Final Draft of ACTA Released

By Jason Rantanen

Yesterday, the negotiating parties (which include the United States) released the final draft of the Anti-Counterfeiting Trade Agreement (ACTA), a document that purports to combat the proliferation of pirated and counterfeit goods.  The development of this Agreement has been subject to considerable controversy, in large part due to the secretive nature of its negotiation, which took place outside conventional International IP bodies such as TRIPS and WIPO.  The Electronic Frontier Foundation, for example, has written extensively about the subject, as has Michael Geist

In its final state, ACTA relates primarily to copyright and trademark infringement, and expressly disclaims application to patent law in several sections.  Nevertheless, everyone interested in intellectual property law issues should give it a read (and at only 24 pages long it's a surprisingly concise document), as within the area of trademark and copyright infringement the scope of ACTA is very broad: despite its characterization as a "Trade Agreement," it covers the enforcement of IP rights in the domestic civil, criminal, and digital spheres in addition to providing for border control measures, 

Although ACTA generally tracks existing U.S. law on copyright and trademark infringement, the Agreement has a clear pro-rights holder slant.  For instance, provisions on discovery discuss only the rights of the party asserting the infringement claim, and do not require similar rights on the part of the alleged infringer.  Readers may also want to pay particular attention to the criminal provisions – which seem on their surface to make any commercial willful trademark or copyright infringement subject to criminal penalties.

Given that this document likely will be scrutinized by scholars and practitioners concerned about the implications of strong copyright and digital property rights, I'll identify just a few specific drafting issues that leaped out at me.

  • "Trademark counterfeiting" and "copyright piracy" are broadly defined, and seem to include any form of trademark or copyright infringement.  In other words, these terms could be readily replaced with "trademark infringement" and "copyright infringement" wherever they appear in the document.  That said, the trademark counterfeiting language is somewhat ambiguous, and could plausibly be read to only apply to instances where the mark "cannot be distinguished in its essential aspects" from the registered trademark.
  • Another issue is the sudden appearance of "copyright or related right," which is first used in Chapter Two, Article 2.2(1).  Perhaps this is an artifact from earlier drafts, but I didn't see any definition of these "related rights."
  • The procedures for civil enforcement of IP rights largely appear to parallel U.S. law.  However, the damages provisions strongly favor rights holders, perhaps more so than current domestic copyright and trademark law. 
  • Similarly, to the extent the sections on litigation discovery procedures expand parties' rights and obligations, they may create a disjunction with current law.
  • In the context of border measures, the terms "goods of a commercial nature" and "goods of a non-commercial nature" are left undefined.  On the surface, it seems like nearly every good hs a commercial nature, but perhaps I'm just picking at nits with this one.
  • Likewise, the term "acts carried out on a commercial scale," used in the context of the section on criminal penalties, seems equally broad, especially given that it includes "at least those carried out as commercial activities for direct or indirect economic or commercial advantage."
  • The pro-rights holder forum and education campaign requirements seem quite one-sided, especially for such a sensitive subject.  Chapter Three, Articles 3.1(4) and 3.4 are particularly strong in their requirement that governments present a pro-IP rights holder message.

The full text of the proposed version of ACTA is available here:  Download Finalized ACTA text.  In addition to substantive issues, some organizations have raised concerns about the potential approval of ACTA via Executive Agreement, as opposed to ratification by the Senate.  If the former approach is indeed used, it will likely have profound legal implications that courts, practitioners and scholars will need to address.

Update: As one commenter pointed out, Terry Hart's blog Copyhype has a detailed point-by-point comparison of many ACTA provisions to the relevant U.S. law.  Mr. Hart also responds to some of the negotiation transparency criticisms that various organizations have raised. 

Chippendales Cuffs & Collar lack Inherent Distinctiveness as Product Packaging Trade Dress

In re Chippendales USA, Inc. (Fed. Cir. 2010)

PatentlyO080The first Chippendales club opened in Los Angeles in 1978. The following year, on-stage performers began wearing their now well-known Cuffs & Collar costumes. In 2003, the USPTO agreed that the trade-dress had acquired distinctiveness and issued Trademark Registration No. 2,694,613. (Chippendales had argued that the mark was also inherently distinctive, but the examiner had rejected that argument.) In 2008, the original mark became “incontestable.”

PatentlyO083This case arose in 2005 when Chippendales requested a new registratation for the same mark based upon its inherent distinctiveness. (The company wanted to strengthen its mark.) The Tradmark Trial and Appeal Board ruled against Chippendales — finding that the mark was not inherently distinctive.  In particular, the Board noted that strippers often wear revealing would-be professional costumes such as a stethoscope, utility belt, or chaps with a ten-gallon hat.  In this case, the Chippendales Cuffs & Collar costume appears directly derived from a Playboy Bunny costume.  Based on these facts, the Board held that the Chippendales outfit failed the test for inherently distinctive trade dress outlined in Seabrook (CCPA 1977). 

On appeal, the Federal Circuit first looked to determine whether the costume is part of the product design or only product packaging.  That distinction is legally important because of the Supreme Court ruling in Wal-Mart v. Samara Bros (2000) that product design is never inherently distinctive.  Here, the court held that the costume is product packaging — with the product being “adult entertainment services.” 

The Appellate Court then walked through each of the three relevant Seabrook elements: 

  1. Whether the mark is a common shape or design;
  2. Whether the mark is unique or unusual in the particular field;
  3. Whether the mark is a mere refinement of a commonly adopted and well-known form of ornamentation for a particular class of goods or services viewed by the public as a dress or ornamentation for the goods or services; or
  4. Whether the mark is capable of creating a commercial impression distinct from any accompanying words. (This fourth element was held irrelevant in this case.)

Here, the Appellate Court rejected the Board’s implicit holding that no costume on an adult entertainer could be inherently distinctive.  However, the Appellate Court agreed with the Board that the Cuffs & Collar costume was a “mere refinement” of the well-known Playboy Bunny costume.  As a result, the Cuffs & Collar costume failed the third Seabrook element and therefore lacks inherent distinctiveness.

The use of the Playboy mark constitutes substantial evidence supporting the Board’s determination that Chippendales’ Cuffs & Collar mark is not inherently distinctive. The Playboy bunny suit, including cuffs and a collar, was widely used for almost twenty years before Chippendales’ first use of its Cuffs & Collar trade dress. The Cuffs & Collar mark is very similar to the Playboy bunny costume, although the Cuffs & Collar mark in-cludes no bunny ears and includes a bare-chested man instead of a woman in a corset. While the Playboy clubs themselves did not involve exotic dancing, the mark was registered for “operating establishments which feature food, drink and entertainment.” The Cuffs & Collar mark was also worn by waiters and bartenders at Chippendales establishments, which Chippendales argues reinforced the association of the mark with the Chippendales brand. Additionally, the pervasive association between the Playboy brand and adult entertainment at the time of the Board’s decision leads us to conclude that the Board did not err in considering the mark to be within the relevant field of use. Thus, the Playboy registrations constitute substantial evidence supporting the Board’s factual determination that Chippendales’ Cuffs & Collar mark is not inherently distinctive under the Seabrook test.

In its brief, Chippendales argues that Wal-Mart v. Samara is at odds with Seabrook and that the Seabrook should therefore be revisited. The Federal Circuit rejected that suggestion.

Trademark Rights for Sound Recordings

Carl Oppedahl lost his case to register the mark “patents.com.”  However, that setback did not dissuade him from continuing to push against trademark law limitations. 

Recently, the USPTO issued a trademark registration certificate for his “sensory mark.” The mark consists of a sixteen-second musical introduction that Oppedahl uses for his recorded lectures on patent law practice. 

During the trademark prosecution, the USPTO examining attorney initially suggested that "due to the length of the proposed mark, consumers may consider the sound to be a mere entertaining prelude to the sound recording, more suitable as a copyrightable work than as a trademarkable source indicator."  Oppedahl responded by pointing-out that the PTO had registered the THX sound recording [THX.MP3] which is apparently 25–seconds in length as registered.  I recently (and unsuccessfully) attempted to use a similar argument when pulled-over for speeding.  Apparently, I have no right to speed just because others speed without getting caught. 

The USPTO has registered a number of sound marks, including the NBC chimes in 1972.  Harley Davidson eventually withdrew its application to register a mark on the sound made by the roar of its V-Twin engine.  

 

A Trademark Justification for Design Patent Rights

I have posted a new draft-article to SSRN entitled A Trademark Justification for Design Patent Rights. The article is currently in the editing process and will hopefully be published later this year in the Harvard Journal of Law & Technology.

As the title suggests, I argue that trademark theory offers the best modern justification for ongoing design patent rights. I suggest that design patents serve as an alternative rule of evidence for trade dress rights and are especially useful when trade dress rights are unavailable (or not yet available).

The Abstract: In a series of cases spanning more than one hundred years, courts and the US patent office have made clear that design patents are not to be justified by a fact that the newly invented ornamental design aids in distinguishing a company's product from those of its competitors. This article reverses that conclusion and argues instead that the trademark-like distinctiveness function that helps eliminate customer confusion is the most compelling policy justification for the continued protection of design patent rights in the US.  In cursory language, a number of courts have suggested that the foundation of design patents policy follows the same incentive-to-create approach of copyright and utility patent law. I tentatively reject this traditional incentive model as unlikely to be important in most situations involving ornamental designs.  Rather, I suggest the better justification for design patent doctrine lies in the notion that design patent rights serve as an alternative rule of evidence for trade dress protection.  However, design patents are not merely a parallel alternative to trade dress.  Rather, the existence of practical differences between the doctrines means that design patents rights are available in situations where trade dress protection is unavailable or uncertain.

This article presents a new set of empirical results to support the theoretical construct that design patents fill a gap in trade dress law protection.  Based on the data, I tentatively reject the oft-stated conventional wisdom that design patents are worthless for many because procurement is too slow, expensive, and difficult.  Rather, based on an analysis of the prosecution history files of a large sample of recently issued design patents, I conclude that the current design patent examination system operates as a de facto registration system.  Notably, more than ninety-eight percent (98%) of the patents in my study were issued without the Patent Office challenging their inventiveness. The dramatic rise in the number of design patents being issued indicates that designers find value in design patent protection, and a study of parallel design patent and trade dress litigation suggests that design patents are serving as a back-up or replacement for trade dress rights.

Notes:

  • Download the article at http://ssrn.com/abstract=1656590 and click on “One-Click Download”.
  • E-mail comments to me dcrouch@patentlyo.com.
  • If you think my conclusions are obvious, it may be because I have been making similar suggestions on Patently-O for the past few years. Or else your standards are too high. :)