Category Archives: Trademarks

Nobody Puts Your 401K in the Corner: Should Dirty Dancing IP Prevail?

by Katherine Imp

Did this title make you think of the 1987 film, Dirty Dancing?

Unless you’ve been living under a rock for 28 years, the answer is probably yes. According to the American Film Institute, “nobody puts baby in a corner” is one of the top 100 greatest movie quotes of all time.

Unfortunately for TD Ameritrade, the creator of “nobody puts your old 401(k) in the corner,” popular quotes generate revenue. And Lionsgate has no intention of giving TD a free pass.

TD Ameritrade’s Dirty Dancing ad spoof ran for seven months before TD received a cease and desist letter from Lionsgate, coupled with a 7-figure settlement demand. On June 26, TD fought back, filing for declaratory relief against Lionsgate in the Southern District of New York. Lionsgate responded by filing its own lawsuit on July 2 in the Central District of California, asserting claims like false association, unfair competition, trademark infringement and trademark dilution.

Who should win?

There is no question that Lionsgate has protection under copyright law. Lionsgate copyrighted the motion picture back in 1987 when Dirty Dancing was first released. However, the Supreme Court has unequivocally held that a “parody” qualifies as fair use. Meaning, TD can use some elements of the film Dirty Dancing without Lionsgate’s permission so long as the use qualifies as a parody.

Trademark law is a little trickier. Trademark law seeks to prevent confusion among consumers as to the origin, sponsorship or approval of goods or services. As a result, the central issue in every trademark infringement case is the likelihood of consumer confusion.

Unlike copyright law, parody is not a defense to a claim of trademark infringement. Instead, the “likelihood of confusion” test requires an analysis of several factors, including freedom of expression concerns.

Last fall, Lionsgate filed trademark applications with the USPTO for use of the quote “nobody puts baby in a corner” in connection with various goods (e.g., paper-based items, clothing, glass and household items). This filing took place one month before the TD ad was released.

In its complaint, Lionsgate also argued that its common law trademark rights (rights to a trademark not registered with the USPTO) date back to 1987.

That said … I’m with TD on this one. For one, TD’s “use” of the Dirty Dancing quote is in connection with the financial services industry, not the goods encompassed in the trademark applications filed last fall. Secondly, TD’s “use” of the quote was intended to amuse, not confuse. In fact, I’d further argue that because the quote is so recognizable, consumers would actually have an easier time distinguishing between a parody and the original.

However, I also understand why Lionsgate won’t back down until it receives a 7-figure settlement check from TD Ameritrade. Lionsgate is an entertainment conglomerate whose sole value is in its intellectual property rights. Giving TD a free pass, regardless of whether the use was proper or improper, opens the door for other third parties to push the boundaries between fair use and infringement.

Whether or not these powerhouses decide to settle or battle it out in court remains to be seen, but one thing is for sure: Nobody puts Lionsgate in a corner.

Katherine Imp is a transactional entertainment attorney at Cummins & Associates, Ltd., specializing in production legal, film finance and intellectual property matters. Contact Katherine at @KatherineImp or kimp@cumminsassociates.com.

Disclaimer: The information in this post is intended for general information purposes only and should not be construed as legal advice.

To see the original post, and similar articles, check out Katherine Imp’s SCREEN Magazine column, Street Legal

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Fox Fights Back on EMPIRE Title for Hit Television Series

by Michael Lovitz

Usually, when Hollywood has a hit, the studio that produced the hit finds itself fighting off claims of copyright infringement or idea theft.  But in the case of Fox’s newest hit show, EMPIRE, it’s a trademark claim that’s first to come to the fore.

As we’re now learning from a complaint filed on March 23, 2015 (Case 2:15-cv-02158) in the Central District of California, a California company called Empire Distribution sent a demand letter to Fox on February 16, 2015, claiming that Fox’s television show had infringed the company’s trademarks; that use of the word “Empire” was likely to confuse the company’s customers, artists, and business partners as to whether the series and its music are affiliated with the company; and further that such use constituted dilution by tarnishment, resulting from the portrayal of the show’s record label head as “a homophobic drug dealer prone to murdering his friends.”

In a follow-up telephone discussion, Empire Distribution demanded through its counsel a payment of $8 million in order to resolve its claims against Fox, and in a second claim letter, provided three options for settling the claims: (1) Fox pay $5 million and include Empire Distribution’s artists as regular guest stars on the series; (2) Fox pay Empire Distribution $8 million; or (3) Fox stop using the word “Empire.”

In response to these claims and demands, Fox brought the March 23rd action against Empire Distribution in the Central District of California.  In its complaint for declaratory relief, Fox notes that defendant Empire Distribution was not formed until 2011; that Empire Distribution has not registered its alleged trademarks; and that the two applications Empire Distribution filed in January 2014 have initially been refused by the USPTO.  Fox goes on to allege that “empire” is a common word in trademark, including in the music and entertainment fields, identifying in California alone companies such as Empire Recordings LLC, Dark Empire Recordings LLC, Empire Entertainment, Inc., and Empire Media Center, and noting there is even a film titled Empire Records.  Fox further alleges that the defendant’s trademark is not famous, given that on a recent Google search for “empire record label,” the company’s website doesn’t appear until the seventh page, and a second search for “Empire Distribution Inc.” listed defendant’s website as the fifth result, with none of the first four references referring to defendant.  Fox has requested relief from the court in the form of a judgment declaring that its use of the word “Empire” as the title of its fictional TV series does not (a) infringe the defendant’s trademark rights, (b) tarnish or otherwise dilute the defendant’s trademarks, and (c) does not violate any applicable common law or statutory unfair competition law.

Michael Lovitz is a partner at Lovitz IP Law, where he practices all aspects of intellectual property law, including copyright, trademark, unfair competition, trade secrets, portfolio management, and licensing and transactional matters.

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How Brands Use Trademark Law to Gain Competitive Advantage Online

by David N. Sharifi

There is a virtual war taking place in the realm of online marketing – one fueled by search queries, big data, and unprecedented levels of interactive brand engagement.  But the theater for this war is not storefronts, print ads, and billboards – it is Google, Facebook, Twitter, Amazon, mobile app stores, and many other digital platforms where consumers find their favorite brands, and advertisers hunt shoppers.

Today’s brands use a variety of creative and technical tools to identify themselves on the web, and to target, speak to, and “connect with” their loyalists online.  In cases where these digital tools – typically consisting of product names, company names, slogans, domain names, QR Codes, social media handles, search keywords, and hashtags (collectively “Digital Marketing Insignia”) – fall under trademark subject matter, brand owners can control valuable digital real estate through trademark protection and gain competitive advantage on the web.

Trademark Infringement in Digital and Social Marketing

Trademarks provide the exclusive right to promote goods and services under distinguishable words, phrases, symbols, designs or a combination thereof.  Rooted in consumer protection law, a trademark is legally a source identifier, a shortcut that communicates the source of the goods and services being promoted.  In some cases Digital Marketing Insignia such as domain names, hashtags, or even stylized QR codes contain trademark subject matter, and that’s when trademark protection is a useful weapon to help monopolize key areas on the web when a consumer is searching or shopping online.

To bring a prima facie trademark infringement case, a plaintiff must prove:

  • Ownership of a valid trademark;
  • Priority;
  • Use in commerce in connection with the sale of goods or services; and
  • Likelihood of consumer confusion.

When brands use Digital Marketing Insignia to promote their products online, trademark law can help protect valuable digital real estate where competitors may piggyback on famous marks. Vigilant trademark monitoring and enforcement can help defend against these unfair and often illegal practices.

As an example, consider one of the most famous trademarks of McDonald’s Corporation, U.S. Registration No. 2035587  for BIG MAC filed under “sandwiches for consumption on or off premises” in international class 030.  As owner of the BIG MAC trademark,  McDonald’s Corp. may choose to promote its famous sandwich on the web at http://www.bigmac.com, or at  facebook.com/bigmac, or under the social media handle @bigmac (Instagram and Twitter), or in search results under Google keyword: Big Mac, or in social media search results under hashtag: Big Mac (#bigmac).

Trademark Enforcement Online

If a competing restaurant promotes its products when a user searches the web for “Big Mac,” or if a competitor hosts a twitter party under #BigMacSucks (yes there is such a thing as twitter parties), or sets up a website under the domain name http://www.BigMacSale.com, do any of these uses of Digital Marketing Insignia constitute trademark infringement?  The answer depends on whether the brand owner can prove the four elements of trademark infringement (above).  Many courts have ruled, for example, that keyword triggering fulfills the use in commerce requirement of trademark infringement, and if the other elements can be proven (such as likelihood of consumer confusion), then infringement exists. (See Buying for the Home v. Humble Abode, 459 F. Supp 2d 310 (D.N.J. Oct. 20, 2006), Edina Realty v. The MLSonline.com, 2006 WL 737064 (D. Minn. Mar. 20, 2006), Hearts on Fire Co. v. Blue Nile, Inc. 2009 WL 794482 (D. Mass., March 2009)).  Other courts have ruled to the contrary. (See Site Pro-1 v. Better Metal, 506 F. Supp 2d 123 (E.D.N.Y. May 9, 2007), and Tiffany v. eBay, 2008 WL 27557897 (S.D.N.Y. July 14, 2008)).

Therefore, at least in the area of keyword triggering, there is room for trademark enforcement, although the issue is far from settled.  From a practical standpoint, brand owners may have leverage to enforce trademark rights through a cease and desist letter and settlement agreement, avoiding costly litigation in a legal area that is currently unpredictable.  And aggressive marketers may be amenable to limiting their use of competitors’ trademarks in Digital Marketing Insignia, rather than defending their positions in costly litigation which may swing either way.  Presumably, the use of hashtags containing protected trademarks triggers a similar analysis to keyword search issues, which have been heavily litigated.  In addition, courts have long settled the issue of use of domain names containing protected trademarks in cybersquatting cases and the enactment of the Anticybersquatting Consumer Protection Act (ACPA) in the late 1990s.

Owners of registered trademarks can also work directly with websites that host infringing content.  Most popular online platforms from Google and Bing, to Twitter and YouTube, to Etsy and Amazon, have copyright and trademark complaint policies available for brand owners to pursue a take down action.  Brand owners have these options to force competitors to comply, but trademark ownership and registration is usually a necessary requisite.

Trademarks Provide Competitive Advantage Online

Today’s brands, whether on the cusp of launching their first assault, or fully engaged in the trenches of competitive warfare online, can use trademark law not only to police their marks in traditional ways, but also to monopolize an assortment of Digital Marketing Insignia and dominate the online real estate where consumers shop and engage with products.  Without having strategic trademark protection and enforcement as a major part of a marketer’s arsenal, a brand online would be fighting a losing battle.

David N. Sharifi is a Los Angeles based intellectual property and business attorney concentrating in digital media and advertising, trademarks law, startups and mobile publishing.  A version of this piece first appeared on David’s blog, The LA Tech & Media Law Blog

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TTAB Decision Reminds Trademark Owners to Correctly Use Trademarks on Their Own Websites

by Tommy Wang

The Trademark Trial and Appeal Board (TTAB) recently issued a decision that reminds all trademark owners it is crucial to properly use trademarks on their own websites to reinforce trademark importance.  This decision emphasizes the importance of educating the individuals in
an organization as to proper trademark use and reviewing all promotional materials to guarantee consistent use.

The decision of Wet Dog Media, Inc. v. Rodale, Inc. is rather expected: basically the Board found that the applied-for trademark, “WOMEN’S RUNNING,” was too descriptive of the subject services to serve as a trademark.  What is remarkable, however, is the Applicant’s own website was the critical evidence cited in defeating its claim of trademark rights and in ruling that “WOMEN’S RUNNING” was not used in a trademark manner. Particularly, the Board commented that the Applicant’s use of “WOMEN’S RUNNING” on its website was descriptive, and not used as a trademark, because the words were “used alongside, in the same font, [as] other website ‘categories’” of information.  At first, the Examining Attorney allowed the Applicant’s claim of acquired distinctiveness in the descriptive mark but, after opposition by a competitor, the Applicant’s own website came under inspection and was used as the source to defeat its claim of trademark rights.  The Board studied the Applicant’s website and found that “WOMEN’S RUNNING” was used in the same fashion and font as other descriptive headers such as “NUTRITION/WEIGHT LOSS,” “SITE
MAP,” and “BEGINNERS.”

The decision serves as an important lesson;  when one is attempting to obtain trademark protection, all promotional materials should support a claim of trademark rights.  Simply put, it is important to use a trademark in a conspicuous, distinctive manner, in a different stylization, font, and/or color than other wording on one’s website, to ensure that viewers see the mark as indicating the source of the  goods/services being promoted.  It is also effective to use the ™ or ® in the vicinity of the mark, when appropriate.

If your trademark is appropriately displayed on your website and in other marketing materials, it can help strengthen your rights in the mark
and cultivate the image that is paramount to the value of your trademark. Ultimately, although the Applicant in Wet Dog Media, Inc. v. Rodale, Inc. might not have been able to obtain a trademark registration for “WOMEN’S RUNNING,” it should not have been the Applicant’s own website that defeated its validity of trademark rights.

Tommy Wang is a registered patent attorney at Yang & Wang, P.C., a law firm he co-founded with his partner Elizabeth Yang.  He currently practices Intellectual Property Law, including Patent, Trademark, and Copyright,  and Business Law in Southern California and East Asia.  His patent practice specializes in securing patents in the medical device, biochemical sciences and life sciences field.

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Technology’s Impact on Fashion Law, and the Basics of the Innovative Design Piracy Act

by Victoria Watkins, Esq.

The fashion industry has never been so impacted by technology as it is today.  With technology advancing at warp speed, the ease of sharing information has quickly increased. Now, sitting front row at a fashion show not only provides a great seat, but it also provides one with the opportunity to take pictures of the garments – photos that can instantly be sent to an artist who can use them to prep knock-off garments for immediate manufacturing.  These knock-off garments could be on their way to the rack before the media coverage of the fashion show is over.  This “runway-to-rack” method, which is often employed by fast-fashion brands that are popular with young shoppers, is a detriment to the designers showing their upcoming designs; the fast-fashion brand can get the knock-off garments on the market faster, leaving the original work to look like a copy.

Opinions are split regarding this complex relationship between high fashion and low-cost, ready-to-wear fashion.

Some believe that there is no competition between high fashion brands and ready-to-wear fast-fashion brands because of the separation of buyers; consumers will decide what they want to buy at high fashion prices, and what they deem fast-fashion worthy.  So for example, having a knock-off version of a Chanel dress sold at Forever 21 will hurt no one, because the Chanel shopper would never buy the Forever 21 version of the dress, and the Forever 21 shopper would never buy the Chanel version of the dress.  Thus, neither Chanel nor Forever 21 is injured by the availability of the knock-off dress in the market, and both make their desired profits (but this is not how the Chanel designer would see it). 

Others believe that the availability of a knock-off garment is hugely detrimental to the high fashion brand that originated the garment’s design; the creator’s name in the market will be adversely affected by the confusion that may be caused by the existence of the knock-off (this is especially common when the creator is a rising designer).  The knock-off can result in brand dilution and the devaluation of the high fashion brand’s trademarks.

Because fashion design misappropriation is so quick and easy in this age of technology,  and because the profits from counterfeits are in the billions, designers must vigilantly monitor their creations in order to protect them from misappropriation.  Designers can utilize copyright to protect their patterns, prints, and ornamental designs (such as original belt buckle designs), and can utilize patents to protect their processes (utility functions, like stone washing jeans).   But the best form of protection for fashion designers today is actually trademark.  Trademarks never expire as long as they are being used in the market, and they show their protective nature to consumers at every point of public encounter.  A properly-utilized trademark notifies consumers of the source of the goods and of the quality they should expect from the goods.  Proper and consistent use of a brand’s trademark will help consumers spot fakes.  Placing the brand with its trademark in the appropriate channels requires heavy vigilance, particularly today, in the era of the “instant internet.”  With technology acting as both a friend and foe of designers, trademarks can be a key to keeping products from being copied.

Recently, there has been an effort to expand the applicability of copyright protection in the fashion industry.  Just this past September, U.S. Senator Charles Schumer filed the Innovative Design Piracy Act (IDPA).  This bill is a successor to prior efforts to offer federal copyright protection to unique fashion designs.  The aim of the IDPA legislation is to protect designers (high fashion designers, as well as those who are just starting out) from the Chanel/Forever 21 situation discussed earlier.  The IDPA legislation would offer three years of protection for fashion designs meeting a high bar of creativity.  While opponents of the IDPA legislation claim that this kind of copyright protection would lead to a flood of litigation, proponents claim that it would work to combat the billion-dollar counterfeit fashion industry.  Surely there’s great benefit in the latter. 

Greater copyright protection for fashion designs would help curb the online knock-off market, as many retailers of knock-offs would be quickly hit with $5,000 – $10,000 penalties.  Designers could more easily monitor and protect their designs, especially once awareness about the IDPA and its provisions became widespread.  As of now, the IDPA bill has reached the U.S. Senate floor and it could see a vote before the end of this Legislative Session.  It would then face a hearing and vote in the House of Representatives.

As technology continues to make our lives easier in many ways, it works just as fast at presenting challenges in many facets of life, leisure, and business.  In a world where we’re all connected instantly, savvy fashion lawyers who are familiar with the benefits and detriments of technology and social media are more crucial to the fashion industry than ever.

 

Victoria Watkins is a legislative attorney for the City of Chicago.  She also writes B.A.F.F.L.E.D., a lifestyle blog, highlighting fashion, law, entertainment, beauty, and so much more.

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An Overview of Fashion Law in the United States and Brazil

By Mina Kaway

Despite the perception that the fashion industry is an industry based solely on inspirations and trends, intellectual property law plays a vital role in this competitive and profitable industry by ensuring the exclusivity of fashion designs. Intellectual property can protect fashion in a vast array of forms (from the trademark of the brand to the apparel design, fabric prints, and embellishments) that together shape a fashion brand.  In actuality, fashion law’s foundation is in intellectual property law, a field of law that protects and encourages creativity and innovation.

This article will provide an overview of fashion law by comparing key points in the fashion law of the United States and Brazil, two large countries with very creative and lucrative fashion industries, but where the legal systems do not explicitly afford protection to fashion designs, leaving fashion houses and designers to rely on complex legal strategies when seeking to protect their creations.

The Inadequacy of Patent and Copyright Protection

Brazil and the United States have similar patent law systems, and in theory, patent law  could be an option for protecting fashion in both countries.  However, the high standards of the novelty test and the functionality criteria present in both countries’ patent systems prevent the fashion industry from utilizing patent laws frequently or effectively.

When it comes to copyright law, both Brazil’s and the United States’ legal systems afford copyright protection to drawings, jewelry, photographs, and fabric prints, but not to the appearance of an article of apparel.  This is primarily because clothing normally fails the non-functionality test.  In the United States, where fashion law is more developed, the Innovative Design Protection Act (IDPA) currently being discussed in the U.S. Congress aims to extend copyright protection to fashion designs.  If the U.S. Congress approves the IDPA bill, it will be a significant milestone for fashion law not only in the United States, but worldwide, as it will most certainly be an important paradigm for the development of fashion law in other countries such as Brazil.

Trademark Protection

Due to uncertainties and a lack of copyright and patent law provisions that specifically protect fashion designs, fashion houses in both the United States and Brazil tend to primarily rely on trademark law for protection.  In United States and Brazil, trademarks have a duration of ten years and can be renewed for the same term indefinitely, which makes trademark protection quite attractive to fashion companies.  A trademark can be applied to all garment pieces in a collection and can even extend to footwear, accessories, cosmetics, and fragrances (in contrast, seeking protection for each new design in a collection, every season, would be time and cost prohibitive for a fast paced industry like the fashion industry).  This explains why, in the fashion industry, the identity of the product (the brand) is often more important than the product itself.

The main difference between Brazilian and American trademark law is in the establishment of a trademark.  Whereas in the United States, a trademark is established by use in commerce, regardless of whether it is registered (although registration is highly recommended), in Brazil the Industrial Property Law (IPL) states that the ownership of a mark is acquired by means of a validly granted registration, and proof of use in commerce will only be necessary in the event of a forfeiture request by a third party.  Nevertheless, the Brazilian IPL does provide a few exceptions to the registration rule.  The right of prior use establishes that any person who in good faith has, at the date of priority or of the application, been using an identical or similar mark for at least six months in Brazil, to distinguish a product that is identical, similar, or akin, is entitled to a preferential right to registration.  Brazilian law also grants special protection to well-known marks in their field of activity, independently of whether they have been previously filed or registered in Brazil.

At this point we may wonder: if patent and copyright law are not practical options for protecting fashion, and if trademark law does not protect a garment itself, but rather the identity of the fashion house, how can fashion law actually protect an article of apparel? The answer is: trade dress.

Trade Dress

Despite being the most difficult form of intellectual property to secure (due to the non-existence of any kind of “trade dress certificate”), trade dress is the form of intellectual property that is utilized most frequently by fashion lawyers trying to protect fashion articles.

In the United States, to obtain trade dress protection for a piece of apparel, the fashion lawyer must demonstrate that the product in question has secondary meaning – in other words, that consumers undoubtedly associate the product in question with that specific company or designer.  This product-company association can be proven through sales numbers, advertising and promotional materials, and budgets.  Establishing secondary meaning is usually easier for well-established companies, as opposed to new and independent designers.

In Brazil, the concept of trade dress has historically primarily been utilized to protect store layouts and concepts (i.e. franchising), as well as product packaging.  However, an important landmark court decision in 2008 granted for the first time trade dress protection to the designs of a children’s clothing company after the designs were blatantly copied by a competitor.  It is relevant to note that Brazilian law does not provide specific provisions regarding trade dress, and does not explicitly require proof of secondary meaning.  Nevertheless, the Brazilian IPL unequivocally prohibits a company or a person from using fraudulent means to divert, for its own or for a third party’s benefit, a competitor’s clientele.  Accordingly, it is through unfair competition mechanisms, such as the above, that Brazilian fashion lawyers have to seek trade dress protection.

Final Thoughts

Although it is clear that fashion law is much more developed in the United States (where it is already included in some law school curriculums and where a bill drafted specifically to protect fashion designs is currently being discussed in Congress), Brazilian attorneys and law students are increasingly recognizing the relevance of fashion law, a specialized field that caters to the specific needs of a complex and valuable industry.


Mina Kaway is an intellectual property attorney, specializing in fashion law, and the author of the blog Fashion Law Notes.  She has a Bachelors degree in Law (LL.B) from the Santa Catarina Federal University, in Florianópolis, Brazil; a Master degree (M.A.) in International and Intellectual Property Law from the Graduate Institute of International and Development Studies (IHEID), in Geneva, Switzerland, with the dissertation “The International Protection of Fashion.”  She is a member of the Innovation, Intellectual Property and Enforcement against Piracy Commission of the Brazilian Bar Association, state of Santa Catarina, and a member of the International Trademark Association (INTA).

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Supreme Court May Put a Stop to the “Hokey-Pokey” Approach to IP Ownership

by Elizabeth Swanson

You put your right foot in, you put your right foot out,

You put your right foot in, and you shake it all about,

You do the Hokey-Pokey and you turn yourself around.

That’s what it’s all about![1]

On June 25, 2012 the U.S. Supreme Court granted YUMS’ Petition for a Writ of Certiorari in Already, LLC dba Yums v. Nike, Inc., No. 11-982.  This grant is important because its result may change federal court  jurisdiction in both patent and trademark infringement declaratory judgment cases.

The “Question Presented,” according to YUMS, is as follows:

“Whether a federal district court is divested of Article III jurisdiction over a party’s challenge to the validity of a federally registered trademark if the registrant promises not to assert its mark against the party’s then-existing commercial activities.”

YUMS explains its logic in its STATEMENT OF THE CASE:

1.     The issue cannot be resolved by litigation because it concerns the constitutional scope of Article III jurisdiction;

2.     Both trademark registrations and issued patents are evidence of the exclusive rights granted to the owners;

3.     Under 15 USC §1119, a person accused of infringement may ask a court to award judgment declaring that the mark is invalid;

4.     When validity is challenged under §1119, the owner may be willing to settle and to include a broad covenant not to sue, as in the YUMS case below;

5.     There may also be an argument that the court is divested of Article III jurisdiction because there are then no more claims of infringement, and this is often used as part of a litigation strategy;

6.     The Ninth Circuit has a pattern of holding that a covenant not to sue does not divest the district court of Ariticle III jurisdiction (Bancroft & Masters, Inc. v. Augusta National Inc., 223 F.3d 1082 (9th Cir. 2000);

7.     The Supreme Court has followed the Ninth Circuit’s reasoning with respect to patent cases including Lear, Inc. v. Adkins, 395 U.S. 653 (1969), MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83 (1993), and Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249 (1945);

8.     The Federal Circuit stated its rule regarding dismissal after settlement in patent cases in Super Sack Mfg. Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1059-60 (Fed. Cir. 1995).  There, the Federal Circuit held  that the patent owner can divest a federal court of Article III jurisdiction over the defendant’s counterclaim for a declaratory judgment of patent invalidity by promising not to sue.  Judge Dyk has argued in a subsequent case against this “Super Sack” rule.  See Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340, 1350-55 (Fed. Cir. 2007) (Dyk, J., dissenting).

9.     When the appeal was brought by YUMS, the Second Circuit stated that it was not persuaded that jurisdiction still exists.  This meant that a plaintiff could file an infringement case and not have to deal with the issue of validity and enforceability of its mark if it covenanted not to sue before a judgment was issued.  This interpretation is inconsistent with those followed by both the Federal Circuit and the Ninth Circuit, and can be viewed as a limitation of the power of federal courts in trademark cases.

If the Supreme Court agrees with YUMS and holds that once you are in court, you are there to the end, not withstanding a covenant not to sue, it may change litigation strategy for both patent and trademark owners;  filing a complaint could become less like dancing the Hokey-Pokey and more like an actual commitment – and attorneys would then need to make full disclosure of that changed risk to their clients.


[1] Written by Roland Lawrence LaPrise, (with Charles Macak and Tafit Baker) 1950 Copyright Acuff-Rose Music, Inc.

Elizabeth Swanson’s Century City practice includes all aspects of patent, trademark and copyright prosecution, trade secret management, and also includes infringement matters and litigation.  Ms. Swanson has been practicing only IP law for over 22 years.

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