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U.S. Intellectual Property and New Media Law Update REASONABLE ATTORNEY'S FEES UNDER THE ACPA Shields v. Zuccarini, (3rd Cir. - June 15, 2001) HUGO BOSS HALF EXPOSED Hugo Boss Fashions, Inc., et al. v. Federal Ins. Co. (2nd Cir. - June 8, 2001) THE UCC IS ENOUGH Cybernetic Services et al. v. Matsco, Inc. et al. (9th Cir. - June 6, 2001) POOL HALL TRADE DRESS Clicks Billiards, Inc. v. Sixshooters, Inc. (9th Cir. - June 1, 2001) PLEASE NOTE: NOTE: FREE POWER SOCCER SOFTWARE!! We have a free download that contains a challenging Soccer game developed by one of our client's and a little information about our firm. If you are interested in receiving it, please e-mail us at jdrangel@ipcounselors.com. REASONABLE ATTORNEY'S FEES UNDER THE ACPA Shields v. Zuccarini, (3rd Cir. - June 15, 2001) This is the Third Circuit's first case under the Anticybersquatting Consumer Protection Act (ACPA). The domain names were variations on the service mark Joe Cartoon for a graphic artist and his cartoon services, such as JOESCARTOON.COM and JOECARTON.COM. The District Court granted judgement to Plaintiff when the Defendant failed to reply to its motion for summary judgement, awarding $ 10,000 statutory damages under the ACPA for each domain name and attorney's fees. After confirming the findings and the damage award on appeal, the Court looked at the award of attorney's fees. It first noted that while one of the criteria for such awards was bad faith, every successful case under the ACPA required bad faith. In this case the Court found the Defendant's conduct was particularly flagrant, with the Defendant showing no remorse. Between the issuance of the preliminary injunction through the hearing date to determine statutory damages, Defendant registered an additional 1,644 domain names that were common misspellings of other famous companies and/or celebrity names. Thus the Court was not faced with having to decide whether the finding of bad faith under the ACPA in itself automatically warranted an award of attorney's fees. This decision can be viewed at: http://supct.law.cornell.edu/supct/html/99-1571.ZO.html http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=3rd&navby=case&no=002236 HUGO BOSS HALF EXPOSED Hugo Boss Fashions, Inc., et al. v. Federal Ins. Co. (2nd Cir. - June 8, 2001) This case is only of indirect interest to the trademark litigator, but of great interest to his clients. The case arises out of the defendant insurance company's refusal to defend and indemnify Plaintiffs against a trademark infringement. The trail judge found the Defendant had a duty to defend and a jury subsequently awarded Plaintiffs $ 500,000 in costs incurred and $ 644,000 in attorneys' fees and costs since the Defendant had breached its duty of good faith in fair dealing. The policy covered "advertising injury." The insurance policy had a specific exclusion for trademark infringement other than "slogans." The insurance company refused to cover since inter alia, it believed that the trademark "Boss" was not a slogan within the meaning of the policy and thus fell within the intellectual property exclusion. It was the insurance company's understanding that a slogan must be a phrase. The Plaintiff on the other hand maintained that Boss was a slogan and fell within the policy. The Second Circuit found that while New York case law is silent on the issue, Federal case law makes it clear that trademark slogans are phrases used to advertise a house mark or product mark in distinction to the house or product mark itself. Thus, the insurance company was not under a duty to indemnify. The Second Circuit also found that the insurer's duty to furnish a defense was broader than its obligation to indemnify and extends to any claim which may rationally be said to fall within the policy coverage whether it may later prove to be outside the limits of the insurer's responsibility to indemnify. Federal was only responsible for the cost of the defense. Thus while there was no duty to indemnify, at the time of the complaint there was uncertainty as to whether the exclusion would apply and thus a duty to defend did exist. Finally, the Court found that there was insufficient evidence of bad faith on the part of the insurance company to support the jury's verdict of attorneys' fees. There was a dissenting opinion which felt there was not even a duty to defend, since the policy exclusion was unambiguous. The decision can be viewed at: http://law.touro.edu/2ndCircuit/June01/00_78240.html THE UCC IS ENOUGH Cybernetic Services et al. v. Matsco, Inc. et al. (9th Cir. - June 6, 2001) As noted by the Ninth Circuit "in the field of intellectual property, [courts] must apply an antiquated statute in a modern context". The question was whether 35 U.S.C. ' 261 of the Patent Act or Art. 9 of the Uniform Commercial Code (UCC) as adopted in California requires the holder of a security interest in a patent to record that interest with the Federal Patent and Trademark Office in order to perfect the interest as against a subsequent creditor. As with so many of these questions, this one arose in the context of a bankruptcy. Matsco had a security interest in a patent owned by the debtor. The security interest was recorded with the Secretary of State of the State of California in accordance with the UCC, but not recorded in the USPTO. If the security interest was properly perfected, the patent would go to Matsco, if it was not it would be available for division among the creditors. The trustee in bankruptcy argued that the Patent Act preempts the UCC filing requirement and that the UCC itself provided an exemption if the security interest in the patent is required to be filed in the USPTO. The Ninth Circuit found no such preemption. There was no express preemption language in the statute and no basis for field or conflict preemption, since the Patent Act only requires parties to record with the PTO ownership interests in the patent, not security interests. To do so it looked at the meaning of the language at the time the statute was drafted in 1870 and found that different language would have been used if the drafters were requiring recordal of security interests. The decision can be viewed at: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=9th&navby=year&year=2001_6 POOL HALL TRADE DRESS Clicks Billiards, Inc. v. Sixshooters, Inc. (9th Cir. - June 1, 2001) A chain of pool halls. An ex-employee who sets out a competing pool hall. The pool halls have a commonality. Trade dress infringement or just pool hall chic. The Court was faced with the question of whether the interior appearance of what to me sounds like a fairly conventional pool hall constituted a trade dress. Elements ranging from large floral carpet patterns and dark mahogany wood finishes to vinyl flooring were named as part of the trade dress. The District Court had granted summary judgment to the Defendant on the basic trademark issues of functionality, secondary meaning, and likelihood of confusion. The Ninth Circuit, on the other hand, found each presented a triable issue. On the issue of functionality it noted while many of the elements are functional, the total design was not. While the lamps illuminate the pool tables and the counters provide a place for customers to place their drinks, the Plaintiff can claim the combined arrangement of the design elements that distinguish it from others using the same concept. The Court found that the question of functionality was really whether the particular integration of elements leaves a multitude of alternatives to the pool hall industry that would not prove confusingly similar to its trade dress. Accordingly, the Court found that this would be a triable issue. Interestingly, the Court found that design decisions which were made for aesthetic reasons is evidence of non-functionality. With regard to the question of secondary meaning, there was a survey conducted by the Plaintiffs. While the Ninth Circuit found ultimately that the response to the survey may not add up to much and a reasonable jury might ultimately agree with the District Court that the survey did not prove the trade dress had acquired secondary meaning, it was sufficient to reach the trier of fact. Similarly, the question of likelihood of confusion could not be decided on summary judgments, since there was significant evidence of actual confusion. An interesting side issue was that the judge visited the pool halls in issue without the parties or counsel present. While the Ninth Circuit made it clear that trips to such establishments were appropriate where the parties were informed of the court's visit ahead of time and were present during the examination, a different more troublesome situation exists where the judge goes on his own. The court's site visits improperly exposed him to factual evidence not part of the record. It was particularly so here, as the Plaintiff accused the Defendant of changing the appearance of the interior during the course of the litigation. Since, however, the Ninth Circuit was overturning the decision anyway, the Court did not decide whether Plaintiff's due process rights were violated under the circumstances. The decision can be viewed at: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=9th&navby=year&year=2001_6 |
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