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U.S. Intellectual Property and New Media Law Update FIRST APPEAL DECISION ON ANTICYBERSQUATTING CONSUMER PROTECTION ACT Sporty's Farm L.L.C. v. Sportman's Market, Inc. (Second Cir. - February 2, 2000) LOGO MADNESS Goto.com, Inc. v. The Walt Disney Company (Ninth Cir. - February 2, 2000) THE THREE STOOGES' DAY IN COURT Comedy III Productions, Inc. v. Order and New Line Cinema (Ninth Cir. - February 4, 2000) FEDERAL EXPRESSO LATTE Federal Express Corp. v. Federal Espresso, Inc. (Second Cir. - January 5, 2000) FIRST APPEAL DECISION ON ANTICYBERSQUATTING CONSUMER PROTECTION ACT Sporty's Farm L.L.C. v. Sportman's Market, Inc. (Second Cir. - February 2, 2000) My, things move fast nowadays. The Anti Cybersquatting Consumer Protection Act was enacted into law on November 18, 1999, and we already have a first Circuit Court decision under the Act. The case was brought under the Federal Trademark Dilution Act. During the pendency of the appeal, the Anticybersquatting Consumer Protection Act was passed. The judges asked for additional briefing on issues raised by that act and ultimately decided the case on those grounds rather than on the original grounds. Reading between the lines, one gets the feeling that the Circuit court was not too happy with the finding of trademark dilution. The fact situation is an interesting one. Plaintiff is the owner of the trademark "Sporty" for a mail order catalogue company, particularly well known among pilots and aviation enthusiasts. Defendant is a 100% subsidiary of a company which has another 100% subsidiary which is in direct competition with the Plaintiff. The parent company registered the name "sporty.com" with NSI. The parent then formed a wholly owned subsidiary "Sporty's Farm" to grow and sell Christmas trees and transferred the "Sporty" domain name to it. When questioned as to the origin of Sporty's Farm name, a rather spotty tale was offered by Defendants' witness: the CEO of Defendant company used to visit a farm where a dog named Spotty resided. Even rubber bands can be stretched only so far. The Circuit court first noted that the Anticybersquatting Consumer Protection Act was passed just to remedy the perceived shortcomings of applying the Federal Trademark Dilution Act in cybersquatting cases, such as this one. In doing so, it depended upon the findings of fact in the District Court which was sufficient to apply the Anticybersquatting Consumer Protection Act. It did not feel it necessary to make an analysis as to whether the mark was in fact famous, since all that was required on the Anticybersquatting Consumer Protection Act is that the mark be distinctive. The court also found bad faith was evident from Defendant's conduct, even though this conduct was not one of the specific enumerated examples of bad faith in the Act. There is also a rather good discussion on the nature of wilfulness required under the Federal Trademark Dilution Act for a finding of damages (which requirement appears to have been incidentally modified by the new Anticybersquatting Consumer Protection Act). Finally, the court noted that retroactive application of the injunctive portion of the Anticybersquatting Consumer Protection Act was not constitutionally barred. The http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/98-7452.opn.html LOGO MADNESS Goto.com, Inc. v. The Walt Disney Company (Ninth Cir. - February 2, 2000) This is an appeal to the Ninth Circuit of a preliminary injunction against Walt Disney using a logo similar to Goto.com's logo. In Plaintiff's logo, the words "Go and To" are in a white font stacked vertically within a green circle, against a square yellow background. ".com" is in black, spilling out of the green circle into the background color. Defendant's logo resembled a traffic light, containing a green circle within a yellow square with details in contouring suggesting a traffic light with a single lens. Within the green circle the word "go" appears in white font; next to the traffic light the word "network" appears in black. Plaintiff complained, Mickey Mouse gave a raspberry and continued on with the introduction of its traffic light logo. The lawsuit is the result. Neither party contested that GoTo is the senior user, the existence of irreparable injury or the existence of a serious question. Thus, the main question before the District Court and then the Court of Appeals was whether the marks were confusingly similar. The Circuit court applied its Sleekcraft factors to provide a determination of likelihood of confusion. In judging the first criterion - the similarity of the mark - the Court has determined detailed axioms to guide the comparison. As set forth by the Court, they are: "first the marks must be considered in the entirety and as they appear in the market place; ... second, similarity is adjudged in terms of appearance, sound and meaning; ... and third, similarities are weighed more heavily than differences" (citations omitted). Using this criterion, the Court found the logos were glaringly similar. Even given Disney's traditional powers of persuasion, the Court was unmoved by its arguments. The Trademark's Office determination of confusing similarity was to a large extent based on the fact that the drawings were not lined for color and it was precisely the identical colors that create the confusion: white script and a green circle on a yellow square. The Court also noted that with respect to internet services, "even services which are not identical are capable of confusing the public." It noted that Disney's own portal shows the potential for one company to offer a host of unrelated services. After a view of all the factors, the Court found a likelihood of confusion. In the words of a Disney rival, "that's all folks." Thhttp://caselaw.findlaw.com/cgi-bin/getcase.pl?court=9th&navby=case&no=9956691 THE THREE STOOGES' DAY IN COURT Comedy III Productions, Inc. v. Order and New Line Cinema (Ninth Cir. - February 4, 2000) This case presented the Ninth Circuit with a simple question: whether a portion of a public domain film used in a motion picture is a trademark capable of protection under The Lanham Act. In 1996, New Line Cinemas released the film "The Long Kiss Goodnight" which contained a clip from The Three Stooges short film "Disorder in the Court". The clip of The Three Stooges plays on the television set in the background of an interior scene for less than 30 seconds. Plaintiff is the purported owner of the rights in The Three Stooges and sued for use of the clip without permission. Since the film was in the public domain, the suit was lodged under The Lanham Act and state unfair competition law. Upon Defendant's motion, the District Court dismissed the case for failure to state a claim with leave to amend. An amended complaint was filed and was similarly dismissed. The Circuit court indicated that in order for Plaintiff to prevail, it must show that the clip in question was an actual, cognizable trademark, i.e., that the public recognized the symbol as identifying goods or services distinguishing them from services of others. Plaintiff's position was that the name, the character, the likeness and the overall act of the Defendants was the trademark. The Court found that Plaintiff had not shown that the film's footage either contained a distinctive mark or that the Three Stooges' name, voice, image and act had secondary meaning. The Court noted that The Lanham Act cannot be used to circumvent the copyright law. Thhttp://caselaw.findlaw.com/cgi-bin/getcase.pl?court=9th&navby=case&no=9855301v2&exact=1 FEDERAL EXPRESSO LATTE Federal Express Corp. v. Federal Espresso, Inc. (Second Cir. - January 5, 2000) This case is an appeal from a denial of preliminary injunction. We all know Federal Express. It delivers those letters and packages we like to believe are important. We and everyone involved in the lawsuit, including the Defendant, know that the Federal Express mark is distinctive, famous and entitled to protection. Defendant intended to open a coffee shop in Syracuse located across the street from a federal building and started a company called Federal Espresso. It was a conscious play on the name Federal Express for the federal workers next door. When that location didn't pan out, Defendant went on to use the name with two other coffee shops in Syracuse. Different colors and different type fonts were used to differentiate Federal Espresso from Federal Express. When Defendant applied for registration, Plaintiff opposed, settlement was reached and Defendant withdrew their application and agreed to cease use of all use of Federal Espresso. Federal Express waived its right to seek monetary damages. Thereafter, Defendant changed the name of their stores to Ex-Federal Espresso. They bought yellow letters "E" and "X" and placed them at a 45 degree angle to the left of Federal Espresso. It did so to save money. It printed by hand the "EX" on its remaining supplies. Plaintiff sued and requested a preliminary injunction. It was denied, since the Court noted that the Plaintiff introduced no independent evidence of damage either from infringement or dilution and thus, irreparable harm only arose if there was a likelihood of success on the infringement claim. The Court concluded that Federal Express was not likely to succeed. In looking at infringement, both the Second Circuit and the District Court agreed that only one of the Polaroid factors (the strength of the federal mark registration) favored Federal Express. In particular, while there was some similarity between the words Federal Espresso and Federal Express with regard to content and sound, those similarities were far outweighed by the dissimilarities evident in the parties' use of the mark, different meaning, different pronunciation and different services. The likelihood of success on the merits of the trademark infringement were low and thus no automatic finding of irreparable injury. While the Circuit court was more inclined to view the possibility that Federal Express would prevail on its dilution claim than the District Court, the Court went on to note that the fact that Federal Express may ultimately prevail on the dilution claim and therefore be entitled to a permanent injunction, does not mean that it is presumptively entitled to a preliminary injunction, i.e., unlike infringement, dilution does not automatically result in irreparable injury. It noted that the District Court before exercising its extraordinary equitable powers to grant a preliminary injunction should consider the likely pace of an erosion of pending adjudication on the merits. Thus, in some dilution cases, a preliminary injunction remedy will be merited such as was found in the Nabisco case (discussed in VIP Newsletter Vol. III, Issue XIV). In other cases, it will not. Here in contrast, Federal Express is a vast organization operating in 210 countries, employing 100,000 people and grossing $11 billion annually. Defendants are three individuals with two stores in Syracuse. The District Court was entitled to conclude, given these facts and the tiny extent of the overlap amongst customers of Federal Express and Federal Espresso, that dilution was not imminent and a preliminary injunction was not needed. The http://caselaw.findlaw.com/cgi-bin/getcase.pl?court=2nd&navby=casae&no=989430 |
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