Significant Intellectual Property Trademark Decisions

by Harris Beach PLLC
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2017 was a year filled with significant developments in case law for trademarks. The below rulings highlight some successes and obstacles faced by companies in the protection of their trademarks and their brand as a whole.

Following is an overview of a few of the more significant decisions in 2017 that may impact the way in which you protect and enforce your trademark rights.

Tiffany & Company v. Costco Wholesale Corporation

In August 2017, a District Court judge held that Costco Wholesale Corporation (“Costco”) would have to pay Tiffany & Co. (“Tiffany”) $11.1 million in trebled profits plus interest and $8.25 million in punitive damages following a four year trademark infringement and counterfeiting legal battle. Tiffany brought suit against Costco in 2013 after Tiffany discovered Costco was advertising engagement rings in its store as “Tiffany” rings. Costco defended that its use of “Tiffany” in connection with rings was to refer to the name of the type of setting, however, Tiffany presented significant evidence refuting such assertion including the fact that “Tiffany” appeared on the signs in a way which was similar to how Costco displayed the name of the manufacturer or source of goods of other items in its store. This four year legal battle is a textbook example of how vigorously companies will protect their trademarks despite the high costs to do so. Costco has since filed a notice of appeal and the case remains pending.

In re General Mills IP Holdings II LLC

In August 2017, the Trademark Trial and Appeal Board (the “TTAB”) upheld the Examining Attorney’s earlier decision and denied registration of General Mills IP Holdings II LLC’s (“General Mills”) application for the color yellow on a box in connection with its Cheerios cereal on the grounds that a color is not inherently distinctive and General Mills failed to show acquired distinctiveness. In its decision, the TTAB cited the numerous examples provided by the Examining Attorney of other companies (including major competitors of General Mills) using yellow on cereal boxes and held that the use of yellow by other sources would make consumers unlikely to believe yellow as a source indicator. General Mills did not appeal the TTAB decision and the trademark application is now abandoned. The struggle of General Mills in this case highlights the difficulty of protecting color as a trademark.

Louis Vuitton Malletier S.A. v. My Other Bag, Inc.

In October 2017, the Supreme Court denied Louis Vuitton Malletier S.A.’s (“Louis Vuitton”) petition for certiorari following the Second Circuit decision in My Other Bag, Inc.’s (“My Other Bag”) favor and accordingly refused to hear the trademark infringement and dilution case. Louis Vuitton originally brought suit against My Other Bag in 2014 arguing that My Other Bag’s inexpensive canvas totes infringed Louis Vuitton’s trademarks. The Second Circuit upheld the District Court’s decision and found that My Other Bag’s cartoon-like graphics of designer bags were protected by the trademark parody defense. My Other Bag previously filed an application for its attorney fees and expenses to be paid by Louis Vuitton arguing that Louis Vuitton’s case against My Other Bag was “exceptional” in that it stood out from other cases because the suit was groundless and also referred to Louis Vuitton’s tactics as that of a bully. The Court denied My Other Bag’s request for attorney fees and expenses for multiple reasons including My Other Bag’s lack of proof that Louis Vuitton brought claims against My Other Bag only due to an improper motive. This demonstrates the delicate balance companies such as Louis Vuitton face in trying to protect their trademarks while trying not to come across as a “bully.”

Matal V. Tam / In re Brunetti

In June 2017, after an almost six year long legal battle, the Supreme Court, in a unanimous decision, held that the disparagement clause of the Lanham Act violates the free speech clause of the first amendment. The disparagement clause prohibited the registration of marks which disparaged or otherwise brought into disrepute institutions, persons, national symbols or beliefs.  The case began in 2011 when Simon Tam (“Tam”) filed a trademark application for THE SLANTS for “Entertainment in the nature of live performances by a musical band” which was originally rejected by the Examining Attorney as well as the TTAB due to the disparagement clause. Following the TTAB’s rejection of the case, Tam appealed to the Federal Circuit which held in Tam’s favor and the United States Patent and Trademark Office (“USPTO”) subsequently appealed to the Supreme Court where the decision was affirmed. The decision in Matal v. Tam has opened the floodgates for the registration of disparaging trademarks.

A couple of months following the decision in Matal v. Tam, in December 2017, the United States Court of Appeals for the Federal Circuit in a panel decision held that the provision of the Lanham Act which bars registration of scandalous and immoral trademarks, likewise violates the free speech provisions of the first amendment. This case centered around the trademark application for FUCT for apparel (which was assigned to Erik Brunetti) which was initially rejected by the Examining Attorney and the TTAB on the grounds that it was scandalous. Since the Federal Circuit’s decision, the Department of Justice (representing the USPTO) has requested an en banc hearing in the matter. As the panel decision is not yet final, the review of applications for scandalous trademarks is currently suspended pending the outcome of the case.

Allstate Insurance Co. v. Kia Motors America Inc.

In December 2017, a federal judge in California held that Allstate Insurance Co. (“Allstate”) did not meet its burden in showing that Kia Motors America, Inc.’s (“Kia”) use of the DRIVE WISE mark would be likely to cause consumer confusion. In 2016, Allstate brought suit against Kia for trademark infringement over Kia’s use of the DRIVE WISE mark in connection with high-end technology add-ons (e.g., blind spot detection) for its automobiles arguing that such use would cause confusion with Allstate’s use of DRIVEWISE in connection with a device used to track consumers driving. The Court’s decision focused on the weak nature of the DRIVEWISE mark as well as Allstate’s lack of evidence showing consumer confusion. Additionally, the Court’s decision covered the notion that not all software is alike stating that, “Software is pervasive in modern society and finding that products are related simply because they both make use of software would drastically expand the scope of trademark rights.” Allstate has filed a notice of appeal and the case remains pending. One of the main takeaways of this case is the importance of the need for evidence of consumer confusion in a trademark infringement case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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