Bullseye! Court Holds That Suspended Corporation Can Sue For Trademark Infringement As An Unincorporated Association
In its recent opinion in Southern California Darts Association v. Zaffina (Case No. 13-55780), the Ninth Circuit Court of Appeals held that a business entity that had its corporate powers suspended by the State of California nevertheless could sue for infringement of its trademarks.
For forty years or more, the plaintiff has promoted the competitive play of the game of darts and has coordinated league play of this game. For a time, beginning in the 1960s, members of the plaintiff formed and ran a corporation named “Southern California Darts Association, Inc.” The corporate powers of the original corporation were suspended by the State of California in 1977, apparently for nonpayment of the corporate franchise tax. Thereafter, the plaintiff continued to use a number of trademarks including its full name (“Southern California Darts Association”); the acronym “SCDA”; the nickname “SoCal Darts”; and a logo featuring the organization’s full name and a dart board.
A main issue in Zaffina was whether the plaintiff had capacity to sue because its corporate powers had been suspended in 1977. Under California law, a delinquent corporation whose powers have been suspended may not bring suit and may not defend a legal action.
However, in Zaffina, the Ninth Circuit held that the suspension of the original corporation’s powers does not necessarily extinguish the plaintiff’s capacity to pursue federal trademark claims in federal court. To reach this conclusion, the Ninth Circuit relied on Rule 17(b)(3)(A) of the Federal Rules of Civil Procedure, which states that a “partnership or other unincorporated association” that lacks the capacity to sue under the law of the state in which the court is located “may sue or be sued in its common name to enforce a substantive right existing under the United States Constitution or laws.” Because the plaintiff was pursuing a federal trademark infringement claim in federal court, it had the capacity to sue.
From the “you thought you had seen everything” department, we bring you the question of who — if anyone — owns the copyright to the now famous “monkey selfie” picture. By now, most of you probably have heard or read about this story. A British nature photographer was travelling in a national park in Indonesia and left his cameras unattended for a few minutes. A band of black macaque monkeys – thought to be among the most intelligent breeds of monkeys — wandered by. One of them grabbed an unattended camera and took a series of “selfies” which actually are quite excellent, stunning and humorous. Here are some examples of the monkey selfies:
Ultimately, the photos ended up on Wikipedia, who refused to take them down after objection from the photographer because, in Wikipedia’s view, the photographer doesn’t own any copyright rights in the monkey selfies since he didn’t take the pictures.
In the ordinary case, a person who takes a selfie normally would own any copyright rights that would attach to the selfie. However, under United States copyright law, a non-person like a monkey cannot own a copyright. Therefore, it is clear (please hold your laughter!) that the monkey doesn’t own the copyright in his/her selfies.
But the question remains: does anyone own a copyright in the pictures? If the photographer had exercised some creativity by setting up the camera, arranging the shot, setting the exposure, etc., and then the monkey just pushed the button, the situation would not be that much different from a picture taken using a timer so the photographer might have a good argument that he owns the copyright. But that does not appear to be the facts here – instead, the pictures appear to be the product of the random acts of the monkey or maybe (if possible???) the creativity of the monkey not the photographer. So it does not appear that the photographer has any claim to the copyright.
For legal purposes, a monkey could be considered “property” under certain circumstances. There have been cases that have held that the owner of the property can own the copyright that might attach to the property in some way – think of a random video of a dog doing something funny. Which could mean that the owner of the monkey is the owner of the copyright. However, the monkey that took the selfie here was a wild monkey. It may be possible to determine whether Indonesia owns its wildlife, but such a result seems doubtful. Instead, the most likely result here is that Wikipedia is correct: no one owns the copyright in the monkey selfies but instead the photos are in the public domain.
Clients who have developed trademarks comprised of words in a particular design often ask us if they should seek registration of the design in black & white or in color. The answer is that it depends on whether color is a critical feature of the design mark. If the color used in the design in and of itself can serve as an indicator of the source of the goods or services to be marketed and sold under the design mark, then registration should be sought for the colors featured in the design. (Think brown and the UPS logo, pink and the T-Mobile logo, red and the Target logo, etc.) In fact, one seeking a federal trademark registration must specify whether color is a feature of the mark sought to be registered.
The problem with seeking registration of a particular color is that the protection that results from the registration could be limited to the colors used in the design. This is not automatically the case, and the analysis depends in large part on how distinctive the underlying design may be – the more distinctive the design, the less important a particular color may be.
Because claiming color as a feature of a mark sought to be registered may act to limit the protection that results from the registration, we generally advise against claiming color as a protected element unless the color acts as a source indicator. If the trademark owner can afford to file 3 separate applications for its design mark, we recommend seeking registration: (i) for the word aspect of the mark standing alone; (ii) design mark in black & white or grayscale; and (iii) the design mark in color. In determining which of these three approaches should be employed, it is critical to consider what registration(s) the specimens of use will support.
Before a trademark owner proceeds to seek registration of a design mark, it is imperative that the owner seek the advice of trademark counsel to determine the best strategy for registration because registration of a design mark can present a number of thorny issues.
Seventh Circuit Rejects “Character Completion Theory” And Confirms Sherlock Holmes Is In Public Domain
In a case of potentially great significance to copyright law and the entertainment industry, the Seventh Circuit has issued its long-awaited decision (authored by Justice Richard Posner) in Klinger v. Conan Doyle Estate, Ltd. The decision can be found here: http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2014/D06-16/C:14-1128:J:Posner:aut:T:fnOp:N:1363624:S:0
The issue in Klinger was whether the characters of Sherlock Holmes and Dr. Watson continue to be protected by copyright even though 50 of the 60 works by Sir Arthur Conan Doyle that feature the characters are now too old to qualify for copyright protection in the United States. The case began when the Conan Doyle Estate threatened to prevent the distribution of a proposed anthology of new Holmes stories by contemporary writers unless it received a license fee for the proposed uses of elements from the writings of Sir Arthur Conan Doyle.
The plaintiff asked the court to find that the 50 Holmes novels and stories published in the United States before 1923 (the current copyright cut-off date in the United States) now are in the public domain and no longer protected by copyright so that anyone could use any elements of those old stories, including the characters of Holmes and Watson, for any purpose in any new artistic works without having to ask anyone’s permission or pay a license fee to anyone.
The Conan Doyle Estate defended by raising a copyright theory known as the “character completion theory,” which says that characters who are developed over a series of stories, some of which still are protected by copyright, may remain protected by copyright even though some of the stories in the series may have passed into the public domain.
In the Klinger case, the Conan Doyle Estate relied on the fact that 10 Holmes stories published by Sir Arthur Conan Doyle still were protected by copyright, and argued that the Holmes and Watson were “unified works of art” because Conan Doyle used the last 10 stories (published as “The Casebook of Sherlock Holmes”) to further the development of the Holmes and Watson characters and such characters were based in part on the creative development in the final 10 stories. In fact, Conan Doyle did discuss events from the youth of Holmes and Watson in the 10 stories still protected by copyright so the Estate’s argument had some basis in the stories themselves.
Unfortunately for the Estate, the Seventh Circuit rejected its “character completion theory” argument. Emphasizing that the Estate’s argument would mean that the Holmes and Watson characters would receive an unprecedented 135 years of copyright protection, the Seventh Circuit held that “from the outset of the series . . . Holmes and Watson were distinctive characters and therefore copyrightable,” and the “additional features” which Conan Doyle added to their portrayals in later works only resulted in
“somewhat altered characters” which “were derivative works, the additional features of which that were added in the 10 late stories being protected by the copyrights on those stories.”
Going forward, it will be interesting to see how the opinion in Klinger is applied when characters such as those in series such as Star Wars, Star Trek, Harry Potter, The Hunger Games, Twilight, etc. first enter into the public domain.
Trademark Owners Must Always Consider Protecting Rights Outside the United States (Subtitled Anheuser-Busch Does Not Own the Rights to “Budweiser” in Portugal)
Any business owner that has spent the time and money to develop a trademark MUST consider protecting its trademark rights in countries other than the United States if there will be foreign sales.
The need to do so was highlighted once again by recent litigation proceedings in Portugal over ownership of the rights to the Budweiser trademark for beer. Given the immense fame and popularity of the Budweiser brand of beer throughout the world, most people would think it would be a no-brainer that Anheuser-Busch would own rights to the Budweiser mark everywhere. Not so.
Portugal’s Court of Appeal recently ruled that Anheuser-Busch cannot secure registrations for the Budweiser mark in Portugal because a company named Budejovicky Budvar NP already registered the mark there. (As a side note, these brewers have been battling over the “Budweiser” name for decades. Both companies began brewing beers named after the Czech town of Ceske Budejovice in the 19th century.) By its ruling, the court ruled that Anheuser-Busch had failed to demonstrate that its use of Budweiser was well-known in Portugal.
As another side note, Anheuser-Busch’s experience in Portugal parallels our firm’s personal experience litigating trademark rights in Portugal. Several years ago, we represented a very well-known skateboard shoe company in its trademark matters, including foreign distribution agreements and foreign trademark protection. While we were in the process of obtaining foreign registrations, one of our client’s distributors registered our client’s trademark in Portugal and then used its registration to have tens of thousands of pairs of valuable shoes impounded at the port of entry into Portugal. Even though our client’s trademark was very famous throughout the world, we were not able to overcome the distributor’s registration so our client had the abandon the entire country of Portugal as a potential market.
What many trademark owners do not realize is that there is a big difference between how trademark rights are acquired in the United States and how they are acquired in many foreign countries. In the United States, priority of rights arises from priority of use, not priority of registration in most cases. In contrast, in many foreign countries, the first to file a registration application can acquire priority of rights even though it may be the junior user.
Any trademark owner contemplating foreign sales should consult with trademark counsel about possible foreign protection of trademark rights. The good news is that it currently is significantly easier to obtain foreign protection that it used to be. In the “old days,” a trademark owner often had to file individual applications in the countries where it wanted protection. Now, various international treaties have significantly streamlined the process.
Today (June 12, 2014), the Supreme Court issued its opinion in POM Wonderful LLC v. Coca-Cola Co. The POM case raised the question of whether a private suit for false advertising under Section 43 of the Lanham Act (15 USC 1125) was preempted by the provisions of the federal Food, Drug, and Cosmetic Act (“FDCA”), which sets forth requirements for product labelling and advertising.
In POM, the Supreme Court found that false advertising claims under Section 43 are not preempted by the FDCA. In so holding, the Court found that there was no statutory text or established interpretive principle to support the contention that the FDCA precluded Lanham Act suits like the one brought by POM. Instead, the Court explained that the FDCA and the Lanham Act complemented each other in the federal regulation of misleading food and beverage labels. The FDCA statutory regime was designed primarily to protect the health and safety of the public at large. Unlike the Lanham Act, which relied in substantial part for its enforcement on private suits brought by injured competitors, the FDCA provided the United States with nearly exclusive enforcement authority. Neither the Lanham Act nor the FDCA, in express terms, prohibited or limited Lanham Act claims challenging labels that were regulated by the FDCA.
In the final analysis, the Supreme Court emphasized that the Lanham Act protected commercial interests against unfair competition, while the FDCA protected public health and safety, and therefore concluded there was no preemption.
The POM decision can be found here: http://www.supremecourt.gov/opinions/13pdf/12-761_6k47.pdf
Does Laches Remain A Viable Defense To Trademark Infringement Claims After The Supreme Court’s Petrella Decision?
Here’s another interesting post from our summer law clerk Ashley Franco:
On May 19, 2014, in Petrella v. MGM, the Supreme Court held that the equitable defense of laches is not a complete bar to a copyright infringement claim brought within the three-year statute of limitations provided under the Copyright Act. You can read more about the Petrella decision in our prior post about the case, which is found here: https://affinitylaw.wordpress.com/2014/05/19/us-supreme-court-holds-laches-not-a-complete-bar-to-copyright-infringement-claim/
The defense of laches often can be a strong defense in trademark infringement cases as well as copyright infringement cases. Is the defense of laches still a viable defense in trademark infringement cases after Petrella?
By way of definition, the doctrine of laches is an affirmative defense available to defendants who are sued for intellectual property infringement, when the plaintiff has unreasonably delayed in bringing his or her suit. The doctrine of laches consists of three elements (1) unreasonable lapse of time (2) neglect to assert a right or claim (3) to the detriment of another. If a defendant proves all three, then the plaintiff’s claim is barred by the doctrine of laches. The doctrine of laches can be a very valuable defense for the infringement defendant because although the plaintiff might have a strong case, he/she/it can be barred from relief if the plaintiff didn’t sue soon enough.
In Petrella, the Court held that the doctrine of laches was not be a complete bar to a copyright infringement claim otherwise filed within the statute of limitations because the Copyright Act provides an express statute of limitations (three years) for copyright infringement claims.
Trademark infringement claims are governed by the Lanham Act, which has no express statute of limitations for trademark infringement claims. On the contrary, courts usually analogize to state law limitations periods for trademark infringement claims.
Applying the reasoning in Petrella to trademark law, the doctrine of laches should still be a complete defense to belatedly-filed trademark infringement claims since there is no express statute of limitations in the Lanham Act. Indeed, in footnote 15 of the Petrella decision, the Supreme Court itself suggests that the Petrella decision is consistent with the Lanham Act. Consequently, laches still should be a strong defense to a trademark infringement claim filed by a plaintiff who unreasonably waited too long to file suit.
Supreme Court Clarifies Procedure For Litigation Of So-Called “Non-Core” Or “Stern” Claims In Bankruptcy Court
On June 9, 2014, the United States Supreme Court issued its eagerly awaited decision in Executive Benefits Insurance Agency v. Arkison (In Re Bellingham Insurance Agency), which is commonly referred to as “Bellingham.”
In Stern v. Marshall (a case arising from the infamous relationship between Anna Nicole Smith and J. Howard Marshall), the Supreme Court held that a bankruptcy court did not have jurisdiction to enter final judgment in so-called “non-core” proceedings, which very simply defined are cases that are related to a pending case but do not involve the restructuring of the affairs of the debtor (the so-called “core” proceedings). Examples of non-core proceedings are state law breach of contract claims, tort claims, and non-bankruptcy federal law claims.
The Stern decision created uncertainty because bankruptcy law requires that non-core proceedings be asserted in the bankruptcy case to which they are related. So the question was: How are non-core proceedings to be finally adjudicated when, under Stern, the bankruptcy court cannot enter final judgment in such cases?
The Bellingham decision answers this question. In Bellingham, the Supreme Court held that the procedure for bankruptcy courts to follow to adjudicate non-core claims is for the bankruptcy court to prepare proposed findings of fact and conclusions of law for the district judge. The district judge then will review the bankruptcy court’s proposed findings of fact and conclusions of law de novo and enter final judgment.
While ultimately more time consuming and likely more expensive than many would have liked, the procedure set forth by the Supreme Court in Bellingham now resolves the question left open in Stern as to what procedure the bankruptcy courts should follow to adjudicate non-core claims.
In the recent decision in Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., the California Court of Appeal explored the outer limits of what constitutes a protectable trade secret, and found that trade secrets (at least in California) are broadly defined.
Among the issues in Altavion was to what extent ideas — as opposed to specific products, formulas, computer codes, etc. – can be protected as trade secrets. The Court of Appeal held that so long as it is protected from public disclosure (i.e. “secret”) and has independent economic value, even an idea can qualify as a trade secret. Consequently, the Altavion case shows that ideas, concepts and designs can be protectable trade secrets even if not general and not reduced to specific practice.
In Altavion, the Court of Appeal also rejected the idea that a generalized idea and/or invention could not be protected under trade secret law if it could be protected by a patent, noting that there is substantial overlap between trade secrets and patents and an idea, so long as it is kept secret, even if the idea also could be protected by a patent as well. Indeed, the court noted that more and more businesses rely on trade secret law to protect their intellectual property given the growing number of patents that are invalidated by the courts.
Finally, in Altavion, the Court of Appeal explained that the mere fact that some elements of a claimed trade secret were in the public domain will not necessarily defeat a trade secret claim. The court rejected an analysis of the individual elements of a claimed trade secret (such as often is done in copyright infringement litigation) and found instead that the combination of matters in the public domain still can qualify as a trade secret so long as the combination was secret and had independent economic value.
The Altavion case obviously is a must read for anyone interested in trade secret law.
Please visit our firm’s Facebook page for a post about this case: https://www.facebook.com/pages/The-Affinity-Law-Group-APC/123851837694859