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Georgia IP Litigation: October 2012

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Wednesday, October 31, 2012, 5:56 PM

Coach Files Trademark Counterfeiting Complaint in Southern District of GA

On October 26, 2012, New York-based Coach, Inc. and Coach Services, Inc. (collectively “Coach”) filed a complaint in the Waycross Division of the Southern District, alleging that defendant Teresa J. Moore d/b/a Douglas Gold Buyers & Jewelry Store sold counterfeit merchandise bearing “Coach Trademarks,” and that Ms. Moore infringed those marks.

Coach’s complaint alleges that in November 2011, its private investigator observed that Ms. Moore’s store was displaying handbags, wallets, and shoes bearing the “Coach Trademarks,” and that as of January 16, 2012, Ms. Moore was offering, on a Craigslist site, a gold bracelet bearing the marks shown below:

Coach Trademarks in U.S. Trademark Reg. Nos. 3,696,470 (left) and 3,413,536  (right)

Coach further alleges that these uses of its marks were without Coach’s permission.  Its complaint requests, among other things, injunctive relief, “statutory damages of $2,000,000 per counterfeit mark per type of Infringing Product”[1] or, alternatively, an award of actual damages and profits, with such an award to be trebled.

As stated by Eleventh Circuit, “The Lanham Act prohibits, among other things, the use in commerce of a counterfeit trademark in a manner likely to cause confusion; and the Act further provides that anyone using a counterfeit trademark in such manner shall be liable in a civil action to the registrant of the trademark.”[2]  “If the infringement is intentional, . . . § 1117(b) governs: unless the court finds extenuating circumstances, treble damages and attorneys’ fees are mandated.”[3]

Proof of intent necessary to recover treble damages and attorneys’ fees under § 1117(b) may be established by proof that the defendant was “willfully blind.”[4]  “Under the doctrine of willful blindness, ‘knowledge can be imputed to a party who knows of a high probability of illegal conduct and purposefully contrives to avoid learning of it.’”[5]  Whether the defendant was “willfully blind” is a question of fact, considering the totality of the circumstances.[6]  Interestingly, the Eleventh Circuit recently refused to apply the concept of willful blindness to the defense of trademark fraud (see prior post).

In addition to civil penalties, criminal liability may be imposed for intentional trademark counterfeiting.  “Section 2320 of the Trademark Counterfeiting Act was enacted in order to increase the sanctions for the counterfeiting of certain registered trademarks above the purely civil remedies available under the [Lanham Act].”[7]

The case is Coach, Inc. and Coach Services, Inc. v. Teresa J. Moore d/b/a Douglas Gold Buyers and Jewelry Store, No. CV512-125, filed 10/26/12 in the U.S. District Court for the Southern District of Georgia, Waycross Division, assigned to Chief Judge Lisa G. Wood, and referred to Magistrate Judge James E. Graham.   

[1] Under the Lanham Act, a plaintiff establishing that the defendant used a counterfeit trademark may, anytime before final judgment in the trial court, elect to recover statutory damages in lieu of an award of profits and actual damages.  “If the court finds that the use of the counterfeit mark was willful,” that plaintiff may recover “not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.”  15 U.S.C. § 1117(c).
[2] Chanel, Inc. v. Italian Activewear of Fla., Inc., 931 F.2d 1472, 1475 (11th Cir. 1991).
[3] Id. at 1476 (italics in original) (discussing 15 U.S.C. § 1117(b)).
[4] Id.
[5] Nike, Inc. v. Variety Wholesalers, Inc., 274 F.Supp.2d 1352, 1369 (S.D. Ga. 2003) (quoting Williams v. Obstfeld, 314 F.3d 1270, 1271 (11th Cir. 2002)).
[6] See Chanel, 931 F.2d at 1476.
[7] United States v. Torkington, 812 F.2d 1347, 1350 (11th Cir. 1987) (discussing 18 U.S.C. § 2320).

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New Patent Cases in the Northern District of Georgia

A summary of recent patent case filings in the Northern District of Georgia is below.

Pedicure Business Sues Former Partner Over Foot Tub Design Patent

On October 23, 2012, Salon Spa Supply LLC ("SSS") of Norcross, Georgia, filed a Verified Complaint for Injunctive Relief and Damages against Touspa, LLC ("Touspa") of Atlanta, Georgia, Minh-Tuan Jgoc Hoang ("Tony Huang") of Tucker, Georgia, and Tran Pham of Loganville, Georgia.  The 67-page complaint includes nine counts, including design patent infringement, breach of contract, breach of fiduciary duty, tortious interference with contractual relations, unfair competition and false designation of origin under the Lanham Act, and unfair competition under the Georgia Uniform Deceptive Trade Practices Act.

The lengthy complaint details the story of a broken partnership involving nail salons, foot tub designs, and overseas illegal activity.  The primary focus of the complaint is on a certain partnership agreement and a non-compete agreement, which SSS contends have been breached.  SSS alleges that it is the owner of all right, title, and interest to U.S. Patent Number D622,858 S.  According to SSS, Tony Huang, while still a partner at SSS, shipped a sample of SSS's patented foot tubs to a relative in Vietnam for the purposes of copying and mass-producing the tubs.  SSS claims that shortly thereafter Huang left SSS and started Touspa, which now produces the allegedly infringing foot tubs.  Then the defendants allegedly opened a competing nail salon within an area prohibited by the non-compete agreement.

SSS is asking the Court for a variety of relief, including injunctive relief and liquidated damages of $144,000 pursuant to the non-compete agreement, actual and punitive damages, costs, and attorney's fees.

The case is Salon Spa Supply LLC v. Touspa, LLC et al., No. 1:12-cv-03701-AT, U.S. District Court for the Northern District of Georgia, Atlanta Division, and is assigned to U.S. District Judge Amy Totenberg. 

Architectural Wall Design Patent Action

On October 24, 2012, 3form, Inc. ("3form") of Salt Lake City, Utah, filed a complaint against Meridien Accents, Inc. ("Meridien"), a Florida corporation with its principal place of business in LaGrange, Georgia, alleging infringement of its design patent directed to an architectural wall design.

3form claims to be the owner of all right, title, and interest in U.S. Patent No. D621,068 S, titled "Architectural Panel with Thatch Reed Design."  3form alleges that Meridien's products designated as "MA9002" and "MA9054" infringe the '068 patent.  3form also alleges that Meridien's actions have been willful, such as to make the case exceptional under 35 U.S.C. §§ 284 and 285 and entitle 3form to enhanced damages and attorney's fees.

The case is 3form, Inc. v. Meridien Accents, Inc., No. 3:12-cv-00156-TCB, U.S. District Court for the Northern District of Georgia, Atlanta Division, and is assigned to U.S. District Judge Timothy C. Batten. 

UPDATE: The parties have settled and a permanent injunction was entered on November 13, 2012 (see November 16 post).

Disposable Cooking Thermometer Patent Case

On October 29, 2012, Volk Enterprises, Inc. ("Volk") of Alpharetta, Georgia, filed a complaint against Jaccard Corporation ("Jaccard") of Orchard Park, New York, alleging that Jaccard's use and sale of its "Safe Cook Timers" infringe two Volk patents.

Volk claims to be the owner of all right, title, and interest in U.S. Patent No. 5,799,606 and U.S. Patent No. 5,988,102, both titled "Pop-Up Temperature Indicating Device."  Volk alleges that Jaccard's use and sale of "disposable cooking thermometers and temperature indicating devices for use in cooking food" sold under the "Safe Cook Timers" name infringe the '606 and '102 patents.  Volk also contends that Jaccard's alleged infringement has been willful, and that Volk has and continues to suffer immediate and irreparable injury as a result of Jaccard's activity.  According to the complaint, Volk claims to be entitled to damages, treble damages, attorneys' fees, costs, and preliminary and permanent injunctive relief.

The case is Volk Enterprises, Inc. v. Jaccard Corp., No. 2:12-cv-0253-WCO, U.S. District Court for the Northern District of Georgia, Gainesville Division, and is assigned to U.S. District Judge William C. O'Kelley.

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Friday, October 26, 2012, 6:46 PM

"Bo Diddley" Rectangular Guitar Body Design the Subject of Trade Dress Case Against Maker of Child-Oriented Guitars

Classic rock fans may readily associate the name Gretsch with the late George Harrison’s Beatlemania-era “Duo Jet” electric guitar, a design reproduced as a limited-edition controller for The Beatles: Rock Band video game.  However, it is another Gretsch guitar design, associated with an even earlier rock pioneer, that is the subject of a new lawsuit filed in the U.S. District Court for the Southern District of Georgia.

On October 24, 2012, Fred W. Gretsch Enterprises, Ltd. ("Gretsch"), based in Pooler, Georgia, sued New York-based Loog Guitars LLC ("Loog") in the Savannah Division, regarding claimed rights to a rectangular guitar body. 

Embodied in at least its G5810 Bo Diddley model, Gretsch's registered rectangular guitar design is shown below.  U.S. Trademark Registration No. 2,357,459 ("the '459 Registration") states that "the dotted lines are not a feature of the mark, but serve to indicate the position of the mark."  Yet the "delineation," if you will, between what is dotted and what is solid is somewhat unclear if one looks only at the drawing in the '459 Registration (below left).  An examination of the drawing that Gretsch submitted with its trademark registration application (below right) more clearly distinguishes between the dotted and solid lines of Gretsch's guitar body design.  The '459 Registration does state that "the mark consists of a rectangular configuration of a guitar body."

Drawing in Gretsch's '459 Registration (left) shown beside drawing in trademark registration application (right).

Discussing its design, Gretsch states: "Beginning in 1958, the Gretsch company supplied a rectangular Gretsch guitar to rock legend Bo Diddley, who famously used that guitar in his subsequent public performances."  Gretsch further alleges: "In 1999, Gretsch reintroduced the classic Gretsch rectangular guitar, which has been continuously sold to the public since that time."  The '459 Registration issued on June 13, 2000 and identifies Gretsch as the registrant.  "The Rectangular Guitar Trade Dress," alleges Gretsch, has become widely known in the guitar industry, and the purchasing public has come to recognize its distinctive shape as an indicator of a Gretsch guitar."

The accused Loog I guitar, as shown an Loog's website, is depicted below.

Loog I guitar
The Loog I is a 3-string acoustic guitar that, according to Loog's website, "makes it fun and easy for kids to play music."  The guitars are shipped in unassembled form pursuant to the website's stated philosophy that "[b]uilding a guitar is an essential part of understanding and loving the instrument.  When you build your own guitar you develop a deep connection with it, and that is why the Loog guitar ships unassembled for parents and children to build at home."  Further explaining its product in its "About Us" section of its website, Loog states:

The Loog Guitar started as an academic project in 2010 when Rafael Atijas developed the concept as his Master’s thesis at New York University. The fact that The Loog Guitar was conceived in a university actually explains a lot about the company's culture: our main goal is not to make the most profit, but to offer a product that is unique and well-designed.
Gretsch alleges that the Loog I model guitar is "confusingly similar to and infringes the Rectangular Guitar Trade Dress," that it had written letters demanding that Loog stop using the shape shown, and that Loog refused Gretsch's demands.
Gretsch's complaint asserts counts of trademark infringement and false designation of origin under the Lanham Act, common law trademark infringement, and violation of the Georgia Uniform Deceptive Trade Practices Act.  Adding the allegation that Loog's acts "are likely to dilute the distinctive quality of Gretsch's Rectangular Guitar Trade Dress and injure Gretsch's reputation," the complaint also asserts a count for trademark dilution under Georgia law, O.C.G.A. § 10-1-451(b).  "Georgia dilution law neither requires a trademark to be famous nor demand the parties to be in competition. . . . Although fame is not a prerequisite to recovery, the mark must be 'distinctive.'  To be considered distinctive, the mark must be at least descriptive with a secondary meaning."[1]
The case is Fred W. Gretsch Enterprises, Ltd. v. Loog Guitars LLC, No. 4:12-cv-0264-WTM-GRS, filed 10/24/12 in the U.S. District Court for the Southern District of Georgia, Savannah Division, assigned to U.S. District Judge William T. Moore, Jr.

Note:  This marks the second trademark lawsuit filed in the Southern District in a little over a month.  Regent University filed a trademark action there on September 20.

[1] Corbitt Mfg. Co., Inc. v. GSO Am., Inc., 197 F.Supp.2d 1368, 1379 (S.D. Ga. 2002).

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Thursday, October 18, 2012, 11:38 AM

Two Northern District Courts Deny Motions to Transfer Venue

Very different factual and procedural backgrounds in two Northern District of Georgia cases led to the same result: denial of a motion brought under 28 U.S.C. § 1404(a) to transfer the action to another district court.

Motions to Transfer Venue in the Eleventh Circuit

A district court may transfer a civil action to another district, one in which the case could have originally been brought, "[f]or the convenience of parties and witnesses, in the interest of justice ...."  28 U.S.C. § 1404(a).  Thus, a court deciding a motion to transfer must first determine whether the case could have been brought in the transferee district.  Venue in patent infringement cases is governed by 28 U.S.C. § 1400(b), which allows an action to be filed in the "judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."
If it is determined that venue would be proper in the transferee district, the court must then balance private and public factors under the prevailing Circuit case law.  In the Eleventh Circuit, courts consider: (1) the convenience of the witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interests of justice, based on the totality of the circumstances" (the "Manuel factors"). [1]  Upon evaluating these factors, courts have broad discretion whether to transfer a case under Section 1404(a).

Plaintiff Changes Its Mind About Preferred Forum

Typically, motions to transfer are filed by defendants seeking to shift the fight to a more friendly venue.  In this unusual case, the plaintiff, IP Co., LLC ("IPCO"), a patent holding company based in Atlanta, Georgia, decided six years after the case was filed that it wanted to move the action to the Eastern District of Texas. 
In October 2005, Tropos Networks, Inc. ("Tropos"), a Delaware corporation with its principal place of business in Sunnyvale, California, filed a declaratory judgment action in the Northern District of California seeking a judgment declaring two IPCO patents, U.S. Patent No. 6,249,516 (the '516 patent) and U.S. Patent No. 6,044,062 (the '062 patent), invalid, unenforceable and/or not infringed.  In March 2006, IPCO filed a patent infringement action in the Northern District of Georgia alleging that Tropos' Wi-Fi mesh network products and services infringed the '516 and '062 patents.  The defendants in each action filed motions to dismiss or transfer the case to the alternative Court.  The California Court transferred Tropos' action to the Northern District of Georgia in July 2006.  Several months later, Tropos moved the Georgia Court to stay the litigation pending USPTO reexamination of the '516 and '062 patents.  The Court granted the stay, which was in effect until the fall of 2011, at which point IPCO moved transfer the case to the Eastern District of Texas.
In an October 5, 2012 order, Judge Cooper first noted that "IPCO must show that at the time of its Complaint, Tropos resided, or committed acts of infringement and had a regular and established place of business in the Eastern District of Texas." [2]  IPCO failed to show that Tropos resided in the Eastern District of Texas.  IPCO alleged that Tropos was a Delaware corporation with "a national and international presence."  The Court found those allegations insufficient to prove residence in Texas.  Likewise, IPCO failed to prove that Tropos had a regular and established place of business in Texas.  IPCO alleged that Tropos had "customers all over the United States, and ... solicits Texan customers throught its website and holds conferences in Texas."  The Court held that the "regular and established place of business" standard requires more than simply doing business in a district, and contemplates a "permanent and continuous presence there." [3]  Thus, Judge Cooper found that IPCO had failed to establish proper venue in the Eastern District of Texas, and did not address the issues of personal or subject matter jurisdiction.
Nevertheless, the court found that even if venue in the Eastern District of Texas was appropriate, it was not a more convenient forum and the nine Manuel factors weighed against transfer.  The convenience of the witnesses, often considered the most important factor, weighed against transfer because the only identified witnesses to date were in Georgia.  Most significantly, IPCO conceded that it originally choose to file the action in the Northern District of Georgia and "a plaintiff's choice of forum should not be disturbed unless it is clearly outweighed by other considerations." [4]  Therefore, the Court found, based on the totality of the circumstances, that trial efficiency and the interests of justice would be served by maintaining venue in the Northern District of Georgia.

Court Denies GM and OnStar Bid to Transfer to Eastern District of Michigan 

Another Nothern District of Georgia case followed a more standard fact pattern.  Plaintiff Omega Patents, LLC ("Omega"), of Douglasville, Georgia, wholly owned by prolific solo inventor Kenneth E. Flick, filed an action in the Northern District of Georgia against General Motors LLC ("GM") and OnStar, LLC ("OnStar"), both Delaware limited liability companies headquartered in Detroit, Michigan, alleging infringement six patents relating to remote tracking and operation of motor vehicles.

In June 2012, shortly after filing their answers, the defendants moved to transfer the action to the Eastern District of Michigan, which they argued is a more convenient forum.  GM and OnStar, while conceding that they regularly conduct business in Georgia, contended that all of the relevant technical information and documents, as well as ten employees identified as potential witnesses, are located in Michigan.  Further, GM argued that certain technical documents relating to the accused products are highly sensitive and can only be accessed in a special "Reading Room" in the Eastern District of Michigan.  In its opposition, Omega identified Flick as a potential witness and also indicated a willingness to submit to a protective order that would require it to review GM's sensitive documents in the Reading Room.
In an October 4, 2012 order, Judge Duffey denied the defendants' motion to transfer to Michigan. [5]  In contrast to the case above, the Court first determined that the case could have properly been brought in the Eastern District of Michigan because GM and OnStar reside in that district.  The Court then evaluated the nine Manuel factors to determine whether transfer was appropriate:

  1. Convenience of the Witnesses:  The Court noted that this factor contemplates the convenience of non-party witnesses, not those witnesses closely aligned with the parties, such as employees. [6]  Though GM and OnStar identified ten employees in Michigan as potential witnesses and Omega identified one potential witness in Georgia, neither party identified any non-party witnesses who would be inconvenienced by trial in any particular forum.  Thus, the Court found this factor to be neutral.
  2. Access to Sources of Proof:  The Court observed that the parties each had relevant documents in their home states, Michigan and Georgia. The Court also found that to the extent that the limited availability of the sensitive GM documents created an inconvenience, it inconvenienced Omega.  Thus, the Court found this factor to weigh against transfer.
  3. Convenience of the Parties:  The Court may not simply shift inconvenience from one party to another, which GM and OnStar sought to do. [7]  As a result, this factor weighed against transfer.
  4. Locus of the Operative Facts:  In patent cases, the "locus of operative facts" is generally where the allegedly infringing product was designed, developed, and produced. [8]  Here, the accused products were designed, developed, and produced in Michigan, so this factor favored transfer.
  5. Ability to Compel Unwilling Witnesses: The Court combined this factor with factor 1 above.
  6. Relative Means of the Parties: The Court found this factor to be neutral because neither party indicated an inability to litigate in a particular forum.
  7. Familiarity with the Governing Law:  The Court found this factor to be neutral because both the Georgia and Michigan Courts are familiar with patent law.
  8. Weight Afforded to Plaintiff's Choice of Forum:  As noted above, a plaintiff's choice of forum should be given considerable weight, especially so where the plaintiff has chosen to litigate in its home forum. [9]  Thus, the Court found this factor to weigh strongly against transfer.
  9. Trial Efficiency and the Interests of Justice:  The Court did not find any evidence that the action would be resolved more quickly or easily in the Eastern District of Michigan, and thus found this factor to be neutral.
Judge Duffey found that only one of the factors favored transfer, while all of the others were either neutral or weighed against transfer.  Accordingly, the Court concluded that the "balance of the Section 1404(a) interests" does not favor transfer and that GM and OnStar's motion to transfer venue should be denied.  
[1] Manuel v. Convergys Corp., 430 F.3d 1132, 1135 & n.1 (11th Cir. 2005).

[2] IP Co., LLC v. Tropos Networks, Inc., 1:06-cv-585-CC, Order, Doc. # 88 (Oct. 5, 2012) (J. Cooper).

[3] HomeBingo Network, Inc. v. Chayevsky, 428 F. Supp. 2d 1232, 1249 (S.D. Ala. 2006) (quoting In re Cordis Corp., 769 F.2d 733, 737 (Fed. Cir. 1985)).  

[4] Ins. Co. of N. Am. v. Levin, No. 10-cv-60130, 2011 LW 1398473, at *2 (S.D. Fla. 2011).

[5] Omega Patents, LLC v. General Motors LLC et al., 1:12-cv-1192, Order, Doc. # 34 (Oct. 4, 2012) (J. Duffey).

[6] Trinity Christian Ctr. of Santa Ana, Inc. v. New Frontier Media, Inc., 761 F. Supp. 2d 1322, 1327 (M.D. Fla. 2010).

[7] United States v. $633,021.67, 842 F. Suppl 528, 535 (N.D. Ga. 1993).

[8] TouchTunes Music Corp. v. Rowe Int'l Corp., 676 F. Supp. 2d 169, 175 (S.D.N.Y. 2009).

[9]  Esfeld v. Costa Crociere, S.P.A., 289 F.3d 1300, 1311-12 (11th Cir. 2002).

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Tuesday, October 16, 2012, 4:11 PM

October Trademark Cases Filed in the Northern District of GA

The U.S. District Court for the Northern District of Georgia has seen continued activity in the filings of trademark cases, adding to the considerable number of such cases filed in Georgia federal courts in September and covered in several blog entries, including our October 1 entry.  Abstracted below are the October 2012 trademark cases filed in the Northern District.

Acworth-Based Publisher Asserts American Digger® Trademark Against Spike TV Entities

The renewal of a television show for the 2013 season has sparked a trademark lawsuit in the Atlanta Division.

According to a complaint filed on October 26, Anita and Grady R. (“Butch”) Holcombe, Jr. have, since December 2004, published a bi-monthly magazine called AMERICAN DIGGER® “dedicated to the hobby of metal detecting and founded to promote the responsible excavation and recovery of artifacts related to America’s heritage, for enjoyment and historical significance.”  On May 15, 2012, Mr. Holcombe received a federal registration for the AMERICAN DIGGER® mark.  The complaint alleges that in September 2012, Mr. Holcombe formed the plaintiff Greybird Publishers LLC (“Greybird”) to own and operate the magazine, and that Greybird acquired the trademark rights on October 4, 2012.  Greybird also, alleges the complaint, owns and operates the website www.americandigger.com, “and produces and distributes the AMERICAN DIGGER® Relic Roundup Internet radio program, which Mr. Holcombe co-hosts.”

Spike TV airs a program called “American Digger,” described on its website as follows:
Spike TV travels around the country uncovering hidden treasure found in the backyards of everyday Americans in “American Digger.”  This new unscripted original series follows former professional wrestler turned modern day relic hunter Ric Savage, as he and his team from American Savage target areas such as battlefields and historic sites in the hopes of striking it rich and capitalizing on unearthing and selling bits of American history. The only thing standing in their way are the homeowners themselves, who Savage must convince to allow them to dig up their property using state-of-the-art metal detectors and heavy-duty excavation equipment. What artifacts they find, they sell for a substantial profit, but not before negotiating a deal to divide the revenue with the property owners. The team from American Savage is comprised of recovery expert Rue Shumate, battlefield historian Bob Buttafuso, Ric’s wife Rita who manages the business and their 25-year old son Giuseppe, who provides tech support and is the “muscle” of the operation.
According to the Episode Guide of that website, the first episode of “American Digger” aired on March 21, 2012.  Shortly thereafter, alleges the complaint, “the Holcombes began receiving a barrage of calls, e-mails, and unfavorable comments on hobbyist forums from subscribers and hobbyists,” who believed that the TV show was related to Greybird’s magazine, and who were “alarmed by the show’s highly inflammatory and negative depiction of their hobby . . . .”  The complaint asserts that “Ms. Holcombe spent numerous hours attempting to correct these misperceptions.”

Greybird alleges that the Holcombes understood Spike TV’s show would only last one cycle and that the problems caused by that show would subside.  However, alleges Greybird, the Holcombes learned in August 2012 that the TV show would be renewed for the 2013 season.

Greybird’s complaint asserts counts of trademark infringement under the Lanham Act and Georgia common law; unfair competition under the Lanham Act, O.C.G.A § 23-2-55, and Georgia common law; trademark dilution under the Lanham Act and under O.C.G.A. § 10-1-451; violation of the Georgia Deceptive Trade Practices Act (O.C.G.A. § 10-1-370 et seq.); unjust enrichment; and misappropriation and conversion.

The complaint requests not only injunctive relief and compensatory monetary relief, but also enhanced damages and attorneys’ fees under the Lanham Act, as well as punitive damages under Georgia law.

The case is Greybird Publishers LLC d/b/a American Digger® v. Viacom, Inc., Spike Cable Networks Inc., Spike Digital Entertainment LLC, Spike Digital Entertainment Inc., and New 38th Floor Productions Inc., No. 1:12-cv-3741-JEC, filed 10/26/12 in the U.S. District Court for the Northern District of Georgia, Atlanta Division, assigned to Chief U.S. District Judge Julie E. Carnes.

Orlando-Based Filta Group, Inc. Sues Accused Holdover Franchisee Over Post-Termination Use of Marks for Cooking Oil Disposal Services

The Filta Group, Inc. (“Filta”), based in Orlando, Florida, describes its services as “providing cooking oil micro filtration services around the world to restaurants and other food establishments.” According the “About & Contact” section of its website, Filta was founded in the United Kingdom in 1996 and has been offering its services in the United States since 2002.  Filta (or its UK counterpart The Filta Group Ltd.) is the registrant named on federal trademark registrations for the marks FILTAFRY (U.S. Trademark Regs. Nos. 2,585,933 & 3,711,461) and FILTA ENVIORNMENTAL KITCHEN SOLUTIONS (U.S. Trademark Reg. No. 3,701,153).

On October 29, Filta filed suit in the Gainesville Division against Cumming-based Either Which Way Inc. (EWWI) and Daniel Van Klingeren for service mark infringement and unfair competition.  EWWI was dissolved in September 2010.[1]  According to the complaint, EWWI and Mr. Van Klingeren, its principal, entered into a franchising agreement with Filta in February 2008, but Filta terminated the contract in 2010 due to “various breaches of the Franchise Agreement.”   

The complaint further alleges that in late 2011, Van Klingeren filed for bankruptcy, failing to list any Filta assets, and that after bankruptcy was filed, Van Klingeren and EWWI: “(a) Held themselves out to be Filta franchisees or otherwise connected with the Filta brand and Filta system; and (b) Wrongfully used Filta’s service marks and/or trade marks to operate a competing business.”

Filta’s complaint asserts counts against EWWI and Van Klingeren for service mark infringement and for unfair competition under the Lanham Act (§ 43(a), 15 U.S.C. § 1125(a)) and under Georgia law (O.C.G.A. § 23-2-55). The Filta group seeks, in addition to injunctive relief: (a) “the Defendants’ post bankruptcy petition profits, (b) Filta’s post bankruptcy petition damages, and (c) the costs of the action, together with additional accrued interest, and whatever further relief this Court deems necessary and just.”  

The case is The Filta Group, Inc. v. Either Which Way, Inc. et al, No. 2:12-cv-255, filed 10/29/12 in the U.S. District Court for the Northern District of Georgia, Gainesville Division, assigned to U.S. District Judge William C. O’Kelley.

[1] According to the Georgia Secretary of State’s website, EWWI was dissolved on September 14, 2010.

Holiday Inn® Hotel Chain Brings Another Trademark Action Against an Accused Holdover Licensee

The last couple of months have now seen three trademark actions by hotel chains against accused holdover licensees. The first two that we covered dealt with the marks HOLIDAY INN® and
RODEWAY INN®.   The most recent one concerns a hotel operator in Vancouver, Washington and, once again, the HOLIDAY INN® family of marks.

On October 16, 2012, Holiday Hospitality Franchising, LLC (“HHFL”) and Six Continents Hotels, Inc. (collectively "Plaintiffs") sued Premier NW Investment Hotels, L.L.C. (“Premier”) and its manager and owner Michael DeFrees for federal service mark infringement, dilution under the Lanham Act, and unfair competition under the Lanham Act and Georgia common law.  Plaintiffs asserted a count solely against Premier for breach of a license agreement, and a count solely against Mr. DeFrees, who had become a guarantor regarding that license, for breach of his guarantee.

The complaint alleges that HHFL and Premier entered into a License Agreement on December 11, 1998, which “authorized and required” Premier to use Plaintiffs’ HOLIDAY INN® marks in the operation of a HOLIDAY INN EXPRESS® hotel in Vancouver, Washington.  “As an inducement to HHFL to execute the License Agreement,” alleges the complaint, Mr. DeFrees executed a guarantee that same date, December, 1998.  The License Agreement terminated on December 31, 2010, according to the complaint.

Plaintiffs’ allegations recite unsuccessful pre-lawsuit efforts to get the defendants to completely disassociate themselves from the HOLIDAY INN® brand, which they allege was required by the License Agreement.  For instance, although Premier removed the term “HOLIDAY” and substituted for it the word “GATEWAY,” Plaintiffs did not deem this sufficient: HHFL wrote Defendants and pointed to their continued use of the same scripted style of text that appears in HHFL’s HOLIDAY INN EXPRESS® registration (see comparisons below).   For further example, Plaintiffs allege that Defendants continue to use the domain name www.vancouverwahie.com, with the letters “hie” standing for “Holiday Inn Express.”  The complaint and its exhibits refer to additional objections noted by Plaintiffs.
Mark appearing in U.S. Trademark Reg. No. 2,207,318

Excerpt from Exhibit N to Complaint, purporting to show a sign on Defendants' hotel

Part of the injunctive relief Plaintiffs request (in addition to compensatory monetary relief) is an order requiring Defendants to transfer the domain name to them, and to “deliver up for impoundment and destruction all HOLIDAY INN EXPRESS® signs including those on which the word ‘Holiday’ has been replaced with the word ‘Gateway.’”  Plaintiffs additionally request all expenses of litigation under Georgia’s “stubbornly litigious” statute, § 13-6-11, as well as attorneys’ fees under O.C.G.A. § 13-1-11[1] and 15 U.S.C. § 1117.

The case is Holiday Hospitality Franchising, LLC and Six Continents Hotels, Inc. v. Premier NW Investment Hotels, L.L.C. and Michael DeFrees, No. 1:12-cv-3608-RWS, filed 10/16/12 in the U.S. District Court for the Northern District of Georgia, Atlanta Division.  The case has been assigned to U.S. District Judge Richard W. Story.

[1] Under § 13-1-11, to obtain attorneys’ fees, the holder of a note or other evidence of indebtedness must first notify the debtor, after maturity of the obligation, of the option to pay both principal and interest on the obligation within 10 days after receiving the notice, without having to incur attorneys’ fees.  A claim for attorneys’ fees becomes void if the debtor makes that payment within that 10-day period.  O.C.G.A. § 13-1-11(a)(3) (2012).  Paragraphs 57 and 112 of the Complaint recite text reflecting that statutory language.

George Clooney, Julia Roberts File Right-to-Privacy and Unfair Competition Action Against Kennesaw-Based Projector Seller and "John Does 1-20"

On October 12, 2012, Hollywood celebrities George Clooney and Julia Roberts filed suit in the Atlanta Division against Digital Projection, Inc. ("DPI"), a seller of projectors and related items based in Kennesaw, Georgia.  Additionally sued are fictitiously-named "John Doe" defendants 1 through 20.[1] 

Mr. Clooney and Ms. Roberts claim that, without their permission, DPI and the other defendants "prominently used large photographs of Plaintiffs in Defendants' advertising, marketing, and promotions," including print advertisements, web pages, and video displays shown at trade shows.  “As such,” the complaint further alleges, “Defendants have infringed upon Plaintiffs’ Rights, and have intruded upon Plaintiffs’ privacy rights to be left alone and to control the use of Plaintiffs’ images, identities and personas in connection with commercial advertisements, including the right to refuse to appear in them.”

The complaint recites causes of action for violation of right of privacy under Georgia law, violation of Georgia’s Uniform Deceptive Trade Practices Act (O.C.G.A § 10-1-370 et seq.), unfair competition under O.C.G.A. § 23-2-55, false designation of origin under § 43(a) of the Lanham Act, and negligence.  Plaintiffs seek injunctive relief, compensatory damages, “profits received by Defendants as a result of the unauthorized use of Plaintiffs’ images,” and punitive damages.

Regarding the first cause of action, a federal court in Georgia recently stated: “[R]ight of publicity claims under state law are uniquely grounded in an individual's right to privacy and/or an individual's property right to control third-party use of their persona.”[2]  “Notably, the Eleventh Circuit has permitted such state law claims to proceed simultaneously with claims under the Lanham Act for trademark infringement.”[3]

The case is George Clooney and Julia Moder, professionally known as Julia Roberts v. Digital Projection, Inc. and Does 1-20, No. 1:12-cv-3569-JEC, filed 10/12/12 in the U.S. District Court for the Northern District of Georgia, Atlanta Division.  The case has been assigned to Chief U.S. District Judge Julie E. Carnes.

[1] “‘The name ‘John Doe’ is, and for some centuries has been, used in legal proceedings as a fictitious name to designate a party until his real name can be ascertained.’”  Milburn v. Nationwide Ins. Co., 228 Ga.App. 398, 400, 491 S.E.2d 848, 851 (1997) (quoting Black’s Law Dictionary 750 (5th ed. 1979)).  Fictitious party practice has been permitted in federal court when the plaintiff has been “able to describe an individual without stating his or her name precisely.”  White v. City of Atlanta, No. 1:07-cv-1739-WSD, 2007 WL 4553520, at *4 (N.D. Ga. Dec. 19, 2007).  Plaintiffs here allege upon information and belief that “Defendants, and each of them, were and are the agents, licensees, employees, partners, joint-venturers, co-conspirators, owners, principals, and employers of the remaining Defendants . . . .” (Complaint ¶ 8).
[2] Bogart, LLC v. Ashley Furniture Indus., Inc., No. 3:10-cv-39 (CDL), 2012 U.S. Dist. LEXIS 121787, at *36-*37 (M.D. Ga. Aug. 28, 2012).
[3] Id. at *37 (citing Tana v. Dantanna's, 611 F.3d 767, 772 & 783 (11th Cir. 2010)).

Infringement Action Filed Over "404-CUT-TREE" Trademark

On October 4, 2012, Norcross-based The Delbridge Group, Inc. d/b/a 404-CUT-TREE ("Delbridge") filed a trademark action in the Atlanta Division against defendants 404-CUT-TREE, Inc. and BAM Tree Experts, Inc. (collectively, "Defendants").

Delbridge is the named owner of U.S. Trademark Registration No. 3,934,225 ("the '225 Registration") for the mark 404-CUT-TREE® for "tree removal services," and of Georgia Service Mark Registration No. S-24222, registered on August 13, 2008 for the same mark, for "cutting, trimming, and pruning trees."  Delbridge's Amended Complaint (filed Oct. 9) alleges, among other things that Delbridge "has been in the business of tree removal, cutting, pruning, and trimming, since December 3, 1997, and that it maintains the website www.404cuttree.com.

Delbridge alleges that Defendants are using the identical mark "404-CUT-TREE" with the intent to trade upon the "goodwill and extensive recognition that [Delbridge] had already established in the marketplace for tree removal services."  The business name 404-CUT-TREE, INC. appears in the Georgia Secretary of State's website, listing the Cumming, Georgia address that Delbridge associates with the Defendants.  That website lists defendant BAM Tree Experts, Inc. as having the same address.  Delbridge charges that Defendants' registration of the "404-CUT-TREE" name with the Georgia Secretary of State's Office, and their use of that name, was done with the "dominant purpose" of palming off its services as those of Delbridge," and of "confusing consumers and persons in the trade as to the source or origin of such services."

Asserted against Defendants are counts for infringement of a federally-registered mark, false designation of origin under § 43(a) of the Lanham Act, and unfair competition under § 23-2-55 of the Official Code of Georgia.  Delbridge requests injunctive relief, including an order that "Defendant 404-CUT-TREE, Inc. [ ] change its corporate name to a name which is not confusingly similar to 404-CUT-TREE."  Delbridge also requests compensatory monetary relief in the form of actual damages of "at least $75,000" and Defendants' profits gained from use of the accused mark.  Delbridge additionally seeks trebling of the damages or profits due to the alleged willfulness of the infringement, as well as attorneys' fees and costs.

The case is The Delbridge Group, Inc. d/b/a 404-CUT-TREE v. 404-CUT-TREE, INC. and BAM Tree Experts, Inc., No. 1:12-cv-3465-SCJ, filed 10/04/12 in the U.S. District Court for the Northern District of Georgia, Atlanta Division.  The case has been assigned to U.S. District Judge Steve C. Jones.

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Tuesday, October 9, 2012, 10:16 AM

"SURFER ON ACID" Tobacco Seller Files Appeal with 11th Circuit

On September 19, 2012, California-based Fantasia Distribution, Inc. ("Fantasia"), a defendant in a trademark case, filed an appeal with the Eleventh Circuit.  The court below, the U.S. District Court for the Southern District of Florida, had entered judgment against Fantasia, permanently enjoining it from using the mark SURFER ON ACID for its tobacco products, and ruling that the plaintiff was entitled to awards of profits and costs of the action.

The plaintiff in the case, Miami-based Drew Estate Holding Company, LLC ("Drew Estate"), according to the district court, is the exclusive U.S. licensee of rights under U.S. Trademark Reg. No. 2,440,808, for the mark ACID, for cigars ("the '808 Mark") and U.S. Trademark Reg. No. 3,687,647, for the mark ACID CIGARS (and Motorcycle Design), for "cigars, tobacco, and related products, namely cigar boxes, cigar and cigarette boxes, ashtrays, cigar bands, cigar cutters, humidors, and cigar tubes" ("the '647 Mark").  Drew sued Fantasia for federal unfair competition (false designation of origin) under § 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), alleging that the SURFER ON ACID mark infringed the '808 and '647 Marks.  Depicted below are examples of the asserted and accused marks as used.

Drew Estate moved for summary judgment on its federal unfair competition claim, arguing that there was no genuine dispute concerning its standing to bring suit, its priority of use over Fantasia, or likelihood of confusion between the asserted and accused marks.  The Southern District of Florida had little problem agreeing with Drew Estate that standing existed, based on the language of the license agreement between Drew Estate and its licensor.  The court also held that priority of use existed, even though Drew Estate had not used its marks on the particular tobacco product sold by Fantasia, because that product was sufficiently related to the products on which Drew Estate did use its marks before Fantasia began selling its tobacco products. 

Included within the court's multi-factor likelihood of confusion inquiry[1] was the observation: “If the public has seen an ACID product featuring a figure on a motorcycle, the public could reasonably believe that SURFER ON ACID represented the same company's product with a new surfer theme.”[2]  Of particular significance to the court were Fantasia’s counterclaims against Drew Estate for unfair competition and trademark infringement, in which Fantasia alleged that the marks were confusingly similar to one another.  Though the court found that the doctrine of judicial estoppel did not apply, since Fantasia’s position concerning its counterclaims did not induce the court to make any finding in Fantasia's favor (indeed, it wound up dismissing those counterclaims), it found Fantasia's position “highly persuasive evidence of the similarity of the marks.”[3]

Consequently, the Southern District of Florida granted Drew Estate's motion.  On July 6, it entered a final judgment and permanent injunction against Fantasia.  In subsequent orders, it ruled that Drew Estate was entitled to an award of $311,509 in profits under 15 U.S.C. § 1117(a), plus $13,646.23 in costs, but deferred ruling on Drew Estate's motion for attorneys fees pending resolution of the appeal.  The court also awarded a third-party defendant $8,578.33 in costs and similarly deferred ruling upon that party's motion for attorneys fees.
Drew Estate and Fantasia have been litigating before the Trademark Trial and Appeal Board (TTAB) as well as in the court system.  Specifically, in December 2010, Fantasia had filed an application to federally register its SURFER ON ACID mark for certain tobacco products.  Drew Estate responded in May 2011 by filing a Notice of Opposition with the TTAB, citing the '808 and '647 Marks.  The TTAB suspended that proceeding in September 2011 pending final disposition of the civil suit in the court system.  On August 7, 2012 Drew Estate provided the TTAB with notice of the Southern District of Florida's final judgment, and on that basis requested that the TTAB enter judgment in that proceeding to reject Fantasia's registration application.  However, on September 27, 2012 Fantasia responded by notifying the TTAB of its appeal filed with the Eleventh Circuit, and requested that the TTAB maintain its suspension of proceedings pending the outcome of the Eleventh Circuit appeal. 

The Eleventh Circuit appeal is Drew Estate Holding Company LLC v. Fantasia Distribution, Inc., et al., No. 12-15083, docketed on October 1, 2012.

[1] “Likelihood of confusion involves a seven-factor inquiry into the: ‘(1) type of mark; (2) similarity of mark; (3) similarity of the products the marks represent; (4) similarity of the parties' retail outlets (trade channels) and customers; (5) similarity of advertising media; (6) defendant's intent; and (7) actual confusion.’”  Drew Estate Holding Co., LLC v. Fantasia Distrib., Inc., No. 11-21900, 2012 U.S. Dist. LEXIS 87380, at *23 (S.D. Fla. Jun. 25, 2012) (quoting Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1200 n.22 (11th Cir. 2001)).
[2] Drew Estate, 2012 U.S. Dist. LEXIS 87380, at *31.
[3] Id. at *29.

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Monday, October 8, 2012, 2:53 PM

Declaratory Judgment Action Filed over Pipe Coupling Patents

On October 3, 2012, Anvil International, LLC ("Anvil") of Portsmouth, New Hampshire, and Mueller Water Products, Inc. ("Mueller") of Atlanta, Georgia, filed a complaint against Victaulic Company ("Victaulic") of Easton, Pennsylvania, in the Northern District of Georgia seeking a declaration that the claims of Victaulic's U.S. Patent No. 7,086,131 ("the '131 patent") and U.S. Patent No. 7,712,796 ("the '796 patent") are invalid and are not infringed by Anvil or Mueller.

Anvil, a wholly-owned subsidiary of Mueller (which, as we reported here, recently filed an unrelated patent action in this district), claims to be a leading provider of services and products in the water infrastructure industry, including pipe fittings, pipe hangers, and piping support systems.  On September 24, 2012, Anvil unveiled its newest rigid pipe coupling, the "SlideLOK" coupling, at the MINExpo International 2012 trade show in Las Vegas.  According to the complaint, the SlideLOK coupling joins two pipe segments together and forms a water-tight seal at the connection point.  Plaintiffs claim that the coupling features a "patent-pending, pressure-responsive gasket" that alleviates gasket pinching and facilitates slide action.

Victaulic is a competitor in the pipe products field and is the owner of several patents for "grooved and plain-end mechanical pipe joining systems."  Plaintiffs contend that the '131 and '796 patents, both titled "Deformable Mechanical Pipe Coupling," are directed to interconnectable pipe coupling segments for joining facing end portions of pipe elements.  In January 2012, Anvil filed an inter partes reexamination request asking the USPTO to reexamine the only claim of the '131 patent.  According to the complaint, the USPTO granted the request and claim 1 of the '131 patent currently stands rejected under 35 U.S.C. § 102 and/or § 103 as unpatentable.  In February 2012, Anvil filed another inter partes reexamination request asking the USPTO to reexamine the claims of the '796 patent.  The USPTO granted the inter partes request with respect to certain claims but denied the request with respect to others.  Anvil then filed an ex parte reexamination request asking the USPTO to reexamine the claims of the '796 patent for which it denied Anvil's inter partes request.

The complaint alleges that Victaulic representatives approached Anvil's booth at the MINExpo show and, after inspecting samples of the new SlideLOK coupling, threatened that Anvil "would be prevented from selling the SlideLOK coupling in the near future."  Victaulic's representatives took several brochures for the SlideLOK coupling, as well.  The day after the MINExpo show concluded, Anvil received a letter from Victaulic's outside counsel requesting samples of the SlideLOK coupling for Victaulic's "evaluation vis-a-vis Victaulic's patent portfolio."  The following language from the letter, which is not mentioned in Plaintiffs' complaint, is worth noting: "We stress that Victaulic is not currently asserting that the SlideLok coupling or use of that coupling infringes any Victaulic patent."  Nevertheless, Plaintiffs claim that the letter, in conjunction with Victaulic's representatives' conduct at the trade show, the patent reexamination proceedings, and Victaulic's history of aggressive enforcement of its intellectual property rights against Anvil and third parties, made Plaintiffs "reasonably apprehensive that Victaulic will attempt to enforce its patent rights in court against them."  As such, Plaintiffs ask the court for a declaration under 28 U.S.C. §§ 2201, et seq., that the '131 and '796 patents are invalid and not infringed by Plaintiffs.

The case is Mueller Water Products, Inc. et al. v. Victaulic Co., No. 1:12-cv-3446-JEC, United States District Court for the Northern District of Georgia, Atlanta Division, and has been assigned to Chief Judge Julie E. Carnes.

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Park Industries Strikes Eurostone with Patent Infringement Action over Imported Corner Saws

On October 3, 2012, Park Industries, Inc. ("Park Industries") of St. Cloud, Minnesota, filed a complaint in the Northern District of Georgia against Eurostone Machine, LLC ("Eurostone") of Atlanta, Georgia, alleging that certain corner saws imported and sold by Eurostone in the United States that are made overseas using Park Industries' patented manufacturing methods.

Accused Product: Lovato Technology's "IDEA 90"
According to the complaint, Park Industries manufactures and sells stone-fabrication machines, including corner saw machines, throughout the world.  Park Industries claims to be the sole owner of U.S. Patent No. 7,771,249 ("the '249 patent") and U.S. Patent No. 8,100,740 ("the '740 patent"), directed to corner saw machines used for cutting corner pieces of stone and other materials.  Park Industries alleges that Eurostone imports and sells in the United States corner saw machines from abroad, including the IDEA 90, that are made by performing the claimed methods disclosed in the '249 and '740 patents.  35 U.S.C. § 271(g) allows a patent owner to collect damages and enjoin infringers from importing into the United States products made overseas using a patented process, as long as such products are "not materially changed by subsequent processes" or have not become "a trivial and nonessential component of another product."  Park Industries contends that neither of the two exceptions apply and that Eurostone should be found liable under Section 271(g).  Accordingly, Park Industries asks the court to preliminarily and permanently enjoin Eurostone from further importation and sales of the accused products, and to award damages, attorney's fees, and costs to compensate for the alleged infringement.

The case is Park Industries, Inc. v. Eurostone Machine, LLC, No. 1:12-cv-3434-JOF, United States District Court for the Northern District of Georgia, Atlanta Division, and has been assigned to U.S. District Judge J. Owen Forrester.

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UPDATE: FTC Seeks Supreme Court Review of 11th Circuit's Decision in "Pay for Delay" Case

In a July 23 entry, we summarized the Eleventh Circuit's ruling upholding a "pay for delay" agreement between pharmaceutical companies to settle patent litigation.[1]  That agreement had been attacked by the Federal Trade Commission ("FTC") as violating antitrust laws.

We characterized conflicting approaches between federal appellate courts on how to analyze “pay for delay” agreements as “revealing a clear split of authority and setting the stage for eventual resolution by the Supreme Court.”

The FTC recently took the first step to seek such resolution by filing a petition with the Supreme Court, requesting review of the Eleventh Circuit’s decision.  In its petition, the FTC framed the issue presented as follows:

Whether reverse-payment agreements are per se lawful unless the underlying patent litigation was a sham or the patent was obtained by fraud (as the court below held), or instead are presumptively anticompetitive and unlawful (as the Third Circuit has held).

According to Alison Frankel of Thomson Reuters' On the Case blog, it will take “a few months” for the Supreme Court to decide the FTC’s petition.  Gene Quinn of the IPWatchdog® blog comments: “So flip a coin if you want to figure out what comes next.  History says the Supreme Court won’t get involved, but eventually this issue will be too tempting for this Court not to want to weigh in.  Is that time now?  Maybe.”

UPDATE:  On November 13, 2012, Watson responded to the FTC's petition, and 31 states jointly filed a brief on November 5, 2012 supporting the FTC's position (see our November 15 post).  The Supreme Court granted the FTC's petition on December 7, 2012 (see our December 10 post).

[1] The Eleventh Circuit defines “pay for delay agreements,” also called “reverse payment agreements,” as agreements in which a patent owner settles infringement litigation by paying “the allegedly infringing generic drug company to delay entering the market until a specified date, thereby protecting the patent monopoly against a judgment that the patent is invalid or would not be infringed by the generic competitor.”  Federal Trade Comm’n v. Watson Pharms., Inc., 677 F.3d 1298, 1301 (11th Cir. 2012), reh’g denied (11th Cir. Jul. 18, 2012).

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Thursday, October 4, 2012, 5:35 PM

COMMENT: This is What Happens When Congress Errs, but Help is On the Way

Occasionally, intellectual property owners find themselves doing battle in proceedings conducted before boards administered by USPTO, rather than in the court system, such as in cancellation proceedings before the Trademark Trial and Appeal Board (TTAB), in which a trademark owner petitions to cancel another’s federal trademark registration. 

On September 27, 2012, the TTAB issued a decision dismissing a dilution claim in a cancellation proceeding.  The registrant successfully invoked the “federal registration defense” of § 43(c)(6) of the Lanham Act (15 U.S.C. § 1125(c)(6)).  That result seems unjust, because it was based on statutory text that Congress passed in error.  Congress intended for that defense to only apply to dilution claims under state, not federal law.  That is not how the statute reads, however, and the TTAB was bound by the statutory text as written.  The TTAB ruled that it was up to Congress to amend the statute to cure any flaws.

Thankfully, in just the couple of months preceding that decision, Congress already took steps to amend the statute.  The U.S. Senate just passed the bill to amend the statute, HR 6215, following its passage in the U.S. House of Representatives.  Certain legal associations, like the Intellectual Property Owners Association (“IPO”) helped to alert Congress to the error in the statute.  This author was privileged to participate in the preparation of the IPO resolution addressing this issue, and to then deliver a presentation at the IPO’s 2012 Annual Meeting, summarizing the problem in the statute and providing an update on the status of HR 6215.

All that remains for HR 6215 to become law is a signature from the President.  Its passage demonstrates that Congress appreciated the harmful consequences that could flow from the existing statute.  The TTAB's decision unfortunately illustrates just such a consequence, and stands as "Exhibit A" in how a seemingly minor error in statutory drafting can result in the loss of important rights.  Help comes too late for that cancellation petitioner.

The “Scrivener’s Error” in the Statute

Section 43(c)(6) of the Lanham Act  contains a drafting error, made in the passage of the Trademark Dilution Revision Act of 2006 ("TDRA"), that results in a provision immunizing owners of federal trademark registrations from all dilution claims – even those based on federal law.  The current text of the statute reads as follows:

(6)  Ownership of valid registration complete bar to action. -- The ownership by a person of a valid registration under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register under this Act shall be a complete bar to an action against that person, with respect to that mark, that—

(A)(i) is brought by another person under the common law or a statute of a State; and
(ii) seeks to prevent dilution by blurring or dilution by tarnishment; or

(B) asserts any claim of actual or likely damage or harm to the distinctiveness or reputation of a mark, label, or form of advertisement.

15 U.S.C. § 1125(c)(6) (2006).  Subsection (A) bars only state law dilution claims.  However, subsection (B) contains no such limitation.  Consequently, in its entirety, § 43(c)(6) appears to bar all types of dilution claims, both state and federal.  This result appears to be contrary to the history and intent behind the TDRA. 

The drafting error in § 43(c)(6), and the proposed correction of that error that is now reflected in HR 6215, were brought to light primarily by a thorough law review article addressing this subject, namely, Timothy Lemper & Joshua R. Bruce, Beware the Scrivener’s Error: Curing the Drafting Error in the Federal Registration Defense to Trademark Dilution Claims, 19:2 Tex. Intell. Prop. L. J. 169 (2011) (“Lemper”).

In 2005, the Trademark Dilution Revision Act was introduced in Congress, its primary purpose being to replace the “actual dilution” standard applied in Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003) with a “likelihood of dilution” standard.[1]  Additionally, this legislation sought to expand the federal registration defense to protect against all types of state law dilution claims, so that it would not be limited to just dilution-by-blurring claims.[2]  That expansion was embodied in a new proposed section § 43(c)(6) to replace an earlier, similar statute.[3]  As originally introduced in the House of Representatives, proposed § 43(c)(6) read:

The ownership by a person of a valid registration . . . shall be a complete bar to an action against that person, with respect to that mark, that is brought by another person under the common law or a statute of a State and that seeks to prevent dilution by blurring or dilution by tarnishment, or that asserts any claim of actual or likely damage or harm to the distinctiveness or reputation of a mark . . . .[4]

Following the House’s approval, the Senate amended the House bill for reasons unexplained, splitting the above text into two subsections - the “(A)” and “(B)” parts quoted above.[5]   Professor Lemper observes: “The Senate bill made virtually no change to the wording in the statute.  But by reorganizing the language of the statute as it did, the Senate version drastically changed the scope of the federal registration defense.”[6]  Subsection (A) bars only state law dilution claims.  However, subsection (B) does not contain the same limitation.  “[B]oth the Senate and the House approved the Senate bill without any testimony, discussion, or written report explaining the change to the federal registration defense in § 43(c)(6) of the Lanham Act.”[7] 

Professor Lemper observes several consequences and potential consequences stemming from this drafting error:
·         “By making federal registration a complete defense to federal dilution claims, § 43(c)(6) already creates conflicts with PTO procedures and §§ 14 and 24 of the Lanham Act, which allow parties to assert dilution claims as a basis for cancelling existing federal registrations.”[8] 
·         “The drafting error in § 43(c)(6) also poses a very real threat to the protection of famous marks.”[9] 
·         An application for a diluting mark is more likely to pass by the examining attorney in the prosecution process since it, being a diluting mark, would be directed to goods or services distinct from those offered under a famous mark.[10]  Once registered, the diluting mark could not be canceled by the owner of a famous mark, because a dilution-based action for cancellation would arguably be barred by § 43(c)(6).[11]  The only real solution would be to pay the registrant to abandon its registration and cease use of the mark, which would spur even more unscrupulous parties to adopt the registration tactic as a moneymaking scheme.[12]  

By restructuring § 43(c)(6) as set forth at page 184 of his article, writes Professor Lemper, Congress can head off these problems.[13]  He comments that “an ounce of prevention is worth a pound of cure.”[14] 

The Amendment to § 43(c)(6) in HR 6215

Legal associations like the IPO took note of Professor Lemper’s article.  For instance, on June 22, 2012, the IPO adopted a resolution supporting the amendment of § 43(c)(6), restructuring the subsections in the manner suggested by Professor Lemper.

On July 26, 2012, Representative Lamar Smith, the Chairman of the House Judiciary Committee, introduced bill HR 6215.  Part (a) of that bill proposes to amend § 43(c)(6) in the exact manner proposed by Professor Lemper, as follows (underlines and strikethroughs showing the changes):

          (6)  Ownership of valid registration complete bar to action. -- The ownership by a person of a valid registration under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register under this Act shall be a complete bar to an action against that person, with respect to that mark, that—

(A)(i) is brought by another person under the common law or a statute of a State; and that

(ii)(B)(i) seeks to prevent dilution by blurring or dilution by tarnishment; or

     (B) (ii) asserts any claim of actual or likely damage or harm to the distinctiveness or reputation of a mark, label, or form of advertisement.

The amended statute thus makes clear that the “federal registration defense” only applies to dilution claims under state, not federal, law.

Part (b) of HR 6215 states: “Effective Date. – The amendment made by subsection (a) shall apply to any action commenced on or after the date of the enactment of this Act.” 

On August 1, 2012, Representative Smith stated to the House Judiciary Committee: “Last year, two law professors discovered a problem with one of the 2006 changes [to the dilution legislation].”  He then described what occurred during enactment of the 2006 legislation, reiterated the concerns expressed by Professor Lemper, and commented: “This produced an unexpected and unintended change to the law.”  “This bill,” declared Smith, “ensures that the trademark community is protected from those who look to use this loophole as a way to disparage legitimate trademarks and cost their holders time and money.”  Ranking Member John Conyers concurred with Chairman Smith’s statement. 

Letters of support for HR 6215 from the IPO (dated July 31, 2012), the International Trademark Association, and the American Intellectual Property Law Association were then entered into the record of the House Judiciary Committee.

Given the lack of opposition to HR 6215, it rapidly progressed through Congress.  The House passed it on September 11, 2012 with a “suspension of rules” procedure, an expedited process for voting on measures that have strong bipartisan support.  Just 11 days later, the Senate followed with its approval, passing the bill on September 22.  Upon signing by the President, HR 6215 will become law, enacting the amendment to § 43(c)(6).

The TTAB’s Academy Decision

Just five days after Senate’s passage of HR 6215, the TTAB issued an order in Academy of Motion Picture Arts and Sciences v. Alliance of Prof’ls & Consultants, Inc., Cancellation No. 92055081 (TTAB Sept. 27, 2012).

The Alliance of Professionals & Consultants, Inc. (“APC”) owns a federal registration for the mark OSCAR, for “providing recognition and incentives by the way of awards and contests to demonstrate excellence in the field of business consultation and information technology.”

The Academy petitioned to cancel APC’s registration on three grounds: (1) likelihood of confusion of prospective consumers; (2) false suggestion of a connection with the Academy; and (3) dilution under § 43(c) of the Lanham Act.[15]  APC filed a motion to dismiss the dilution claim, arguing that § 43(c)(6) completely barred that claim, since APC owns a federal registration for its OSCAR mark.[16]

The TTAB granted APC’s motion.  Notably, it observed that never before has either the TTAB or any federal court considered the federal registration defense of § 43(c)(6).[17]  The TTAB remarked: “The parties agree with legal commentators that a clerical error occurred during the passage of the TDRA, but disagree as to how that ‘error’ should be interpreted.”[18]   It cited Chairman Smith’s August 1 statement attesting to how the Senate altered the meaning of § 43(c)(6) when it split part of that statute into the two subsections.[19]  Nevertheless, the TTAB held that it was required to apply the statute in its current form:

The Board must apply and enforce the statute as written, rather than picking and choosing a preferred interpretation.  “Congress’ intent is found in the words it has chosen to use.”  Petitioner characterizes the Senate reorganization of the language as creating an “unintended” change to the statute, and argues Congress clearly meant to retain possible federal dilution claims.  Nonetheless, this Board must assume that Congress means what it says.  If Congress has enacted into law something different from what was intended, then Congress must amend the statute to achieve its desired results.[20]

The TTAB commented that § 43(c)(6) has “scant legislative history, and certainly not enough to support an alternative reading in this case.”[21]  Thus, the TTAB struck the dilution allegations from the Academy’s petition, and ordered that “[t]his case will move forward on petitioner’s remaining claims.”[22]


Academy of Motion Picture Arts and Sciences proves all too well that fears about a defective statute can easily come to pass.  Professor Lemper, IP legal associations, and Congress had good reason to be concerned about the potential consequences of § 43(c)(6) being applied literally, even if it appears that Congress did not intend such a result. 

Despite Congress’ prompt action to fix § 43(c)(6), the Academy will not benefit from those efforts, since HR 6215 will only apply prospectively.  Thus, important trademark rights have been permanently lost simply because Congress made a “scrivener’s error” in drafting a statute.

Hopefully, the President will act quickly to sign HR 6215 into law and thereby prevent any more cases from reaching the unjust result reflected in the Academy decision.

NOTE:  This author wishes to thank Wendy Larson, Esq. of the law firm of Pirkey Barber, PLLC, in Austin, Texas, for her having alerted him to the Academy decision and for her input on this entry.  Ms. Larson is the Chair of the Dilution Subcommittee of the IPO's U.S. Trademark Law Committee, and this author is a member of that Subcommittee.

UPDATE:  President Obama signed HR 6215 on October 5, 2012.  The commendable, swift action by Congress on this bill is the latest demonstration of bipartisanship on intellectual property issues.  Owners of famous trademarks will be tremendously grateful.

[1] Lemper, 19:2 Tex. Intell. Prop. L. J. at 176. 
[2] Id. at 176-77. 
[3] Id. 
[4] Id. at 177 (footnote omitted).  
[5] Id. at 178-79 (footnote omitted).
[6] Id. at 179 (emphasis added). 
[7] Id. at 179-80 (footnote omitted).
[8] Id. at 182.
[9] Id. at 183. 
[10] Id. at 186-87. 
[11] Id. at 187-88. 
[12] Id. at 188-89.
[13] Id. at 189-90. 
[14] Id. at 193. 
[15] Academy of Motion Picture Arts and Sciences, slip op. at 1-2.
[16] Id. at 2-3.
[17] Id. at 9 & n.15.
[18] Id. at 6.
[19] Id. at 7 n.11.
[20] Id. at 8 (citations omitted).
[21] Id.
[22] Id. at 9.

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