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U.S. Intellectual Property and New Media Law Update A PROTECTED LINE OF CHILDREN’S CLOTHING Samara Bros., Inc. v. Wal-Mart Stores (Second Cir. - December 28, 1998) ATTORNEY PAYS FOR THE PRIVILEGE OF APPEALING The Ernst Haas Studio Inc. v. Palm Press, Inc. (Second Circuit - January 5, 1999) PERRIER ARGUES NO TRADE DRESS IN A BOTTLE SHAPE Nora Beverages Inc. v. Perrier Group of Am. et al. (Second Circuit, December 30, 1998) WHO’S INJURED NOW Conte Bros. Automotive Inc. v. Quaker State-Slick 50, Inc. (Third Circuit - December 30, 1998) A PROTECTED LINE OF CHILDREN’S CLOTHING Samara Bros., Inc. v. Wal-Mart Stores (Second Cir. - December 28, 1998) Samara is a manufacturer of children's clothing. Their core business is a line of spring/summer seersucker children's garments, most of which bear colorful appliques, such as hearts, strawberries, circus clowns, and the like. Wal-Mart is a national chain of retail stores which among other things sells children's clothing. In 1995 Wal-Mart contracted with a third party company to manufacture a large quantity of children's seersucker garments to be offered for sale under its own label. The samples provided to Wal-Mart's manufacturer were of Samara garments. Some but not all of the Samara garments had copyright registrations for the applique designs appearing on the garments. Samara sued both for copyright infringement and trade dress infringement under the Lanham Act along with the normal array of state counts. After trial by jury, Samara was awarded $912,856.77 on the copyright claims, $240,458.53 for the Lanham Act violation and $50 for the state law violations. Not surprisingly, Wal-Mart appealed. There were two primary questions before the Second Circuit: i) whether there was trade dress protection for a line of clothing including a number of variations with dissimilarities in some of the very features claimed as trade dress; and ii) whether the copyrighted appliques had sufficient creativity to warrant their registration. The Court noted that it was far more difficult to prove that a line of goods (rather than a single item) either has secondary meaning or is inherently distinctive and thus worthy of protection. A majority found the line inherently distinctive after a review of the various elements of the line: Consumer confusion was presumed from Wal-Mart's intentional copying. With regard to the copyright, the majority pointed to the fact that a certificate had issued establishing a prime facie case of copyright in the design and that insufficient evidence was introduced to rebut this presumption. There is a strong dissent by Judge Newman who argued that clothing was not likely to be understood as an indicator of product source. Judge Newman also dissented with regard to the sufficiency of certain of the copyrighted designs as lacking originality. The decision can be reviewed at: http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/97-7933.opn.html The dissent can be reviewed at: http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/97-7933.dis.html ATTORNEY PAYS FOR THE PRIVILEGE OF APPEALING The Ernst Haas Studio Inc. v. Palm Press, Inc. (Second Circuit - January 5, 1999) This is a case where the Appeals Court ran out of patience with an attorney who could not find a theory to justify the appeal. The original action was based on a 1953 photograph of Albert Einstein taken by Ernst Haas, the father of the president of Plaintiff. It was published in Vogue and the copyright in the issue was registered and renewed. The photograph was later included in a montage which was published by Defendant Palm Press on note cards. The Plaintiff sued for copyright infringement for use of the photograph and alleged in its complaint that it was awaiting confirmation of ownership of the registration from the Register of Copyrights. Instead, the copyright was rejected and the District Court dismissed appellant's complaint. Appellant appealed and the Second Circuit affirmed on the unusual grounds that "the main brief filed by the Appellant articulates no grounds for reversal of the judgment and we decline to entertain arguments made for the first time in the reply brief". Plaintiff/Appellant's main brief was only nine pages long and did not cite a single statute or court decision relating to copyright, nor did it present a coherent legal theory, even one unsupported by citations to authority which would sustain the complaint. While the complaint does allege error it did not explain why any of the matters raised are of legal relevance. The one thing which might have enhanced the appellant's position, was the question of a possible denial of a motion to amend the complaint. However, there is no citation in the brief to the actual making of any such motion to so amend. While there was a reply brief three times larger than the main brief, its arguments were new and thus under Second Circuit practice, may, at the discretion of the court, not be entertained. The Second Circuit refused to be so entertained. Because of the frivolous nature of the brief, the counsel bore sole liability for the other side's attorneys' fees on appeal. The decision can be reviewed at: http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/97-9259.opn.html PERRIER ARGUES NO TRADE DRESS IN A BOTTLE SHAPE Nora Beverages Inc. v. Perrier Group of Am. et al. (Second Circuit, December 30, 1998) This case presents an interesting reversal for the author. A number of years ago, the author obtained damages and an injunction for infringement of the shape of the Perrier bottle despite the fact that both bottles were clearly labeled. In this suit, Nora accuses Perrier of copying its bottle shape and Perrier defends based, in part, on the difference in the labels. The story is short, sweet and typical business. Nora uses a ridged PET bottle in the form of a bottle on top of a bottle for its NAYA water bottle as seen at: Nora sued for trade dress infringement and various assorted state claims including breach of contract. The District Court tossed out the claims and Nora appealed. While a good part of the decision revolves around whether there was, in fact, a contract between Plaintiff and Defendant which would control the purchase of the bottles, substantial questions of trade dress infringement and local unfair competition law were decided on appeal. The District Court found that the bottle shape was generic since it was common in the industry. However, the evidence as to other uses were undated. The court found the period to look to is when Perrier entered the field since the genericness could have developed between the introduction of the NAYA bottle and Perrier's first use. Nora can claim protection for its bottle shape if it was distinctive and non-functional, but Defendant's label must be considered in the likelihood of confusion analysis. In the light of the evidence that the Nora bottle was unique at the time of its introduction, the court found insufficient evidence for the District Court's conclusion that there was no genuine factual dispute as to whether the bottle had become generic at the time Perrier introduced the infringing bottle and accordingly remanded for such a determination. The court also found that the court improperly truncated the analysis under the Polaroid factors by finding that no actual confusion meant that there was no likelihood of confusion and was remanded for that basis as well. With regard to the remaining claims, the court found no trade secret in the materials voluntarily turned over to Perrier and since there was no profit shown to Perrier, no quantum meruit or restitution appropriate. The decision can be reviewed at: http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/98-7041.opn.html WHO’S INJURED NOW Conte Bros. Automotive Inc. v. Quaker State-Slick 50, Inc. (Third Circuit - December 30, 1998) An interesting question uniquely decided by the Third Circuit is whether retailers have standing under Section 43(a) of the Lanham Act to bring false advertising claims against manufacturers of products which compete with the retailers products. Standing would clearly appear from a literal reading of Section 43(a). However, this Appeals Court makes its own less literal interpretation in view of long standing rules of standing, limiting the scope of Section 43(a). Plaintiffs are a putative nationwide class of retailer sellers of motor oil and other engine lubricants. They compete with Slick 50, a Teflon-based engine lubricant manufactured by the defendants. Defendants' marketing materials state that one quart of Slick 50 can be substituted for one quart of regular motor oil at the time of an oil change. The complaint alleges that the appellees falsely advertised that the addition of Slick 50 would reduce the friction of moving parts, decrease engine wear and improve engine performance and efficiency. Defendants had already been enjoined in an action brought by the FTC from disseminating false or unsubstantiated claims regarding Slick 50. Appellants raised the same allegations in this action for damages arising from the loss of sales on that one quart replaced by Slick. Appellees successfully moved below to dismiss the complaint for lack of standing. The court reviewed the language of Section 43(a)(1)(B). The Third Circuit perceived its purpose for determining the parties' standing under Section 43 (a) was equated with an inquiry into congressional intent. The court found that the Lanham Act did not intend to negate the prudential standing rules which had been developed by the courts. They denied appellants contention that they are entitled to bring suit based on a literal reading of Section 43(a). The court found the focus of the Lanham Act was anti- competitive conduct. It then proceeds to define the reasonable interest test in the context of the present case, indicating it was the first court of appeal to utilize this long standing analysis in the context of a Lanham Act claim. The court noted that while Appellant's had alleged a commercial interest, they had not alleged competitive harm or offered any indication that Plaintiff's goodwill or reputation being harmed directly or indirectly. The court then found that this injury was not of the type that Congress intended the Lanham Act to cover. We can only wait to see if the appeal court takes this tack. |
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