Insurance Company Win Makes Coverage More Difficult

2019 is shaping up to be a pretty unfriendly year for trademark infringement plaintiffs. A pending Supreme Court decision and case involving insurance for advertising injury could make trademark infringement costs prohibitive for millions of small businesses leaving them without a realistic avenue for recourse when their trademarks are being infringed. When small businesses cannot receive assistance with the cost of litigation, then defendants are incentivized to make branding decisions based on their perceptions of a plaintiff’s ability to pay for litigation. In the end, a market filled with more confusingly similar marks may exist, which ultimately harms consumers.

The First Circuit Court of Appeals recently decided a case involving insurance coverage for advertising injury. Small businesses pay for policies that include this type of coverage, but these policies generally make an exception for trademark infringement. Meaning if the advertising injury involves a trademark infringement claim, then the insurance is not obligated to cover the claim.

The argument over this advertising injury clause always centers around whether the infringing trademark plead in the complaint also functions as an “advertising idea” or “slogan.” If this dual functionality exists, then Courts have been more receptive to find that coverage exists. Unfortunately, the First Circuit Court of Appeals recently slammed the door on there ever being coverage for an infringing trademark that also functions as an “advertising idea.” The Court held that even if a trademark can qualify as an advertising idea, the exclusion nevertheless avoids coverage for a resulting infringement claim. Consequently, there will never be coverage for a trademark infringement claim in the First Circuit because plaintiffs do not bring claims for “advertising idea infringement” they bring claims for “trademark infringement.”

Additionally, the Supreme Court will decide whether a plaintiff must prove intent before being allowed to recover the defendant’s profits from its infringing act. Assuming the Supreme Court decide this issue in favor of requiring evidence of bad faith intent, the small market there is for contingent trademark infringement cases or third-party financing for trademark infringement litigation will dry up. The reason lawyers take contingent fee cases or there is third-party litigation is the possibility for a plaintiff to recover a large monetary damage award. Sometimes these fee arrangements result in frivolous litigation, but frivolous litigation is the minority of cases.

Where are small businesses to go if insurance coverage is more difficult or impossible to obtain and no attorney will take the plaintiff’s case on a contingency? The Trademark Trial and Appeal Board is not an option because the TTAB does not have the authority to issue injunctions. Small businesses will have to turn to legal aid clinics, but there are not enough of them to adequately service the number of small businesses in the U.S. The legal system needs a small business favorable option for markets to function fairly.

Lessons from a Rare Trademark Refusal Reversal

The Trademark Trial and Appeal Board issues a trademark refusal reversal only about 10% of the time. So when a trademark refusal reversal occurs it is worth spending some time figuring out what lead to the reversal.

Soletanche Freyssinet applied to register the mark CMC (in standard characters) for “non-metallic underground columns for land stabilization and reinforcement that are fabricated and installed on-site.” The CMC application began with a broader goods description but was narrowed to the current description following a first Office Action. Two of the descriptions included in the original description were “reinforcement rods not of metal” and “non-metallic materials for building.”

The Trademark Office refused registration of Soletanche Freyssinet’s CMC mark based on a prior registered, identical mark CMC (in standard characters) for “full line of metals in sheet, rod, bar, angle, round, beam, castellated beam, cellular beam, flat beam, joist, strip, tube, plate, billet, square, and wire, form.” There were no limitations in the cited CMC mark and Soletanche Freyssinet did not petition to partially cancel the cited CMC mark to have any limitations imposed on the prior registration.

Instead, Soletanche Freyssinet focused on narrowing its identification to the true nature of its goods. In doing so, it introduced a level technicality that would allow the Board to consider evidence instead of relying solely on the words in the description of the goods to decide the relatedness of goods factor. Soletanche Freyssinet offered the declaration of one of its executives who explained the nature of its goods and how they differed from those goods offered under the cited CMC mark.

The Trademark Office did not offer any evidence only argument and speculation. It appears that the Trademark Office continued to argue the descriptions that Soletanche Freyssinet deleted from its application and not the amended description. For example, the Trademark Trial and Appeal Board quickly dismissed the argument the rods identified by the cited CMC mark could be used for stabilization just like Soletanche Freyssinet’s non-metallic rods. In reality, the “columns” identified in Soletanche Freyssinet’s application could have been made of non-metallic rods, but the Trademark Office did not offer evidence to establish this fact.

The Trademark Office offered evidence that in a general construction context, beams and columns are used to support other structures. But because Soletanche Freyssinet’s description identified that its columns were “fabricated and installed on-site” the general construction context was irrelevant. The Trademark Trial and Appeal Board required the Trademark Office to offer evidence in the relevant context.

Starting broad is still a good filing strategy, but voluntarily narrowing the description if a registration refusal issues is important. When making the amendment, introducing where the goods are sold or services are performed can be helpful. Finally, support the amendment with evidence. The Board, in this case, seemed to look at the declaration from Soletanche Freyssinet to understand why the particular words were used in the amended description.

USPTO’s Strength Decision Supported by Substantial Evidence

The United States Court of Appeals for the Federal Circuit recently held that the USPTO’s strength finding was supported by substantial evidence when only 8 third-party registrations with no evidence of use were offered by the trademark applicant. The USPTO refused registration of JS ADL LLC’s ARTISAN NY & Design mark in connection with a variety of clothing items and accessories on the ground that it was likely to cause confusion with a prior registered mark for ARTESANO NEW YORK also for a variety of clothing items. The USPTO found that “artesano” is Spanish for “artisan” and JS ADL did not dispute this finding. In doing so, JS ADL’s primary argument was that the words ARTISAN and NEW YORK are so weak that its use of the Spanish word “artesano” and Design element was sufficient to avoid a likelihood of confusion.

To support its argument, in its Office Action response, JS ADL submitted 8 third-party registrations for marks containing the term ARTISAN for various clothing items and accessories. JS ADL actually submitted a total of 10 third-party registrations, but 2 were surnames. JS ADL did not submit any evidence of use for any of these third-party registrations.

The USPTO maintained the registration refusal despite JS ADL’s weakness argument and evidence. Curiously, JS ADL did not submit a Request for Reconsideration and instead chose to simply appeal the USPTO’s decision. To forego a Request for Reconsideration is a gutsy call because the record on appeal is frozen. In other words, all the trademark applicant’s evidence – save for some limited exceptions – must be submitted to during the prosecution of the application. To JS ADL’s credit, the TTAB has not been consistent on whether evidence of use is required in order to establish trademark weakness. Just two months ago, the Board found trademark weakness relying only on third-party registrations, no evidence of use. In this case, it turned out to be a mistake for JS ADL not to submit a Request for Reconsideration.

The Trademark Trial and Appeal Board affirmed the USPTO’s registration refusal and JS ADL appealed that decision to the United States Court of Appeals for the Federal Circuit. The Federal Circuit reviews the TTAB’s factual findings for substantial evidence. Where there is adequate
and substantial evidence to support either of two contrary
findings of fact, the one chosen by the TTAB is binding on
the Federal Circuit regardless of how the Court might have decided the issue if it had been raised de novo. This makes a reversal on appeal very difficult because the benefit of the doubt favors the Board.

The Federal Circuit agreed with the USPTO that JS ADL’s evidence did not establish that ARTESANO NEW YORK is a weak mark. First, the Court held that evidence purporting to show that the individual components of a composite mark are weak does not necessitate a finding that the combined terms also form a weak mark. Second, JS ADL did not offer any evidence of use for the marks displayed in the third-party registrations. Accordingly, the Federal Circuit affirmed that USPTO’s finding on strength.

Louis Vuitton Get’s It Half Right and Loses APOGEE Appeal

"Louis Vuitton store in Paris, France"

Louis Vuitton Malletier appears to employ a common trademark application filing strategy, which is to prepare the trademark application with broad goods descriptions. From there the broad description can be narrowed in an attempt to avoid a registration refusal should the Trademark Office issue an office action. We dare to say that most trademark applicants follow this filing strategy, which is why trademark searches must use broad terms when conducting their trademark searches. But narrowing a goods description alone is no substitute for a proper trademark search and trademark clearance opinion. Louis Vuitton learned this lesson the hard way in a recent case.

Louis Vuitton applied to register the mark APOGEE (in standard characters) for, among other goods, perfumes. The Trademark Office refused registration of this mark on the ground that it was likely to cause confusion with a prior registered mark APHOGEE (in standard characters) for “Hair care lotions; hair conditioners; hair creams; hair mousse; hair oils; hair shampoo; hair sprays; hair styling preparations; non-medicated hair treatment preparations for cosmetic purposes; non-medicated preparations all for the care of skin, hair, and scalp; hair moisturizers.”

Realizing that its description was too broad, Louis Vuitton voluntarily amended its description to narrow the channels of trade and classes of consumers to “non-professional use and sold only within Louis Vuitton Malletier stores, on Louis Vuitton Malletier’s website, and within Louis Vuitton Malletier’s store-within-store partnerships with high-end retail stores within Louis Vuitton Malletier’s exclusive distributor network.” Voluntarily narrowing its description was a must because the evidence of legion that it is common for perfume brands to also offer shampoos and other personal products under the same mark. However, Louis Vuitton’s choice of limitation begs the question of whether pursuing the application as hard as it did was worth it.

The limitation made by Louis Vuitton means that its rights in the APOGEE mark would exist only in the channels where only its products are sold. There is no opportunity for another company’s branded product to appear at the point of sale. Strength is not transferable from one well-known brand to another. And at least according to the Amazon reviews, the APHOGEE brand receives positive reviews. Difficult to see where Louis Vuitton’s hard would emanate from in this case. So while recognizing that an amendment is necessary, it is equally important to ensure that the proposed amendment does not render the resulting registration borderline worthless.

Despite the detailed description volunteered by Louis Vuitton, the company did not seek a corresponding amendment in the APHOGEE registration. Accordingly, the APHOGEE registration remained broad enough to include stores and channels where only Louis Vuitton goods are sold. Moreover, Louis Vuitton did not offer any evidence that APHOGEE was weak in its entirety or partially. Accordingly, the Trademark Trial and Appeal Board affirmed the registration refusal.

Minimum Third-Party Registration Trend Bites The Trademark Office

"ferret with mouth open symbolic of third-party registration trend biting trademark office"

It’s not often, but sometimes the Trademark Office relies on the trademark weakness argument to support a decision to refuse registration of a mark. In 2018, we talked about the emergence of a trend requiring a trademark applicant to offer at least 10 relevant, third-party registrations in order to demonstrate conceptual weakness. This trend carried over to 2019 and for the first time, we saw the trend applied to the Trademark Office.

Morgenstern Center for Orbital and Facial Plastic Surgery Inc. – that’s a mouthful so we will just use “Applicant” going forward – applied to register the mark MAIN LINE REFRESH (“MAIN LINE” disclaimed) for “medical consultations; medical services; cosmetic and plastic surgery.” The Trademark Office refused registration of Applicant’s mark on the ground that it was likely to cause confusion with three prior registered marks owned by two different entities:

(1) MAIN LINE HEALTH (standard characters, “HEALTH” disclaimed) for, among other services, “medical services”;

(2) MAIN LINE HEALTH & Design (“HEALTH” disclaimed) for, among other services, “medical services”; and

(3) MAIN LINE PLATIC SURGERY & Design for, among other services, “cosmetic and plastic surgery.”

Neither Applicant’s mark nor any of the cited marks contained limitations in the descriptions of the services. Accordingly, the services were deemed to be legally related, traveled in the same channels of trade, and appealed to all classes of consumers. It also meant that less similarity between the marks was necessary for a likelihood of confusion to exist.

Applicant successfully demonstrated that MAIN LINE was a weak term. Not only is the term geographically descriptive of a place in Pennsylvania, but it is also used by 110 medical clinics, physicians, and surgeons located in Pennsylvania. Accordingly, Applicant argued that the addition of the suggestive term REFRESH was sufficient to distinguish its MAIN LINE mark from the other MAIN LINE marks.

The Trademark Office attempted to demonstrate that REFRESH was conceptually weak and even descriptive of Applicant’s services by offered seven third-party registrations. This showing was three less than what the Trademark Trial and Appeal Board required in prior cases, so the Board held that REFRESH was suggestive of Applicant’s services. Because of this finding, the Board reversed the Trademark Office’s registration refusal.

Trademark Review Places COVFEFE Decision in the Top 7

"wristband with covfefe on it"

It is hard to forget the moment when then Candidate Trump tweeted late one night “Despite the constant negative press covfefe.” This tweet sparked a nationwide debate about the word “covfefe.” Not only did this word spark a debate, but it also caught the eye of some opportunists. One of those opportunists was John E. Gillard who applied to register the mark #COVFEFE (in standard characters) for “hats, t-shirts, wristbands as clothing; hoodies; jackets; ties as clothing; tops as clothing” in International Class 25. Unfortunately for Mr. Gillard, the Trademark Office refused registration of his #COVFEFE application on the ground that the term fails to function as a trademark.

Although a trademark applicant must declare that the mark is being used on all of the applied for goods, the Trademark Office requires an example of only one good displaying the mark to support a registration. Mr. Gillard submitted a rubber wristband, polo shirt, and baseball hat displaying the mark #COVFEFE as his specimens.

The Trademark Office argued that COVFEFE had no meaning when it was used by then Candidate Trump, but took on a meaning to refer to Donald Trump because of the extensive media and Internet coverage the Tweet received. The Trademark Office also offered evidence of the term COVFEFE used in an ornamental way on a variety of goods. All of this evidence suggested that consumers would understand Mr. Gillard’s use of #COVFEFE as commentary of then Candidate Trump and not as an indicator of source.

Just because a term has a known meaning does not remove it from the universe of terms available as potential trademarks. In fact, dictionary terms are commonly adopted as trademarks and service marks. The beauty about the Trademark Act is that any matter (words, sounds, smells, environments, touch, designs, colors, shapes, and taste) can function as a trademark.

Common laudatory phrases or statements that are ordinarily used in business or in a particular trade or industry, and slogans or other terms that are merely informational, are examples of claimed trademarks that may fail to function as such due to their nature. And how the mark is used on the good is not dispositive of whether the word functions as a trademark. Although placement of the proposed mark across the front a t-shirt (for example) is often used by the Trademark Office as evidence that the mark is merely ornamental and fails to function as a trademark. In this case, Mr. Gillard was smart and placed in the #COVFEFE mark in a small font size on the polo shirt and baseball hat in locations where consumers expect to see trademarks.

Nevertheless, the inclusion of the “#” symbol in the mark drawing primarily sunk Mr. Gillard’s application. The Board found that the hashtag symbol is understood as a piece of metadata used to identify or facilitate a search for a keyword or topic of interest. In this case, consumers would understand that #COVFEFE promoted the discussion of then Candidate Trump’s Tweet. Mr. Gillard may have stood a better chance of success if he would have applied for COVFEFE without the hashtag.