Single Word Defeats Entire Whiskey Distillery Logo

"whiskey in a glass"

When it came to the similarity of the marks likelihood of confusion factor, a whiskey distillery threw the kitchen sink at the Trademark Office and still lost because of a single word. Unfortunately for the applicant, this was a situation where the Trademark Office should have exercised its discretion to look at the two marks in the real world marketplace to determine if a likelihood of confusion exists. The Trademark Trial and Appeal Board has time and time again stated that the literal portion of a mark is entitled to more weight in the analysis of the marks than any designs. But should a single word – absent a showing of fame – be afforded so much weight that it can bring down an entire logo?

Mystic Mountain Distillery LLC filed a trademark application to register its logo on the Principal Register for “whiskey”:

The Trademark Office refused registration of Mystic Mountain’s mark on the ground that it was likely to cause confusion with the prior registered mark OUTLAW (in standard characters) for “alcoholic beverages.” Because of the identical nature of the goods, less similarity between the marks is necessary for a likelihood of confusion exists. Mystic Mountain did nothing to narrow the goods descriptions and failed to demonstrate that the OUTLAW term was weak.

Without a doubt, there were significant headwinds to Mystic Mountain’s trademark application. About a year ago, the Board in Major League Baseball Properties, Inc. v. Christopher Webb stated that it may take into account the real-world use of the marks to determine if they create confusingly similar impressions. The unanswered question is when will the Board take into consideration the real-world use of the mark and the answer may be that as a party you have to ask for it. If the Board would have considered the specimens and real-world use of the OUTLAW mark, it would have seen that the overall commercial impression is different than the impression given by Mystic Mountain’s logo.

Loosened Exceptional Case Standard Keeps Expanding

In 2014, the United States Supreme Court loosened the exceptional case standard in patent infringement cases. Because the Patent Act and Trademark Act are similar, often times a decision involving one of these Acts will influence the jurisprudence of the other Act. The loosening of the exceptional case standard is one of those decisions.

It did not take long for the Supreme Court’s decision in Octane Fitness v. Icon Health to start to influence trademark infringement cases. The Court of Appeals for the Sixth Judicial Circuit was the first to apply the loosened exceptional case standard to trademark infringement cases. Since then, the Third, Fourth, Fifth, Ninth, and most recently the Second Circuits along with a smattering of District Courts in the other Judicial Circuits have all held that the Supreme Court’s Octane Fitness decision applies to trademark infringement cases.

The most recent application of the Octane Fitness decision came from the Second Circuit Court of Appeals. 4 Pillar Dynasty LLC and Reflex Performance Resources Inc. (collectively the “Plaintiffs”) sued New York & Company, Inc. and New York & Company Stores, Inc. (collectively the “Defendants”) for trademark infringement. The District Court for the Southern District of New York initially awarded the Plaintiff treble damages in the amount of about $5.6M. However, after post-trial motions, the Court reconsidered its trebling decision and changed the award to the stipulated amount of the Defendants profits, which was $1.8M. The Court did award Plaintiffs its attorneys’ fees.

The Second Circuit Court of Appeals reversed the District Court’s decision not to treble the monetary damage award because the Court failed to applied the loosened exceptional case standard from Octane Fitness. The Octane Fitness standard requires a court to consider the totality of the circumstances in deciding whether a case is exceptional.

The totality of the circumstances standard considers not only the respective merits of the parties cases but also the parties conduct during and even leading up to the commencement of the case. While it is still unlikely that failing to conduct a trademark search will alone warrant a finding that a case is exceptional, it certainly will be a consideration.

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.

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.

New Consideration For A Trademark Licensee

"Liquidation sale sign new impact on a trademark licensee"

The United States Supreme Court recently decided an issue involving trademark licenses in bankruptcy that for years had split the lower courts. Prior to this decision, when a trademark licensor entered bankruptcy it had a choice to either continue with any existing trademark license agreements or terminate the agreements. The effect was trademark licensors would terminate trademark license agreements it deemed in its business judgment were unfavorable leaving the trademark licensee in a difficult spot.

In an 8-1 decision, the U.S. Supreme Court decided that trademark licensors will no longer have this choice. Instead, a trademark licensor that rejects a trademark license while in a bankruptcy proceeding is breaching not terminating the trademark license. Jay L. Westbrook, a professor at the University of Texas School of Law, in an article for Bloomberg Law said the decision “establishes the basic principle that once you transfer a property right, it won’t vaporize if the transferor files bankruptcy.” Professor Westbrook is right that this decision prevents the trademark licensee’s right from vaporizing overnight. But that does not mean the right will not eventually vaporize.

A trademark owners obligation to engage in quality control is a legal not contractual obligation. The purpose of a trademark is to indicate a single source of goods or services, and this is accomplished by the trademark licensor’s exercise of control of the quality of the goods and services offered under the licensed trademark. The legal consequence of not exercising quality control is an abandonment of all trademark rights.

Generally, trademark licensees want to be left alone from the trademark licensor. And trademark licensors are happy to oblige, which is why the trademark licensor’s exercise of actual quality control in couched in terms that leave it to the discretion of the trademark licensor. However, with this recent Supreme Court decision, trademark licensees may need to change their position on this even if it means more oversight from trademark licensors.

The practical effect of the U.S. Supreme Court’s decision will likely be that trademark licensors in bankruptcy will not reject trademark licenses because they do not want to be in breach of contract. They will simply stop exercising any quality control. Nothing in the U.S. Supreme Court decision forces trademark licensors to engage in quality control. Trademark licensees will still need to implement a Plan B, just later than they otherwise would have under the old law.

To guard against this possibility and to provide the trademark licensee with some recourse, trademark licensees may need to negotiate an affirmative contractual obligation on trademark licensors to engage in quality control.

Who Wants Some Football with Their Commercials?

"mercedes-benz stadium in background of super bowl trophy and new england patriots and los angeles rams football helmets when most viewers cared more about the commercials"

Super Bowl LIII was the culmination of the 2018-2019 National Football League season. It was a hard fought game between the New England Patriots and Los Angeles Rams with the Patriots winning their sixth Super Bowl. Although the game was entertaining, a significant number of people tuned in just for the ads.

Prior to the Super Bowl, the American Marketing Association published some interesting statistics about the big game. According to the AMA article, the price for a 30 second advertisement was more than $5 million. In 2018, 114 million people watched the Super Bowl, which represents about a third of the United States population. About 25% of surveyed Super Bowl viewers consider the commercials to be the most important part of the game.

At first impression, these statistics convey that only a select group of companies are capable of taking advantage of the Super Bowl platform to promote their goods or services. But for trademark owners the statistics should represent something more. These statistics are the type of information trademark owners need to collect to establish consumer recognition of their brands for purposes of secondary meaning and to established the strength of their mark.

Spending $5 million on a commercial is a significant number, but if it reaches only a relatively small number of prospective purchasers then its significance decreases. Context is key when assessing secondary meaning and strength. As a trademark owner, you should track not only advertising spend but also advertising reach. Internet advertising makes this easy by collecting impression statistics, but this type of data should be collected for other forms of advertising as well.

If you watched the Super Bowl for the commercials, you can see who the winners and losers were by checking out the USA Today Ad Meter. You can even exercise your Super Bowl viewer right and weigh in with you opinion.

KFC Extends Brand Again With Gravy Candle

"KFC's gravy candle"

Gravy candle. Yes, you heard me right. Gravy candle. If you thought the smell of Kentucky Fried Chicken’s crispy fried chicken enveloping your home from the fireplace was not enough, KFC agreed with you. That’s why it announced the KFC gravy scented candle. Unfortunately for U.S. consumers, the candle is available only in the United Kingdom and only 230 are being manufactured.

As we discussed last December, KFC could acquire and maintain trademark rights in the United States for its mark in connection with candles even if the use on candles is limited throughout the year. The key is that the company would have to repeat this promotion each year. Not only is KFC’s decision to offer a fire log and candle under its brands a brilliant public relations tactic, but it is also an opportunity to increase the fame – for likelihood of confusion purposes – of its brands.

The United States Court of Appeals for the Federal Circuit has said that in the absence of direct evidence of fame the “fame of a mark may be measured indirectly by . . . the variety of goods bearing the mark.” Coach Services, Inc. v. Triumph Learning LLC, 101 USPQ.2d 1713, 1720 (Fed. Cir. 2012). And strong marks cast a long shadow that competitors must avoid. It would seem like a no brainer that KFC should be filing new trademark applications for its brands in connection with a fire log and gravy candle, but to date it has not.

The Federal Circuit’s decisions on the issue of fame do not require the trademark owner to federally register its brands for all the goods or services it offers under the marks. But there is so much benefit that comes with a federal registration, and some of those benefits are a presumption of trademark validity, ownership, and the exclusive right to use the mark in connection with registered goods or services.

The goods new is it is not too late for KFC to change course and file some of these applications because as we seen in prior cases the sooner you file the trademark application the better.