Three Point Shot - May 2020

Proskauer Rose LLP

Welcome to Three Point Shot, a newsletter brought to you by the Sports Law Group at Proskauer. Three Point Shot brings you the latest in sports law-related news and provides you with links to related materials.

Your feedback, thoughts and comments on the content of any issue are encouraged and welcome. We hope you enjoy this and future issues.

Edited by Robert E. Freeman

Jordan’s Last Dance in Trademark Dispute Scores Big in Chinese Top Court

In a prelude to the airing of ESPN’s “The Last Dance” miniseries, a behind-the-scenes look at Michael “Air” Jordan (“Jordan” or “MJ”) and the 1997-1998 Chicago Bulls, the Supreme People’s Court, China’s top court, ruled in favor of Jordan and sounded the buzzer on a long-running dispute with Chinese company Qiaodan Sports (“Qiaodan”) over the unauthorized use of his name in its trademarks.

“The Last Dance” miniseries has allowed sports fans and sneaker aficionados to relive moments of unparalleled basketball greatness and learn more about the on- and off-the-court moments that defined Jordan. Jordan’s basketball and sports branding prowess have also been the focal point of a trademark dispute with Qiaodan regarding the use of his name and the recognizable ‘Jumpman’ logo in Qiaodan`s sporting goods and related marketing.

This decision by the Chinese High Court in March 2020 represents the culmination of nearly a decade of litigation in China as Jordan battled away from his home court and attempted to weave around an unfamiliar foreign IP system and legal defense. Jordan first filed suit in 2012 to invalidate Qiaodan’s trademarks that used versions of his name and put a stop to Qiaodan`s attempts to profit off of his fame. We last recounted the dispute between Jordan and Qiaodan in the December 2016 Edition of Three Point Shot when the Supreme People’s Court of China partially reversed a lower court decision and invalidated Qiaodan’s registration of the Chinese version of Jordan’s name. The Court there, however, did not invalidate registrations that used the transliteration or pinyin (the Romanization of Chinese characters based on their pronunciation) version of Jordan’s last name, “Qiaodan.” At the time, the Court concluded Qiaodan was not an exact translation of MJ`s name and could refer to anyone with the common surname “Jordan” and that consumers were not confused because Nike’s Jordan Company and Qiaodan had their own distinguished markets.

The principal trademark at issue using Jordan’s name and silhouette was filed by Qiaodan in 2007 and approved in 2010, the so-called “Jordan and Figure” mark (see image below).

MJ claimed, among other things, that when the Chinese public sees a version of his name, "Qiaodan," alongside a silhouette that resembles the Nike Air Jordan Jumpman sneaker logo in reference to sporting goods, it will wrongly associate Qiaodan Sports with his famous name. Jordan alleged various claims under Chinese law, including most notably trademark claims and infringement of his right of publicity, which was broken down into two separate claims. In the first, MJ claimed that Qiaodan violated his “prior name right” under Chinese law from Qiaodan’s registration and use of his name. Secondly, Jordan claimed that Qiaodan violated his “portrait right” under Chinese law for misappropriating the “Jumpman” logo in its trademarked logos. In April 2014, the Chinese Trademark Review and Adjudication Board rejected Jordan’s attempt to invalidate Qiaodan’s trademarks. And so began years of appeals, leading to the ruling this past March by China’s top court.

In its most recent decision, China’s High Court found that the evidence on which the prior courts had based their judgment – mainly that “the two sides [Jordan Company and Qiaodan] had formed their own consumer groups and markets respectively” – was inaccurate. New evidence provided Jordan the rebound necessary to drive the lane and levitate to an air-defying dunk. Findings from an online investigation supported Jordan’s claim that he was well-known to the Chinese public by the name “Qiaodan” well before the date of Qiaodan’s disputed trademark application.

According to the Court, the findings showed that when articles published from 1984-2012 in newspapers, periodicals, and websites in China, as well as books, referenced the six-time champ, MJ was most commonly referred to by his surname only, “Jordan,” or as “Flying Man, or “Flying Man Jordan.” This new evidence was helpful for the High Court to consider whether Qiaodan violated Jordan’s “prior name right.”

As the High Court explained, under applicable Chinese law, “unauthorized registration of a name with another person’s prior name right as a trademark may easily lead the relevant public to mistakenly believe that the goods or services marked with the trademark have a specific endorsement, permission, etc., that is related to the natural person.” Applying the law, the High Court overturned the prior court’s determination that the name “Jordan,” or in pinyin “Qiaodan,” did not specifically refer to MJ. Ultimately, the High Court found that Qiaodan Sports had violated MJ’s “prior name right” and it invalidated the disputed Qiaodan Sports mark: “[Qiaodan Sports] knows that [Michael Jordan] has a long-term and widespread reputation in China, and still uses "Jordan" to apply for the registration of the disputed trademark, which may easily lead the relevant public to mistakenly believe that the goods marked with the disputed trademark have specific endorsements, licenses and other specific links with the retrial applicant, which damages the prior name right of [Michael Jordan].”

While Jordan scored big regarding use of his name, the victory was not a complete sweep. Jordan may have prevailed on the right of publicity issue surrounding his name, but the High Court refused to call a foul on Qiaodan for its continued use of the Qiaodan logo of a silhouetted basketball player, which MJ argued bears striking similarities to the Jumpman logo used by Nike in Air Jordan sneakers. The High Court noted that whether the registration of the disputed trademark damaged Jordan’s “portrait right” depended on the logo at issue and whether it was “recognizable” and “refers to a natural person.” In declining to overturn prior rulings on Jordan’s “portrait right” claim, the High Court determined that the Qiaodan logo did not have identifiable personal features such that it could be said to form the “personal dignity or personal interests of the specific natural person that should be protected on the logo according to law.” The Court concluded that the logo was just a dark silhouette and does not contain “any personal characteristics” related to Jordan. Aside from the resemblance to the Air Jordan “Jumpman,” many basketball fans might say that Jordan’s nicknames – “Air Jordan” and “His Airness” – suggest that the silhouetted basketball player is unmistakably Jordanesque. [Of course, this is not the first time the Jumpman logo has been at issue in an IP dispute – see the May 2018 edition of Three Point Shot]. Thus, unlike MJ’s sixth and final championship, Jordan’s trademark victory was not to be – though in fairness, during the Bulls’ dynasty when it won six championships in the 1990s, the team did not win every game in the Finals against its opponents (and was in fact taken to six games in five out of six series in the Finals).

For now, it seems as though this High Court proceeding is the last dance between Jordan and Qiaodan. Importantly, the ruling provides a precedent for other well-known athletes to stand on to ensure that the right to the use of their name and brand in China is afforded protection.

Wrestler Ric Flair’s Attempt to Register NATURE BOY for Apparel Gets Pinned by USPTO

WoooOOOooo! Legendary professional wrestler Ric Flair (aka “The Nature Boy”) (“Flair”) was recently denied trademark registration on the Principal Register by the United States Patent and Trademark Office (USPTO) for the NATURE BOY trademark for t-shirts and related clothing, forcing the former pro wrestling heavyweight champ to tap out. (In re Ric Flair, LLC, Serial No. 87884420 (TTAB Apr. 6, 2020) (non-precedential)).

Widely regarded as one of the all-time great professional wrestlers, Flair helped bring the sport to national prominence over the span of his 40-year career. He has been officially recognized by the WWE as a 16-time World Champion: eight-time NWA World Heavyweight Champion, six-time WCW World Heavyweight Champion, and two-time WWF Champion. He’s easily recognized by his bleach-blonde hair, unmistakable rants and bluster, wonderfully garish robes and infamous finishing move, the Figure-Four Leg Lock. Always “stylin’ and profilin’”, Flair has used the moniker “The Nature Boy” to propel his flamboyant persona since the 1970’s.

In April 2018, Flair filed an application with the USPTO seeking to register the NATURE BOY mark for various classes of goods, including cell phone cases, beach towels, and Class 25 clothing items such as t-shirts, tank-tops, and sweatshirts. In August 2018, the Examining Attorney refused to register Flair’s mark for the Class 25 clothing because it resembled the existing mark NATURE BOYS (registered in 2016 for fishing-related apparel) and would likely cause consumer confusion between the marks. However, the Examining Attorney did approve the application to register the NATURE BOY for other classes of goods (e.g., cell phone cases and beach towels).

Under the federal Lanham Act, the USPTO may bar registration of an applied-for mark if it is so similar to a registered mark that it is likely consumers would be confused, mistaken, or deceived as to the commercial source of the goods and/or services of the parties. See 15 U.S.C. §1052(d). Likelihood of confusion is determined on a case-by-case basis by applying a multifactor test. This test, which is measured using the “DuPont Factors,” considers 13 factors, including the similarity or dissimilarity of the marks in their entireties as to appearance, the fame of the prior mark, and the number and nature of similar marks in use on similar goods. As the TTAB explained, not all of the likelihood of confusion factors are relevant to every trademark examination, and only factors of significance to the particular mark need be considered, which in this case, included the similarities between the marks and the similarities between the goods and services.

Declaring this registration battle as a best two-out-of-three falls, Flair shook off this initial defeat and filed an appeal with the TTAB (as opposed to bringing his appeal to the informal wrestling tribunal known as Piper’s Pit). Flair argued that, concerning the similarity of the marks, the Examining Attorney cited no evidence when discussing the commercial meaning and connotation of the NATURE BOY mark, relying solely on the fact that Flair’s mark is the singular form of the NATURE BOYS mark and downplaying the fact that due to Flair’s fame, the public would associate NATURE BOY with the famous wrestler himself and not necessarily with NATURE BOYS fishing apparel.

In the main event, the TTAB, playing the heel, affirmed the agency’s refusal to register Flair’s mark NATURE BOY for clothing.

In breaking down the similarity and dissimilarity and nature of the goods, the TTAB found that the already-registered mark NATURE BOYS had a description of goods that included “shirts” generally, and thus was not limited to “fishing shirts” (and would necessarily include t-shirts and tank tops). As such, the TTAB found that description of goods concerning Flair’s and the already-registered NATURE BOYS mark were legally identical. When it came to shaking loose from this broad definition of “shirts” in this instance, Flair couldn’t break the TTAB’s arm bar. The TTAB concluded that there needn’t be a similarity as to each product listed in the description of goods, and that it was “sufficient for a refusal based on likelihood of confusion that we find any item encompassed by the identification of goods in a particular class in the application and registration related.”

The second factor considered was the similarity of channels of trade and classes of purchasers of the products. Here, the Board quickly pinned Mr. Flair against the turnbuckle, stating that because the goods described in the application are legally identical to goods covered by the NATURE BOYS registered mark, there is a presumption that the channels of trade and classes of purchasers are the same.

The final factor that the Board considered was the similarity or dissimilarity of the marks, focusing on the likelihood of confusion of the marks in their appearance, sound, connotation, and commercial impression. As the TTAB noted, like the first factor, similarity in any one of these elements is sufficient to find that the marks are confusingly similar. More specifically, the TTAB stated that the proper test is not a side-by-side comparison of the marks, but instead whether the marks are sufficiently similar in terms of their commercial impression, “such that people who encounter the marks would be likely to assume a connection between the parties.” In this case, the Board noted that the only difference between Mr. Flair’s NATURE BOY mark and the already-registered mark NATURE BOYS – both of which would appear on t-shirts – is the pluralization of the word “Boy.”

With no one to tag to bring in a new grappler, Flair attempted to stage a late comeback with a final move, arguing that while the marks may have similarities, the marks have different connotations since NATURE BOY refers only to himself, the famous wrestler. In essence, Flair argued that because consumers recognize NATURE BOY as his nickname, the fame of the mark should change the meaning and commercial impression and the Board’s analysis. The Board quickly put this argument on its back and Flair into submission, stating that the principal consideration is the likelihood of confusion “based on the marks that appear on the drawing pages and in connection with the description of goods in the application and registration at issue.” In placing Flair in an inescapable cradle, the Board concluded: “[B]ecause neither the mark, nor the description of goods, refers to any individual, there is no basis on which we can find that the meaning and commercial impression of Applicant’s mark NATURE BOY differs from that of the registered mark NATURE BOYS.”

In sum, Flair failed to show that in the context of t-shirts and tank-tops that NATURE BOY has a specific meaning in connection with Flair the wrestler. The Board stated that the calculus might be different if Flair’s clothing was limited to “wrestling shirts” or “wrestling tank-tops,” or presumably if the applied-for mark was something akin to THE NATURE BOY RIC FLAIR.

While Flair was handed a defeat at the hands of TTAB, he may still, among other things, seek a rematch at the Federal Circuit – indeed, as Flair was wont to boast: “To be the man, you gotta beat the man.” Regardless, with Flair still having the NATURE BOY mark registered for other classes of goods, and perhaps wanting to create new branding opportunities based on his renown, it’s unlikely that this will be his last bout in the USPTO squared circle.

Online Golf Retailer Calls Out Competitor’s Alleged Out of Bounds Play

A golf equipment retailer alleged one of its competitors violated state and federal law by repeatedly clicking on its online pay-per-click (PPC) advertisements in an effort to foreclose potential customers from seeing the ads and drive up the retailer’s advertising expenses.

On April 10, 2020, Motogolf.com, LLC (“Motogolf” or “Plaintiff”), a Nevada-based online golf equipment business, brought its complaint against Top Shelf Golf, LLC (“Top Shelf”), its president, Ivan Sokolovich, and several other employees (collectively, the “Defendants”), claiming that Top Golf failed to follow the rulebook in allegedly trying to game the online advertising system to Motogolf’s detriment (Motogolf.com, LLC v. Top Shelf Golf, LLC, No. 20-00674 (D. Nev. filed Apr. 10, 2020)). The two companies are direct competitors, as Top Shelf similarly sells golf equipment through its own online store. In the early 2000s, companies brought multiple suits against competitors for using the companies’ trademarks as search engine advertising keywords to trigger paid ads displayed next to natural search engine results. Although those suits have generally vanished, Motogolf’s current lawsuit over alleged illegitimate clicks is an interesting trick shot in online advertising-related litigation.

To advertise its website to potential customers, Motogolf stated that it purchases online pay-per-click advertisements from various online advertising platforms, primarily Google, for ideal pin placement of its ads on the web. While the complaint did not indicate the specific online forums Motogolf uses to advertise, generally speaking online advertising can appear as a result of a search engine query, or displayed on certain third party websites that display PPC ads or may be presented in a targeted manner on a user’s social media feed. Under the advertising contracts referenced in the complaint, Motogolf purportedly commits to a predetermined online ad budget that provides for a set number of ad clicks per day. According to the complaint, once viewers have clicked the set number of ads in a given day, the ads become “exhausted” and are no longer visible for potential customers. To relist the exhausted ads in a future round, Motogolf claims that advertisers must pay a higher fee per click and each successive ad exhaustion cycle ultimately costs it more money given the higher fees. Moreover, if any of the exhausted clicks originate from bad actors, instead of legitimate customers, the false clicks hurt the advertiser from tee to green: the number of remaining online ads to legitimate consumers decrease (thereby lowering the potential ad conversion rate and overall return on investment), while the advertiser’s ad budget balloons on the scorecard. Beyond having their ads appear on users’ web browsers, Motogolf also receives valuable demographic data about prospective customers whenever viewers interact with the online pay-per-click ads. This data enables Motogolf to fine tune its shot selection and improve its chances of hitting its target market when selecting keywords and crafting future online ad campaigns.

Motogolf alleged in its complaint that Top Shelf employees used various electronic devices to intentionally click on Motogolf’s online pay-per-click ads “in an illegitimate manner calculated to cause damage to Motogolf.” By repeatedly clicking Motogolf’s ads, Top Shelf effectively exhausted Motogolf’s available online ads and forced the retailer to devote sleeve after sleeve of new resources toward advertising to maintain an online presence, according to the Plaintiff. Motogolf claimed that exhausting the advertisements placed Motogolf in the rough, thereby preventing legitimate customers from viewing the ads and navigating to the retailer’s online store, and caused the Defendants to gain market share and the Plaintiff to lose its market position.

Motogolf further asserted that Top Shelf was familiar with the technological infrastructure behind the online pay-per-click ads, and recognized that intentionally interfering with the ads would cause Motogolf to suffer harm to its business. Upon discovering the Defendants’ practice in early 2019, Motogolf claimed it sent multiple cease and desist letters stating that the Defendants were no longer authorized to click on Motogolf’s ads. However, according to Motogolf, the Defendants did not end their scheme and even accused Motogolf of unlawfully clicking on the Defendants’ PPC ads.

In total, Motogolf contends in its complaint that it sustained damages well over par from increased costs of advertising, lost revenues, lost benefits from pay-per-click contracts in the form of gaining new customers, losing valuable demographic data from potential customers and expenses associated with combatting the illegitimate clicks. Motogolf asserted several causes of action, including Lanham Act (and Nevada state) unfair trade practices claims, violations of the Computer Fraud and Abuse Act (CFAA) (and Nevada state law counterpart) and related business torts, such as intentional interference with contractual relations. In a novel pleading on the CFAA claim, Motogolf alleged that the Defendants, with intent to defraud, exceeded authorized access to Motogolf’s computers (or the online advertising platform’s computers which were used to conduct business with Motogolf) when it conducted its alleged illegitimate PPC scheme, particularly after having its access expressly revoked by a cease and desist letter, and thereby caused “impairment to the integrity and availability of data reposed on the Motogolf’s Computers.” It is unclear how the court, if given the opportunity, will interpret the CFAA in this instance (and whether such an interpretation will be framed by the Supreme Court’s decision in a CFAA appeal expected to be decided next term concerning the contours of “unauthorized access”). The Plaintiff seeks relief in the form of compensatory and punitive damages and attorneys’ fees, and demands a jury trial instead of enlisting the tournament director.

Top Shelf is likely seeking advice from its caddie (aka legal counsel) on how to play the proper approach shot, as the company has appeared but has not yet filed an answer to the Plaintiff’s complaint. Either way the Defendants will want to hit the driving range before teeing off for this round since a successful defense will be no “gimme” given the weight of the Plaintiff’s claims.

[View source.]

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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