued are unlawful. The Defendant never alleged that the goods and services identified in the HIGH TIMES registrations are unlawful. Therefore, if you attempt to assert a trademark that is being used for illegal goods, you can expect it to be cancelled via counterclaim by the defendant.

[2] The Controlled Substances Act expressly excludes from its scope a party’s mere advertisement or “promotion” of controlled substances and drug paraphernalia. See 21 U.S.C. § 843(c)(1). This statement gives trademark holders a bit more flexibility in describing both the legitimacy of common law marks and registered marks as they are asserted in litigation. In essence, following this analysis, you can obtain a trademark for legitimate goods and services, but then use the same mark in promoting the use of controlled substances  – which would otherwise likely be held as “scandalous or immoral” by the USPTO.

If removed from the cannabis context, this holding is pretty plain. But it does provide an important lesson to trademark applicants: even if you don’t describe your services as promoting the use of cannabis in your application, you can still edge into those services and successfully defend against an argument to cancel your mark.

At the moment, federal cannabis trademark litigation is relatively quiet, but with a budding industry (pardon the pun), that is likely to change. Further, it will be interesting to see how state trademarks in this sphere are enforced around potential areas of federal law crossover (stay tuned for The Mary Jane Group v. The Taste of Travel).

Commil USA v Cisco- Belief of Invalidity Doesn’t Matter

On May 26, the Supreme Court finally drew a line in the sand on indirect patent infringement defenses. Enter: COMMIL USA, LLC v. CISCO SYSTEMS, INC.

Previously, the Federal Circuit held that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement,” Commil USA LLC v. Cisco Systems Inc., No. 2012-1042, slip op. at 11 (Fed. Cir. June 25, 2013). The Supreme Court actually read the plain text of the Patent Act and reversed.

Direct infringement is still strict liability. Here, the Supreme Court held that a patent defendant’s so-called “Good Faith Belief of Invalidity” defense to infringement simply does not exist in reality or in law. (Slip Opp. pp. 5-14). Plainly, the Court held that the mental state of a direct infringer is wholly irrelevant. This is wonderful news for fans of stare decisis because SCOTUS held the exact same thing in Global-Tech v. SEB S.A. No real surprises here.

Good-faith belief of non-infringement will probably suffice. However, the Commil opinion reiterated its Global-Tech holding that liability for indirect infringement can only attach if the defendant knew of the patent and knew as well that “the induced acts constitute patent infringement.” In delivering the opinion, Justice Kennedy reiterated that for both induced and contributory infringement, Global-Tech requires “proof the defendant knew the acts were infringing.” (Slip Opp. at 9).

Well … how will a defendant know that an act is infringing without a ruling stating the same? This gives defendants a lot of flexibility in defeating an accusation of indirect infringement. In essence, a defendant can say, “Well how was I supposed to know I was inducing or contributing? Patent Infringement can only be fully known when a court says so.” To be fair, Kennedy hinted that such a belief of non-infringement on the part of the defendant must be “reasonable,” but that still gives defendants plenty of ammunition to defeat an accusation.

Good-faith belief of invalidity is no defense. Citing how different the issues of infringement and invalidity are under the Patent Act, the Court held that a good faith belief of invalidity is NOT a defense to indirect or direct infringement. The Court spilled some ink over how burdensome litigation would become if a good-faith belief of invalidity would be allowed, but indirect infringers can make things just as onerous by maintaining a good-faith belief of non-infringement.

The lesson here for indirect infringement defendants is to play dumb regarding infringement. The lesson here for plaintiffs is to find a direct infringer.  Some are calling this a “win for trolls,” including dissenter Justice Scalia (Roberts also joined in the dissent). But from a practical standpoint, the Court’s ruling will likely not make life any easier for plaintiffs, because a defendant will only need to hodge-podge some good faith belief of non-infringement – as opposed to a good faith belief of invalidity. In light of the Federal Circuit’s recent Akamai decision, that’s getting increasingly easier to do.

At the end of the day, however, the Supreme Court made a lot of patent plaintiffs breathe a collective sigh of relief after reeling from the Federal Circuit’s earlier decision.

“When Dr. Leighton and Mr. Lewin patented their invention, they expected our legal system to protect their intellectual property.”

Heh, heh, heh…ho, ho, ho,…whatever lead them to believe THAT?

The Federal Circuit, perhaps spurred on by the hysteria over “patent trolls,” continues to systematically extract whatever worn down, yellowed and decaying teeth remain in the patent laws.  Their recent decision in Akamai v. Limelight reaffirms the recently created “single entity” rule that essentially requires that a “single entity” perform all steps of a patented method before direct patent infringement can be found.

As a practical matter, this means that all but the most clueless operators can safely infringe method patents through the simple expedient of having two or more parties perform different ones of the claimed method steps. (Here I am assuming they are bright enough not to enter into a discoverable contract entitled, “Agreement To Infringe Patent.”)   The dissent in this case correctly identifies this as a “gaping hole in liability which the majority never defends, and which all agree makes no sense.”

The decision is interesting to read for a variety of reasons, not the least of which are the history and background of Section 271(a) (complete with citations to Giles S. Rich’s 1949 statements before Congress) as well the bickering between the majority and dissenting judges.  Personally, I come down on the side of the dissent, which correctly notes that (1) “whoever” as used in Section 271(a) is plural, and (2) this whole “single entity” business is only a recent creation and not some long-standing rule of law.

While there is much to discuss and debate regarding the two positions, what struck me is the majority’s concern that, plugging this gaping hole is somehow unjust because it might lead to more litigation and the imposition of liability on wrongdoers.  Well, yeah, isn’t that kind of how this is supposed to work?  I’ll wager Dr. Leighton and Mr. Lewin thought so as well.

IP Litigator Philip Mann Named to 2014 Washington Super Lawyers List

IP Litigator Philip Mann Named to 2014 Washington Super Lawyers List

Normally we don’t toot our own horn – but we are pleased and honored to announce that our founder Philip P. Mann was recognized in the 2014 Washington Super Lawyers ranking which lists the top attorneys in the state of Washington. The annual Super Lawyers list was featured in the July issue of Seattle Met magazine.

Super Lawyers is a rating service that selects outstanding lawyers from more than 70 practice areas who have attained high degrees of peer recognition and professional achievement. The selection process includes independent research, peer nominations and peer evaluations.

Mann is a trial lawyer with more than 30 years of experience litigating patent, trademark, copyright, trade secret and other intellectual property matters. He has broad experience representing clients in jury trials and bench trials before federal and state courts across the country, and in appeals to the Federal Circuit. Mann, who also has a degree in Electrical Engineering, worked in private practice in Chicago, Milwaukee and Seattle before founding the Mann Law Group in 2004.

 

Tyler Perry Snatches ‘What Would Jesus Do’ Mark

….clearly.

I’ll avoid the rampant irony of taking a trademark around Jesus’ name and/or using The Lord’s name in vain for the sake of financial gain. (Isn’t there something about that in the Bible?)

Television/movie star and man-of-many-faces Tyler Perry successfully snatched away the mark: "WHAT WOULD JESUS DO" from Reality TV  "star" Kimberly Kearney ("Poprah" on I Want to Work for Diddy). Perry convinced the Trademark Trial and Appeal Board (TTAB) that Kearney never used the Mark and/or abandoned the Mark.

According to the TTAB decision, Perry attempted to register the Mark for "’Entertainment services in the nature of an on-going reality based television program,’ in International Class 41" (Reg. No. 3748123). Perry then successfully convinced the Board that Kearney did not use the Mark in connection with any television program. Three big lessons from all of this …

Lesson #1: Always Answer the Requests for Admission.

Kearney did not respond to Perry’s Requests for Admission. Accordingly, TTAB found that Kearney admitted to everything that Perry requested and that such facts she "admitted" are now "conclusively established." (Fed. R. Civ. P. 36). Even though she denied those facts in her Answer, her failure to respond to the Requests for Admission trump those denials. YIKES. Let that be a lesson to those of you in litigation – Respond to your Requests for Admission.

Lesson #2: Mind Your Meetings

Here, Kearney alleged that she attempted to start a reality show by pitching it  to … coincidentally enough … Tyler Perry Studios.

We see this all the time in trademark law. Here’s what probably happened: Kearney likely walked in to TP Studios, gave them an idea for a ridiculous reality show, didn’t really have much protectable IP, but did have a federal trademark on a name for said ridiculous show. Then, the TP Studio executives likely said "no thank you" to Kearny, then decided that she still had a neat name for a show. Tyler Perry studios, realizing Kearny would likely never make anything of the Mark, filed to cancel it and take it away from her. What should you remember from this? Mind Your Meetings!

If you’re going to meet with someone who might steal your intellectual property, make sure you get in a Non-Disclosure Agreement at the very least. Here – it didn’t look like Kearny had much in terms of trademark rights, but this is still very indicative of how many large companies operate. Many have been known to pretend to be disinterested in your ideas only to misappropriate them later. Worse yet, sometimes they will string you along for several weeks/months/years of negotiations to get more information and then tell you they aren’t interested.

Lesson# 3 Actual Use Still Counts

A federally-registered trademark is presumed valid, but that does not make it invincible. In other words, "use it or lose it." If Kearny had actually made use of this trademark in some way relating to producing a show around it, she could have survived cancellation. At the very least, she could have gotten this issue in front of a judge or jury and slowed down the process. The press around the dispute very well could have gotten her a TV deal with someone other than TP Studios. What might be interesting later is if Tyler Perry poaches some of Kearney’s substantive material around her show (assuming she actually has some).

 

-Tim Billick

Hershey’s Chocolate Wants to Kill Your Buzz

Hershey’s Chocolate, Inc. filed suit (Case No. 2:14-cv-00815-RSL) for Trademark Infringement in U.S. District Court in Seattle against Conscious Care Cooperative (Seattle CCC), a Seattle company which describes itself as "a non- profit cooperative that is dedicated to providing its members the highest quality of organic medicine or Medical Marijuana in Seattle."

What’s bugging Hershey’s exactly? This (photo credits Kiro TV news):

And this:

http://www.komonews.com/news/local/Chocolate-company-suing-Seattle-pot-co-op-for-trademark-infringement-261905731.html

 

According to the Complaint filed Tuesday, June 3, Hershey’s is alleging the following causes of Action

  • Count One: Federal TM infringement of the various REESE’S, REESE’S PUFFS, and MR. GOODBAR marks and/or trade dress. (15 USC 1114)
  • Count Two: Trade dress infringement, false designation of origin, and unfair competition. (15 USC 1125(a)).
  • Count Three: Trademark and Trademark Dilution. (15 USC 1125(c)).
  • Count Four: Violation of Washington State Trademark Dilution Statute. (RCW 19.77.160)
  • Count Five: Violation of Unfair and Deceptive Practices Act. (RCW 19.86.020).
  • Count Six: Common Law Trademark Infringement and Unfair Competition

FEDERAL TRADEMARK LAW AND CANNABIS LAW

Generally speaking, you cannot get federal protection over your cannabis-related marks. Sections 1 and 45 of the Lanham Act only covers "lawful" use in commerce, but THC, the active high-inducing chemical in marijuana, is still very much illegal under the Controlled Substances Act. Not surprisingly, the Feds aren’t too keen on protecting what they still (half-heartedly) believe to be an illegal substance. Therefore, based on priority of use, and federal protection, Hershey’s very clearly has superior rights in its marks to the Seattle CCC.

 WHAT WILL BE THE OUTCOME? 

Of course there are many ways to win (and lose) a case. If you remove the cannabis aspects of this case, it’s fairly straight-forward. Hershey’s has superior rights, and a reasonable jury could view the marks to be confusingly similar. This is a fact question, so it’s unlikely that this aspect would be decided on summary judgment.

But the cannabis elements admittedly cloud the analysis. Do federally-protected TM rights in legal candy trump state-protected rights in cannabis candy? Normally, the answer is "yes", but only a handful of states have legalized medicinal marijuana, and only Washington and Colorado (as of June 10, 2014) have legalized recreational marijuana. Seattle CCC could therefore argue that its customers are in a very niche market and very distinct from Hershey’s customers and that no reasonable consumer could possibly mistake a pot treat coming from Hershey’s.

What about the dilution/tarnishment claims? Is Seattle CCC really "diluting" the Hershey’s mark? Would people truly think that "Reefer’s" came from Hershey’s and that the Seattle CCC will likely cause harm to the fine upstanding Hershey’s name? In my very humble opinion, if someone wants to ingest cannabis, they buy  and ingest cannabis. If someone wants to buy candy, they buy and ingest candy. Sure, maybe some careless parents might leave some cannabis-candy on the counter and Little Johnny and Little Suzy might mistakenly eat it, but regulating that sort of thing shouldn’t be in the wheelhouse of federal trademark law. We have plenty of state-based organizations for that in Washington.

My cynical/tactical thinking is that Hershey’s is looking to cash-in on the national pot craze without actually getting its hands "dirty" in the business. Hershey’s likely wants to collect a settlement and/or license agreement for pot dealers to use its trade dress and trademarks. Obviously this would only be enforceable in Washington state, because – again – the Feds won’t enforce contracts that are illegal under federal law. This way, Hershey’s won’t openly affiliate with drug dealers; won’t have to invest in the infrastructure to make cannabis candy; and will be able to collect some cash on the side from budding industry (couldn’t resist).

I’ll do my best to follow this case very closely and provide more insight as my time permits. Until then, if you have any questions on trademark issues, feel free to contact Mann Law Group.

UPDATE:

Hershey’s is suing a Colorado cannabis dealer as well:

http://www.washingtonpost.com/blogs/govbeat/wp/2014/06/09/hershey-sues-edible-marijuana-company-over-gangja-joy-and-other-candy-bars/

 

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