The U.S. Supreme Court has granted certiorari in Dewberry Group, Inc. v. Dewberry Engineers Inc., a trademark damages case focused on how corporate separateness principles apply to disgorgement remedies under the Lanham Act, 15 U.S.C. § 1117(a). The Fourth Circuit’s decision affirmed a $43 million disgorgement award against petitioner Dewberry Group (DG) for trademark infringement, an amount that included profits earned by DG’s “legally separate” corporate affiliates. Apparently, the affiliates were “single-purpose entities,” also privately owned by John Dewberry, whose sole function was to own commercial properties serviced by DG.
Pierce the Veil: In its literal sense, a veil is a delicate fabric that separates the visible from the concealed, a barrier that can be easily lifted or parted. However, the phrase has a history of extending beyond the material world, with a veil often serving as a boundary between the physical and spiritual realms in our universe. Many of us go through life, only occasionally glimpsing beyond this veil into the hidden spiritual dimensions that, according to story tellers, lie alongside our own. In the corporate world, the veil of corporate personhood serves to shield the owners from personal liability, creating a legal fiction that separates the actions of the company from those of its shareholders. This veil of protection is not impenetrable, however, and can be pierced by the courts in cases of serious misconduct or wrongdoing, exposing the owners to personal responsibility. Although the truth of owner identity may already be known, piercing the corporate veil removes the protection against responsibility by attempting to holding accountable those who would misuse its protections. But, the legal doctrine of corporate separateness is quite strong and I might venture that it is easier to pierce the veil of our spiritual realms than the corporate analogue. (more…)
The Federal Circuit’s recent decision involving Paul Hobbs and Hobbs Winery raises a number of important issues for anyone investing in celebrities or influencers. In the case, early investors in Hobbs Winery were unable to prevent Mr. Hobbs from using his name in other wine ventures, even though a registered mark on PAUL HOBBS was owned by Hobbs Winery. This case was decided on statutory grounds – with a holding that minority owners in a company are not authorized to bring a TM cancellation to protect a mark held by the company. This is an important decision because it prevents the TTAB from being used to settle internal corporate management issues. (more…)
In its initial decision, the TTAB dismissed iFIT’s opposition to ERB’s I-FIT FLEX registration — finding no likelihood of confusion because the goods were in separate markets. iFIT is a major manufacturer of exercise equipment like treadmills and stationary bikes and holds several trademark registrations for IFIT marks covering fitness machines, online fitness training services and content, software, and some ancillary products like apparel. ERB Industries applied to register I-FIT FLEX for protective and safety eyewear sold at hardware stores such as Home Depot. Although the two brands are at-times sold in the same online store (Amazon.com and Walmart.com) this type of overlap was not sufficient for the TTAB. In its decision, the TTAB rejected iFIT’s relatedness argument using an analogy to racecar drivers and chemists. The TTAB reasoned that while some racecar drivers and chemists may use safety glasses, that doesn’t mean safety glasses are related to racecars or to chemicals like ammonia.
iFIT appealed the Federal Circuit, and most recently Federal Circuit granted (more…)
In this appeal, the Federal Circuit affirmed a Trademark Trial and Appeal Board (TTAB) decision sustaining an opposition proceeding and refusing registration of the standard character mark #TODECACHO for hair combs. Procedural and Substantive: the Federal Circuit held that the TTAB properly allowed Framboise to extend its trial period; and that substantial evidence supported the TTAB’s finding that Framboise established prior use. Opinion by Judge Lourie, joined by Judges Linn and Stoll.
In Brazilian Portuguese the colloquial phrase – “to de cacho” – is often used to mean “I am angry.” In the context of this case, however, it references difficult to control curly hair. (more…)
In re Charger Ventures, — F.4th. —, 22-1094 (Fed. Cir. 2023)
In this trademark case, the Federal Circuit affirmed a decision by the Trademark Trial and Appeal Board (TTAB) denying registration of the mark SPARK LIVING for residential real estate, based upon the prior registration of SPARK for commercial real estate. The prior registration is tied to Spark Co-working spaces that started in Baltimore and have now expanded to several other cities.
Charger presented several arguments centering on the du Point factors used to determine whether a proposed mark “so resemble a registered mark as to be likely, when used on or in connection with the goods or services of the applicant, to cause confusion, mistake, or to deceive.” Section 2(d).
An interesting discussion in the case focuses on the weakness of the prior mark. Although the tribunals agreed that it was potentially weak, it is still a registered mark and therefore subject to protection. Further, Charger’s trademark application proceeding is not a proper arena for challenging the validity of a trademark held by someone else. This is especially true here since the owner of the prior mark did not file an opposition.
A second, interesting aspect of the decision focuses on the “LIVING” portion of the proposed mark. That word is generic with regard to residential housing and, in addition, the applicant had disclaimed the word. Still, likelihood of confusion question should focus on comparing the entire proposed mark. The applicant argued that the TTAB had improperly given no weight to the LIVING portion. But, the appellate court affirmed, holding that the Office was correct to focus attention on the dominant portion of the mark. Here, the TTAB had quickly considered the impact of LIVING, but concluded that it offered no meaningful distinction.
Finally, the appellate court agreed that there was no reason to distinguish between commercial and residential real estate.
Throughout its entire review, the court appeared to agree with the TTABs conclusions, but noted that it would give deference to TTAB factual conclusions so long as supported by substantial evidence.
The Court did find one error by the TTAB, but concluded that it was harmless. In particular, the lower tribunal had failed to expressly indicate what weight it accorded to each of the du Point factors. Although the TTAB decision lacked clarity on this point, the appellate panel concluded it could sufficiently discern the agency’s path of reasoning.
Apple Records was founded by The Beatles in 1968 and quickly became a success, producing many hit records in the late 1960s and early 1970s. Apple Computer Company was founded in the mid-1970s and almost immediately sued for trademark infringement by Apple Corps (the parent company of Apple Records). The companies eventually settled the case with Apple Computer paying $80k and agreeing to stay out of the music business. The companies clashed again in the 2000s as Apple Computer (now Apple Inc.) expanded into music via iTunes and other services. The two eventually reached another settlement that transfers substantial rights over to Apple Inc. to use the mark in connection with its music-related products and services.
In 2015 Apple began using the mark APPLE MUSIC as its new music streaming service. It also filed to register a trademark on the mark.
Meanwhile, Charlie Bertini created his band AppleJazz Band back in 1984 to perform at the AppleJazz festival. He also created the AppleJazz record label. Bertini filed an opposition to Apple’s TM registration which the TTAB eventually dismissed. On appeal here, however, the Federal Circuit has reversed — holding that Apple had not proven a sufficient right of priority.
Tacking: The basic issue in the case is whether Apple Inc. can claim priority use back to the founding of Apple Records in 1968 (or sometime before 1984). Of importance, the pre-84 use of Apple mark was solely for “gramophone records” and other record formats. In its registration application, Apple is seeking to register APPLE MUSIC for “15 broad categories of services, from the production and distribution of sound recordings, to presenting live musical performances, to providing websites featuring entertainment and sports information.” Slip Op.
On appeal, the Federal Circuit held that the tacking analysis must be pursued for each service listed its application.
The Board legally erred by permitting Apple to claim absolute priority for all of the services listed in its application based on a showing of priority for one service listed in the application. Tacking a mark for one good or service does not grant priority for every other good or service in the trademark application. A trademark owner must show tacking is available for each good or service for which it claims priority on that ground. . . . The trademark applicant cannot establish absolute priority for the full application simply by proving priority of use for a single service listed in the application.
Slip Op. Here, Apple has not shown that taking is proper for live musical performances and therefore the application must be rejected. On remand, Apple will likely be able to narrow its application to only services that are properly covered by its assignment from Apple Records.
In her analysis, Federal Circuit Chief Judge Moore repeatedly stated that tacking is an exception to the ordinary rule and should be narrowly construed. American courts “uniformly apply the tacking doctrine narrowly.” Although tacking allows for minor changes in services and in the mark itself, tacking requires “substantial identity.” “[G]oods or services must be substantially identical for tacking to apply.” Id. In the context here, in order to have tacking for musical performances “Apple must therefore show live musical performances are substantially identical to gramophone records.” Although substantial identity is a question of fact, the Federal Circuit concluded that there was no need for the TTAB to determine this question — “no reasonable person could conclude … that gramophone records and live musical performances are substantially identical.”
Accordingly, Apple is not entitled to tack its use of APPLE MUSIC for live musical performances onto Apple Corps’ 1968 use of APPLE for gramophone records. Because Apple began using the mark APPLE MUSIC in 2015, Bertini has priority of use for APPLE JAZZ as to live musical performances. We therefore reverse the Board’s dismissal of Bertini’s opposition to Apple’s application to register APPLE MUSIC.
Id.
Note that Apple has substantially moved-on from this issue and redid its logo as shown below using a design-plus-word mark.
Reddit: Anyone can start a subreddit, and back in 2012 Jaime Rogozinski started r/WallStreetBets. Over the years, the site attracted millions of subscribers talking about aggressive trading strategies; providing middle-school humor; and pumping-up various stocks (e.g., GameStop).
In 2020, Reddit removed Rogozinski from his role controlling the subreddit as moderator, concluding that he was “attempting to monetize a community.” Rogozinski had published a book titled WallStreetBets and also filed trademark registration application for the mark WALLSTREETBETS, with him as the owner. Of course, lots of folks are monetizing their subreddits, but I have not heard of others registering a TM on the subreddit name. Immediately after removing Rogozinski from control, Reddit filed competing registration applications for the same mark and continues to control the subreddit. Opposition proceedings are now pending before the TTAB.
Reddit claims control and ownership because the subreddit is on its site and under its control; Rogozinsky argues that he did all the work building the brand for himself – not for Reddit. The issues in this case are interesting because they are similar to those being debated with regard to AI ownership and attribution. Here, the difference is that we have a corporate owner rather than an AI. And, although both the company and Rogozinsky had input in the creation — what really made this valuable is the input and connection to millions of users. Similarly, AI works well only if it has good input data — typically obtained by scooping up and examined up so many copyrighted works and user data.
In addition to the opposition proceedings, Rogozinski has now sued Reddit in Federal Court, asserting infringement of his unregistered WallStreetBets mark; infringement of his registered mark WSB; as well as violations of contract, rights of publicity, and duty of good faith and fair dealing. James R. Lawrence, III is representing the plaintiff.
Joseph Phelps Vineyards v. Fairmont Holdings (Fed. Cir. 2017)
Phelps Vineyards has been selling its INSIGNIA wine for the past 40 years — often at $200+ per bottle. In 2012, Fairmont received its federal registration for the mark ALEC BRADLEY STAR INSIGNIA for cigars. Phelps Vineyard petitioned for cancellation before the Trademark Trial and Appeal Board (TTAB).
Although different market areas, Phelps Vineyards argued that the fame of its mark increased the likelihood of confusion. However, the TTAB rejected that argument – finding that “Petitioner’s mark is not famous” and thus gave that DuPont factor no weight. On appeal, the Federal Circuit has vacated that decision – finding that “fame” in the likelihood of confusion analysis is not a binary yes/no consideration but rather “varies along a spectrum” from not famous at all to extremely famous: think Chester Arthur to Donald Trump. Note here – the DuPont factor of fame is totally different from dilution fame, which is a yes/no question.
In looking at the facts of the case here, the appellate panel noted substantial evidence that INSIGNIA wine “is renowned in the wine market and among consumers of fine wine. . . . We are perplexed at the Board’s finding that INSIGNIA wine has no ‘fame,’ giving no discernable weight to this factor. . . . The factor of ‘fame’ warrants reasonable weight, among the totality of the circumstances.”
On remand, the TTAB will take-up the case again and determine whether this change impacts the results in any way. Of course, a conclusion that INSIGNIA is famous in the wine business certainly does not directly lead to the conclusion that the mark ALEC BRADLEY STAR INSIGNIA is confusingly similar when used to sell cigars.
An interesting aspect of the decision is that it was written as a per-curiam opinion of the court (Judges Newman, Dyk, and Wallach). However, Judge Newman also penned a concurring opinion noting two additional errors made by the board:
Although the Board found that the wine and cigars are sold in the same channels of trade to the same purchasers, it did not further explore the DuPont factor of “relatedness.”
In considering the likelihood of confusion of the marks, the Board did not consider Fairmont’s actual use of its mark that placed the word INSIGNIA in a dominant format – raising the likelihood of confusion.
Since these notations are in the concurring opinion, the TTAB is not directly bound to follow Judge Newman’s suggestions, but will do well to given them full consideration on remand.
