Intellectual Property Law Firm Florida

Looseleaf Booklet With Sheets of Photographs Showing Sculpture is Sufficient to Register Copyright

The Seventh Circuit Court of Appeals concluded that loose photographs of a sculpture, stuck in a book, were sufficient to be classified as a copyrightable “collection.” Neri v. Monroe, et al., Case No. 12-3204 (7th Cir. August 12, 2013) (available here).  Plaintiff Quincy Neri designed a glass sculpture called “Mendota Reflection,” which was installed in the ceiling of Linda Hughes’s condominium by Architectural Building Arts (“ABA”).  The ABA is owned by Defendant Melinda Monroe.  Leslie Sager designed the lighting.  Hughes gave Eric Ferguson permission to take photographs of the project.  ABA and Monroe posted copies of the sculpture photos on its website and used the photos in its newsletter. Sager posted copies of the sculpture photos on her website and Ferguson posted the photos on his Flickr webpage.  Neri sued, arguing that they violated her copyright in the sculpture.  A magistrate judge dismissed the case, finding that Neri lacked a copyright registration and the sculpture.  In the Copyright Office, Neri had submitted a collection of photographs of her unpublished works, including the sculpture, for registration.  Neri received a copyright registration but the lower court concluded that the application was defective and therefore the copyright certificate was invalid.  Neri appealed.  The Seventh Circuit vacated the dismissal.

A collection of unpublished works is defined, under the Copyright Office regulations, when each copyrightable work is self-contained and a number of works are combined into a single unpublished “collection.”  “For these purposes, a combination of such elements shall be considered a ‘collection’ if: (1) The elements are assembled in an orderly form; (2) The combined elements bear a single title identifying the collection as a whole; (3) The copyright claimant in all of the elements, and in the collection as a whole, is the same; and (4) All of the elements are by the same author, or, if they are by different authors, at least one of the authors has contributed copyrightable authorship to each element. Registration of an unpublished ‘collection’ extends to each copyrightable element in the collection and to the authorship, if any, involved in selecting and assembling the collection.” 37 C.F.R. §202.3(b)(4)(i)(B).

Neri clearly met three of the requirements: the collection had a single title; she claimed a copyright in each sculpture and in the collection as a whole; and she was the only author.  However, the magistrate judge found that Neri’s submission was not in an “orderly form.”  Neri’s submission was a book of photographs of several sculptures, and some loose photographs.  The sculpture subject tot he lawsuit was among the loose photos.  Thus, the magistrate judge concluded that the submission was not orderly and was not a collection of unpublished works entitled to copyright registration.

The Seventh Circuit tried to review Neri’s submission (the copyright deposit) but it was not in the record.  Thus, the magistrate judge had come to his conclusion based on deposition testimony.  Neri had described her submission the same way as the magistrate judge did, but also argued later that a photo of the sculpture was in the book.  “The problem may be terminological; Neri may have used the title ‘Mendota Reflection’ for more than one sculpture. But it is hard to understand how a court could conclude that a given submission is not ‘in an orderly form’ when the submission cannot be examined.”  Neri, Slip Op. P. 4.

Even though Neri’s deposit copyright deposit material submission was not in the record, she did have the copyright certificate.  Thus, Defendants had to show why the court should disregard the registration.  If the appeals court followed the magistrate judge’s line of reasoning, only a single bound book is an “orderly” way to present photographs of sculptures, and if the sculpture is in the book then the registration is valid. However, the Seventh Circuit did not see why only a single document could be considered orderly. The Copyright Register found Neri’s submission to be adequate and a district court should not find otherwise without a compelling reason.  Further, the magistrate judge did not rely on any legal authority to show how much order was required in a collection submission.

“Since the ‘orderly form’ requirement implements a statute allowing the [Copyright] Register to require ‘other information’, the key question must be whether the submission is organized well enough to permit users and courts to pin down the ‘information’ on which copyright enforcement depends.”  Neri, Slip Op. P. 5.  Thus, as long as the loose photographs were labeled in some way so that each work was readily identifiable, then Neri’s submissions should be considered orderly.

“Any organization that enables a court to associate a work underlying the suit with a work covered by a registration ought to do the trick. If a booklet (or PDF file) with page numbers is orderly enough—as the magistrate judge thought—a sequence of loose but numbered or named photographs should be enough too.”  Neri, Slip Op. P. 6.  However, if Neri did not submit photos of the sculpture, then the copyright registration does not support this lawsuit.

Defendants also argued that Neri was not the author of the sculpture: Fritz Schomburg is a glass-blower (a gaffer) who made the glass elements of the sculpture, but Neri only made the molten glass available as Schomburg needed it.  Defendants’ argument was that a change in form from drawings to glass creates intellectual property rights.  This is the same argument as saying that a typesetter owns the copyright to a book because the author did not type it personally.  Neri created the sculpture by designing it, choosing the glass, picking out the shapes and colors, etc.  As a result, the Seventh Circuit vacated the dismissal of Neri’s suit and remanded it for further proceedings.

User Comments On A Public Interest Website Do Not Violate Website’s User Agreement

The Appeals Court for the Fourth District Court of Appeals in California affirmed the special motion to strike a plaintiff’s complaint for being barred under the anti-SLAAP statute.  Hupp v. Freedom Communications, Inc., Case No. #-57390 (Cal. 4th DCA, November 7, 2013) (available here).  Plaintiff Paul Hupp sued Defendant Freedom Communications, Inc., dba The Orange County Register (“the Register”), alleging breach of the Register’s user agreement with Hupp when the Register failed to remove comments on its website regarding Hupp.  The Register filed a special motion to strike (anti-SLAPP) and the lower court granted the motion to strike Hupp’s complaint.  Hupp appealed, arguing that his lawsuit is a standard breach of contract action not subject to an anti-SLAPP motion.

In March 2012, the Register published an article on its website concerning public safety pensions in Orange County, California.  Many readers, including Hupp, posted comments on the article.  A large portion of the comments were between Hupp and Defendant Mike Bishop.  The Register argued that Hupp complained to the author of the article about five postings by Bishop and demanded that they be removed.  Hupp argued that the Register violated its user agreement by making public comments and failing to remove the comments about Hupp.  He argued that the comments invaded his right of privacy, harassed him, and were harmful to him.  The Register’s User Agreement states that interactive areas of the Register’s website are provided to the users as a way for users to express their opinions and share ideas and information.  The User Agreement also stated that users who used the interactive areas, and that the Register reserved the right, but undertakes no duty, to review, edit, move, or delete any user generated content in its sole discretion.

The Register filed an anti-SLAAP motion under Code of Civil Procedure Section 425.16, which authorizes such a motion “against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue . . . .”  Code of Civil Procedure Section 425.16(b)(1).  The statute is meant to be construed broadly, and the anti-SLAAP motion must be granted unless a plaintiff can show that there is a probability for plaintiff to prevail on the claim.  A SLAAP lawsuit is a civil lawsuit aimed to bring an economic advantage to the plaintiff over the defendant, not a lawsuit brought to vindicate a legally cognizable right of the plaintiff.  “While Hupp’s complaint does not generally fit the above description of a typical SLAPP suit, it is subject to an anti-SLAPP motion if it fits within the statutory definition, which includes having the purpose of punishing the Register for exercising its free speech rights. Hupp’s appeal on this point provides only two sentences of argument and does not address the issues presented by the trial court’s decision.”  Hupp, Slip Op. P. 5.

The Court first had to determine whether the Register made the required showing that Hupp’s complaint arose from a protected activity.  If so, then the Court would consider whether Hupp had demonstrated a probability of prevailing on his claim.  The Register argued that its actions arise from acts in furtherance of its free speech rights.  The Register argued that its maintenance of the website, which publishes public interest articles and allows user comments, facilitates free speech, and allows for the exchange of ideas and opinions.  The California Supreme Court has held that publicly available websites are public forums for purposes of anti-SLAAP motions.  Barrett v. Rosenthal, 40 Cal.4th 33, 41, fn. 4, (2006).  The comments between Hupp and Bishop began as a conversation about the pension article posted on the Register’s website.  However, Bishop then asked Hupp if he was a vexatious litigant, stating that he had searched for Hupp on Google, and that Hupp was the subject of discussion on other websites.  To support this, the Register submitted to the Court an appendix of 145 pages of lawsuit related documents concerning Hupp.  The Register argued that the subject of vexatious litigants is an issue of public  interest.  The Court concluded that the Register’s actions were in furtherance of its free speech rights.  “Maintaining a forum for discussion of issues of public interest is a quintessential way to facilitate rights, and the Register has no liability for doing so.”  Hupp, Slip Op. P. 8.

The Court extended this holding to find that Hupp had not shown any probability of prevailing in this action.  Hupp had failed to present any argument on the issue, and thus his lawsuit is barred.  As a result, the Court affirmed the lower court’s granting of the Register’s anti-SLAAP motion.

Hupp then argued that there was an issue with document service.  Hupp filed his complaint on March 22, 2012 and the Register was served on July 2, 2012.  The Register had 30 days to respond, and on July 24, 2012, it filed an ex parte motion for an extension in order to file its anti-SLAAP motion.  The motion was granted, and Hupp acknowledged receipt of the order on July, 30, 2012.  On August 31, 2012, the Register filed the anti-SLAAP motion, the hearing was set for September 28, 2012, and on September 13, 2012 the process server filed an amended proof of service stating that the original had inadvertent incorrect information, and that service was completed by leaving copies of the documents with the security guard at the front gate of Hupp’s residential community.  This is a permissible means of service in California.  Hupp filed a declaration by the secuirty guard, who stated that he turned the process server away and did not receive any documents.  Hupp filed his motion to strike the anti-SLAAP motion on September 24, 2012 for improper service, however he acknowledged receipt of the Register’s motion on September 13, 2012.  Counsel for the Register moved for a continuance, which was granted, and the anti-SLAAP motion was heard on October 18, 2012.  The lower court granted the anti-SLAAP motion.  The Court concluded that Hupp had admitted to receiving the Register’s motion on September 13, 2012, and therefore he had 34 days before the rescheduled hearing on October 18, and had actual notice of the action in time to defend against the anti-SLAAP motion.  As a result, the Register complied with all service requirements.

The Court affirmed the lower court’s order granting the Register’s anti-SLAAP motion to strike Hupp’s complaint.

Trademark Infringement, Likelihood Of Confusion and Concurrent Use Not Properly Summary Judgment For 100 Year Hotel Name

The First Circuit Court of Appeals vacated a summary judgment order, finding that there were genuine issues of material fact regarding the likelihood of confusion for two hotels using similar marks.  Dorpan S.L. v. Hotel Meliá, Inc., Case No. 12-1679 (1st Cir. August 28, 2013) (available here).  Dorpan S.L. (“Dorpan”) and Hotel Meliá, Inc. (“HMI”) are Puerto Rican hotels.  Dorpan sued HMI in a trademark infringement case over the use of the mark “Meliá.”  The lower court found in favor of Dorpan on a summary judgment ruling, holding that with the exception of the city where HMI’s hotel was located, Dorpan had exclusive use of the Meliá mark throughout Puerto Rico.  HMI appealed.  On appeal, the First Circuit concluded that the two hotels could not co-exist and both use “Meliá” without creating confusion.  As a result, the First Circuit vacated the summary judgment in favor of Dorpan and remanded the case for further proceedings.

HMI operated the Hotel Meliá for over 100 years in Puerto Rico but never federally registered the mark with the United States Patent and Trademark Office (“USPTO”).  Dorpan has several federally registered trademarks using the name “Meliá” since the late 1990s.  In 2007, Dorpan opened a hotel called “Gran Meliá” in the city near HMI’s hotel.  Dorpan filed a petition with the Puerto Rico Department of State to register the mark “Gran Meliá,” and HMI filed an opposition expressing concern for confusion and citing to HMI’s common law rights to the Meliá mark.  Dorpan withdrew the request to register, but continued to use the Gran Meliá mark in connection with its Puerto Rico hotel.  In 2008, HMI filed a complaint against Dorpan’s parent company, asserting that HMI was the senior user of the Meliá mark and therefore had the sole right to use it in connection with hotels and restaurants throughout Puerto Rico.  Dorpan then filed a complaint against HMI seeking a declaration that under the Lanham Act, Dorpan had the right to use the Meliá mark throughout Puerto Rico and that HMI only had the right to use the mark in the city where its hotel was located.

The two cases were consolidated, Dorpan moved for summary judgment, and the lower court granted it.  While the lower court did note that the two hotels’ names were very similar, and that there was evidence of confusion, it placed the most emphasis on the fact that neither HMI nor Dorpan had accused each other of attempting to profit from the good-will of the other.  In addition, the lower court noted that the hotels were in different geographic areas, HMI’s 100 year use was strictly limited to its use in Puerto Rico, and thus “frozen” to that area, while Dorpan’s Meliá marks were used internationally.  Thus, the lower court concluded that HMI could use the Meliá mark in the city where its hotel was located, but that Dorpan could use the mark throughout the rest of Puerto Rico and the United States.  HMI appealed, arguing that the lower court erred in treating HMI as the junior user of the Meliá mark.

The First Circuit noted that avoiding confusion is the focal point of trademark protection.  While the Lanham Act provides federal protection against trademark infringement, the individual states also offer trademark protection either by registering the mark with the state or by using the mark in that state.  In other words, a senior user of a mark who does not register its mark, retains rights in its geographic area of use.  HMI argued it had the exclusive right to the Meliá mark in Puerto Rico under Puerto Rico law, while Dorpan argued it had the exclusive right to use the mark in Puerto Rico under federal law.

Dorpan’s federally registered Meliá mark is incontestible under the Lanham Act, giving Dorpan the presumption of exclusive use.  However, HMI was not seeking to cancel, contest, or challenge Dorpan’s registration.  HMI claimed that it was the undisputed senior user of the mark in Puerto Rico and therefore Dorpan’s rights under federal law are limited by HMI’s common law Puerto Rico rights (supported by 100 years of use), which HMI acquired before Dorpan’s mark become incontestible.  HMI’s argument is supported by the Lanham Act, which limits the incontestible right of a federal trademark holder “to the extent, if any, to which the use of a mark registered on the principal register infringes a valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration under this chapter of such registered mark.” 15 U.S.C. § 1065.  Thus, Dorpan’s federal rights are limited by any rights HMI acquired under Puerto Rico law before Dorpan’s mark became incontestible.

“The senior unregistered user of a mark in Puerto Rico does not automatically acquire a Commonwealth-wide right to use the mark. Rather, the senior unregistered user is entitled to exclusive use of the mark in the area where ‘he currently do[es] business.’” Dorpan, S.L., Slip Op. P. 14.  Thus, HMI is entitled to the exclusive use of the Meliá mark is based on where HMI’s hotel is located.   If Dorpan’s use of a similar Meliá mark near where HMI uses its Meliá mark creates a likelihood of confusion, then HMI’s trade area protect extends at least as far as where Dorpan’s hotel is located and Dorpan’s use infringes on HMI’s rights.  Conversely, if Dorpan’s mark does not create a likelihood of confusion with HMI’s mark, then HMI’s trade area is smaller and Dorpan is not infringing on HMI’s rights.  Therefore, the First Circuit had to determine whether Dorpan’s use of the Meliá mark in Puerto Rico created a likelihood of customer confusion.

The most common type of confusion is “ordinary” or “forward” confusion, which occurs when a weaker junior user attempts to use the senior user’s goodwill and brand loyalty to boost its own brand.  The second type is “reverse confusion,” where a senior unregistered user is overwhelmed by a more powerful junior user, causing the senior user to lose its brand and goodwill.  There are eight factors that the First Circuit looks at in determining whether there is a likelihood of confusion: “(1) the similarity of the marks; (2) the similarity of the goods (or, in a service mark case, the services); (3) the relationship between the parties’ channels of trade; (4) the juxtaposition of their advertising; (5) the classes of prospective purchasers; (6) the evidence of actual confusion; (7) the defendant’s intent in adopting its allegedly infringing mark; and (8) the strength of the plaintiff’s mark.”  Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO v. Winship Green Nursing Ctr., 103 F.3d 196, 201 (1st Cir. 1996).  These are known as the Pignons factors.

The First Circuit applied the Pignons factors to the case.  First, the First Circuit examined the similarity of the marks.  HMI’s “Hotel Meliá” and Dorpan’s “Gran Meliá” are essentially identical in terms of trademark because they both have “Meliá” as their most salient word.  Second, HMI and Dorpan both use their marks to operate large, full-service hotels in Puerto Rico.  Third, the hotels advertise and solicit customers in similar ways, such as attending trade shows, working with travel agents, advertising to consumers, and accepting bookings on Internet website like Orbitz.  Fourth, HMI had presented evidence that consumers were confused between the two hotels.  Fifth, there was no evidence that Dorpan used “Meliá” in order to cause market confusion or to exploit HMI’s reputation and goodwill.  Sixth, “the parties have developed relatively little evidence from which a factfinder could draw inferences about the relative strength of the marks and their tendency to create confusion.”  Dorpan, S.L., Slip Op. P. 25.  In balancing these factors, the First Circuit noted that, with the exception of Dorpan’s intentions, the rest of the factors weighed in favor of HMI’s claims of confusion.

The First Circuit then explained the errors in the lower court’s analysis.  First, the lower court did not give enough wight to the evidence of actual confusion.  Second, even if HMI had not presented evidence of actual confusion, the similarity of the marks, services, customers, and advertising were enough to create a reasonable inference of a substantial likelihood of confusion.  Third, the lower court placed too much emphasis on its conclusion that Dorpan did not act in bad faith.  Fourth, the lower court’s focus on the physical locations of the hotels was irrelevant.  Lastly, the lower court erred in taking the narrow view of confusion when considering the strength of the marks.  As such, the First Circuit vacated the lower court’s summary judgment in favor of Dorpan and remanded the case back to the lower court for further proceedings.

Articles Copied Without Authorization In Patent Applications Is Copyright Fair Use

A Magistrate Judge for the District Court of Minnesota recommended that the District Court grant a defendant’s motion for summary judgment, finding that the defendant was entitled to fair use protection under the Copyright Act for using portions of scientific articles in patent applications.  American Institute of Physics, et al. v. Schwegman Lundberg & Woessner, P.A., et al., Case No. 12-528 (RHK/JJK) (D. Minn., July 30, 2013) (available here).  Plaintiffs American Institute of Physics (“AIP”) produce and distribute scientific journals containing scholarly articles.  Defendant Schwegman Lundberg & Woessner, P.A. (“Schwegman”) is a law firm specializing in prosecuting patent applications.  Schwegman copied 18 of AIP’s articles from the United States Patent and Trademark Office (“USPTO”) and other sources.  AIP sued, alleging copyright infringement asserting that Schwegman’s downloading, storing, making internal copies of, and distributing AIP articles by email constituted infringement.  Schwegman and the USPTO argued that its copying of the articles constituted fair use under the Copyright Act and moved for summary judgment.  The District Court requested a report and recommendation from the Magistrate Judge.  The Judge concluded that Schwegman established its fair use defense and recommended that the District Court grant Schwegman’s motion for summary judgment.

The Judge began by stating that Schwegman’s use of the articles was directly connected to Schwegman’s practice as a patent prosecution law firm.  Thus, the patent application process and the USPTO requirements are relevant.  The USPTO requires a patent application to disclose all known information that may affect the patentability of an invention, which is known as “prior art.”  If a patent application is filed along with a disclosure statement, that lists the prior art, that statement must include a copy of each publication.  “Thus, when a patent applicant files a disclosure statement, the USPTO’s regulations require the applicant to submit copies of publications, in whole or in part, that are material to the applicant’s claims of patentability for her inventions.”  American Institute of Physics, Slip Op. P. 7.  Schwegman provided copies of the articles to the USPTO in order to comply with this duty to disclose the prior art.

Next, the Judge considered the intended audience for the articles.  AIP publishes its articles to inform their readers, which include academics, researchers, and the general public.  Thus, AIP argues that patent attorneys and investors should be within AIP’s target audience.  AIP had issued nine licenses to various law firms to allow these firms to copy AIP’s articles.  Schwegman argued that the academic journals were a two-way market: authors submit their articles in hopes of being published, and readers benefit from the content.  Schwegman’s expert witness, economist Dr. Jean-Pierre Dubé, testified that patent attorneys read these articles for a different purpose than AIP’s target audience; patent attorneys read the articles to determine whether they should be disclosed as prior art.  As such, Schwegman argued, patent attorneys are not within the target audience.

Schwegman obtained 11 of the 18 articles by downloading them from the USPTO’s website.  The remaining 7 articles were obtained different ways, such as from an email attachment or a university website.  Schwegman kept copies of the articles on its electronic file management system.  This system allows the attorneys at Schwegman to access documents stored on the firm’s server.  The system does not place restrictions on who can see the articles, or how the articles can be used, but it does not allow people to search the text of the articles.  AIP argued that this electronic file management system is essentially an electronic library.

Schwegman moved for summary judgment, arguing that its use of AIP’s articles was fair use. There are four non-exclusive factors for courts to consider when analyzing a fair use defense: “(1) The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) The nature of the copyrighted work; (3) The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) The effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107.

First, the purpose and character of Schwegman’s use of the articles was to comply with the legal requirement to provide prior art to the USPTO.  Schwegman provided a copy of each article and cited to each article in each of its patent applications.  Thus, Schwegman’s use was different than AIP’s use.  Even though Schwegman’s use of the articles was not transformative, because the articles were copied and not changed, the first factor still weighs in favor of Schwegman.  “[R]eproduction of an original without any change can still qualify as a fair use when the use’s purpose and character differs from the object of the original, such as photocopying for use in a classroom.” American Institute of Physics, Slip Op. Pp.  24-25.  Thus, the first factor weighs in favor of Schwegman.

Second, the Judge considered the last factor of the effect on the potential market for the articles, because it is related to the first factor involving the purpose and character of the use.  If Schwegman’s use of the articles does not usurp the market for the articles, then the fourth factor weighs in favor of fair use.  “[AIP] present[ed] no evidence that the patent lawyers’ use of the scientific Articles to meet their obligations to disclose prior art to the PTO adversely affects the traditional target market for these Articles, i.e., academics, physical scientists and researchers, engineers, educators, students, and members of the general public who want to read peer-reviewed scholarly, highly specialized articles about the physical sciences and other scientific disciplines.”  American Institute of Physics, Slip Op. P. 31.  Further, AIP presented no evidence to counter Dr. Dubé’s testimony that Schwegman was outside of AIP’s target market.  The only evidence AIP presented was that it lost revenues from patent attorneys who did not pay the licensing fee to obtain copies of the articles.  “But this is not the sort of negative effect on the market that weighs heavily against a finding of fair use. If it were, then the market factor would always weigh in favor of the copyright holder and render the analysis of this factor meaningless.”  American Institute of Physics, Slip Op. P. 32.  Therefore, the fourth factor weighs in favor of Schwegman.

Third, the nature of the articles was considered.  Generally, a “creative” work receives more copyright protection.  The Judge concluded that the nature of AIP’s articles weighs slightly in favor of Schwegman because the articles “are factual or informational,” primarily communicating very technical information about the results of scientific research.

Fourth, the Judge examined the amount and substantiality of the articles used by Schwegman.  Copying a work in its entirety does not prevent a defendant from claiming fair use protection.  The amount of the copying is related to how the copying furthered the purpose and character of the use.  Schwegman copied the articles in their entirety.  However, this copying was necessary for Schwegman’s purpose to disclose prior art on patent applications.  This purpose was different than AIP’s purpose in publishing the articles.  Thus, “Schwegman’s copying is consistent with the purpose and character of Schwegman’s new and different use of the Articles,” and therefore weighs in favor of fair use.  American Institute of Physics, Slip Op. P. 38.

AIP also argued that a finding of fair use was inappropriate because Schwegman did not have an authorized or licensed copy of the articles.  The Court found no legal authority supports this contention.  Further, there was no evidence presented that Schwegman acted in bad faith in copying the articles.  As such, the Judge concluded that Schwegman was entitled to the fair use defense.

Location Of Copyright Owner Insufficient For Personal Jurisdiction Over Defendants

The Second Circuit Court of Appeals held that a plaintiff’s economic losses were not enough to establish personal jurisdiction under New York’s long-arm statute.  Troma Entertainment, Inc. v. Centennial Pictures, Inc., et al., Case No. 12-1883-cv (2d Cir. September 6, 2013) (available here).  Troma Entertainment sued Defendants for copyright infringement under the Copyright Act and several New York state law claims.  Troma alleged that the lower court had personal jurisdiction over the Defendants under New York’s long-arm statute section 302(a)(3)(ii), which allows for personal jurisdiction over a defendant when the allegedly tortious conduct causes injury to a person or property within New York.  The lower court concluded that Troma had not shown an in-state injury and dismissed the case against Defendants-appellees Lance H. Robbins and King Brett Lauter.  Troma appealed.  On appeal, the Second Circuit affirmed, finding no personal jurisdiction.

Troma is a New York-based company that produces and distributes “controlled budget motion pictures,” such as the two spoof films titled “Citizen Toxie, Toxic Avenger Part IV,” created by Troma, and “Poultrygeist: Night of the Chicken Dead,” which Troma owns distribution rights (“the Movies”).  In 2009, Troma authorized defendant-appellee Robbins to represent Troma in negotiating a license to distribute the rights to the Movies with a German distributor.  The authorization was supposed to lapse after 30 days if no agreement was reached.  Troma believed that Robbins was unable to negotiate a deal at the end of the 30 days.  However, Robbins had conspired with co-defendant-appellee King Brett Lauter (“Lauter”) to enter into a distribution agreement with a German distribution company called Intravest Beteiligungs GMBH (“Intravest”).  Troma alleged that Robbins and Lauter falsely told Intravest they owned the rights to the Movies; purchased copies of the movies from and delivered the copies to Intravest; and kept the proceeds of the agreement without telling Troma.  However, none of these actions took place in New York.

In 2010, Troma discovered that Intravest was broadcasting the Movies in Germany, and in 2011 Troma sued.  Robbins and Lauter moved to dismiss for lack of personal jurisdiction.  The lower court held that the New York long-arm statute did not allow the court to exercise personal jurisdiction over Robbins and Lauter because Troma did not show that Robbins’s and Lauter’s actions caused injury in New York.  Troma had the opportunity to transfer the case to California, where personal jurisdiction over the defendants could have been exercised (because Robbins and Lauter allegedly created their plan in California), but declined the transfer.  As such, the lower court dismissed Troma’s case.

The Second Circuit had to determine whether the lower court was correct in holding that it could not exercise personal jurisdiction over Robbins and Lauter.  Troma argued that personal jurisdiction existed under section 302(a)(3)(ii), which confers personal jurisdiction over one who “commits a tortious act without the state causing injury to person or property within the state . . . if he . . . expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.”  N.Y. C.P.L.R. § 302(a)(3)(ii).  Thus, the issue was whether Robbins’s and Lauter’s actions caused such injury in New York.  Troma argued that their actions did cause such injury, because the actions resulted in a loss of sales and generalized harm to Troma’s exclusive distribution rights over the Movies.  However, the fact that Troma is a New York corporation is insufficient on its own to confer personal jurisdiction over Robbins and Lauter.

Troma’s argument rested mainly on the New York Court of Appeals’ decision in Penguin Group (USA), Inc. v. American Buddha (“Penguin II”), 16 N.Y. 3d 295 (2011).  In Penguin II, plaintiff Penguin Group alleged that defendant American Buddha infringed its copyrights of several books by uploading copies of the books to its Internet website free of charge.  On appeal, the Second Circuit certified a question to the New York Court of Appeals: “In copyright infringement cases, is the situs of injury for purposes of determining long-arm jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) the location of the infringing action or the residence or location of the principal place of business of the copyright holder?”  Id. at 34.  The Court of Appeals accepted the question but narrowed it to the specific situation of when a copyright infringement case involves the uploading of a copyrighted printed literary work onto the Internet.  The Court of Appeals held that the situs of injury was where the copyright owner was located.  The Court of Appeal’s decision rested on two factors.  “The first was the nature of the alleged infringement, viz., the uploading and making available of Penguin Group’s copyrighted works by means of the Internet. . . The second factor upon which the Court of Appeals rested its decision was ‘the unique bundle of rights granted to copyright owners.’” Troma, Slip Op. Pp. 10-11.

The holding in Penguin II is too narrow to control to Troma’s case.  While Penguin II dealt with a copyright infringement injury that was virtually impossible to localize (uploading and making available of copyrighted materials, free of charge, to anyone with access to the Internet), Troma does not allege any conduct that does not have a centralized locality.  Thus, the Second Circuit concluded that Troma’s case was a traditional commercial tort case in which the place where Troma’s business was lost of threatened influences the jurisdictional analysis.  Troma offered no evidence as to how New York would be such an influence.  “Troma is left, then, to rely on the Court of Appeals’ endorsement of the theory that out-of-state infringement may harm the bundle of rights held by a New York-based copyright owner in New York.”  Troma, Slip Op. P. 13.  However, this is only a theory of injury.  There is nothing in the Penguin II decision that would allow Troma to bypass the obligation to allege facts showing a direct New York-based injury.  Troma’s allegations of generalized harm to its distribution right were too speculative to support a finding of New York-based injury.  Instead, Troma’s alleged injury is simply economic losses, which are insufficient for personal jurisdiction.  As a result, the Second Circuit affirmed the dismissal of Troma’s case.

For Criminal Copyright Infringement You Must Know That Act Is Unlawful

The Ninth Circuit Court of Appeals in a criminal copyright infringement case found that “willfully” under the Copyright Act required actual knowledge of the illegality of the act, and to “knowingly” traffic counterfeit labels required knowledge that the labels were counterfeit.  U.S. v. Liu, Case No. 10-10613 (9th Cir. October 1, 2013) (available here).  Defendant Liu appealed his criminal conviction for copyright infringement and trafficking in counterfeit labels.  Liu’s company, Super DVD, commercially copied CDs and DVDs without permission from the copyright holders.  The Appeals Court vacated Liu’s convictions and remanded, finding that the lower court had improperly instructed the jury.

The issue was whether Liu acted “willfully” and “knowingly.”  “We hold that the term ‘willfully’ requires the government to prove that a defendant knew he was acting illegally rather than simply that he knew he was making copies. Similarly, to ‘knowingly’ traffic in counterfeit labels requires knowledge that the labels were counterfeit.” Liu, Slip Op. P. 3.  Liu’s commercial replication of the CDs and DVDs is different than an individual “burning” recorded content onto a blank CD or DVD.  Liu would take pre-recorded discs that had their content stamped onto them, which requires a molding machine and a stamper.  The creation of a CD stamper is called “mastering.”

In 2003, federal agents executed a search warrant on Liu’s Super DVD warehouse.  The search resulted in the discovery of thousands of unauthorized DVDs and CDs.  Liu testified that Super DVD did manufacture copies of the movie “Crouching Tiger, Hidden Dragon” for a company called R&E Trading.  R&E had given Super DVD a stamper with the name “Tiger” on it, and it was only later that Liu realized R&E did not have the rights to duplicate the movie.  He denied knowledge and involvement in replicating the other works found in the warehouse.  Liu was charged with and convicted on three counts of criminal copyright infringement under 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(b)(1), and one count of trafficking in counterfeit labels under 18 U.S.C. § 2318(a).  He was sentenced to four years in prison and three years of supervised release.

Liu requested a jury instruction mimicking the language of 17 U.S.C. § 506(a)(2), that “[e]vidence of reproduction or distribution of a copyrighted work, by itself, shall not be sufficient to establish willful infringement of a copyright.”  17 U.S.C. § 506(a)(2).  This language was not included in the government’s proposed jury instruction, although the government informed the lower court that it had no problem with Liu’s requested jury instruction.  The night before closing arguments, the lower court emailed out a draft of the jury instructions.  The next morning, the court stated that it made some unsubstantial changes to the jury instructions.  However, the Ninth Circuit determined that the changes were substantive.  For example, the court added a definition of the term “knowingly.”  The lower court defined “knowingly” as follows: “An act is done ‘knowingly’ if the Defendant is aware of the act and does not act through ignorance, mistake or accident. The government is not required to prove that the defendant knew that his act was unlawful. You may consider evidence of the Defendant’s words, acts, or omissions, along with all the other evidence, in deciding whether the defendant acted knowingly.”  Liu, Slip Op. P. 9.  The lower court did not allow objections to the jury instructions.

The Ninth Circuit noted that the term “willfully” is ambiguous.  “To infringe willfully could simply mean to intentionally commit the act that constitutes infringement. Alternatively, it could mean that the defendant must act with a bad purpose or evil motive in the sense that there was an intentional violation of a known legal duty.”  Liu, Slip Op. P. 12 (internal citations omitted).  Liu was charged with criminal copyright infringement, and therefore, the Ninth Circuit determined, “willful” infringement required the government to prove that Liu acted with knowledge that his conduct was illegal.  In other words, “willfully” infringing on a copyright under the Copyright Act § 506(a) means “voluntary, intentional violation of a known legal duty.” Cheek v. United States, 498 U.S. 192, 201 (1991) (internal quotation marks omitted).  The Ninth Circuit supported its reasoning by stating that in order to infringe a copyright, one must actually copy the protected work.  Thus, if willfulness under § 506(a) was met by an intent to copy, there would be no difference between criminal and civil copyright liability in most cases.

In this case, the parties agreed to include a jury instruction that evidence of a reproduction of a copyrighted work was not, by itself, sufficient to establish willfulness.  However, the lower court failed to include this language.  The lower court defined willful infringement but omitted the knowledge component, thereby instructing the jury to use the civil liability standard for copyright infringement and not the criminal liability standard.  The Ninth Circuit concluded that this error was not harmless.  Liu’s state of mind was critical to his criminal convictions.  As a result, the Ninth Circuit vacated Liu’s convictions and sentence for criminal copyright infringement, and remanded them to the lower court.

Liu also challenged the jury instructions on the count for trafficking in counterfeit labels, which required that Liu acted “knowingly.”  “Like ‘willfully,’ the word ‘knowingly’ is susceptible to more than one meaning in this context. It could mean either that the defendant knew that he was trafficking or that he knew that the labels were counterfeit. We hold that ‘knowingly’ in this context means the latter, and thus the government must prove that Liu knew the labels were counterfeit.”  Liu, Slip Op. P. 21.  The lower court’s jury instruction included a statement that instructed the jury that the government did not have to prove that Liu knew his act was unlawful.  Instead, the lower court instructed the jury that Liu only needed to know that he trafficked the counterfeit labels.  “This instruction was at best ambiguous as to whether Liu needed to know that the labels were counterfeit or merely needed to know that he trafficked in labels that later turned out to be counterfeit—a strict liability standard.”  Liu, Slip Op. P. 24.  As a result, the lower court’s error was not harmless.  The Ninth Circuit vacated and remanded Liu’s conviction and sentence for trafficking in counterfeit labels.

Mayweather Knocks Out Competition In Case For Copyright Infringement

The Fourth Circuit Court of Appeals held that speculative evidence was not enough to show a genuine issue of material fact relating to damages in a copyright infringement lawsuit.  Dash v. Mayweather, et al., Case No. 12-1899 (4th Circuit, September 26, 2013) (available here).  Anthony Dash sued Defendants Floyd Mayweather, Jr. (“Mayweather”), Mayweather Promotions, Mayweather Promotions LLC, Philthy Rich Records, Inc., and World Wrestling Entertainment, Inc. (“WWE”) for copyright infringement.  Dash argued that Mayweather Defendants violated his copyright by playing a variant of his copyrighted music during Mayweather’s entrance at two WWE events.  The lower court granted summary judgment in favor of Defendants and Dash appealed.  The Fourth Circuit affirmed.

In 2005, Dash created an instrumental musical track called “Tony Gunz Beat” (“TGB”).  Dash never received any revenue from any of his musical compositions.  In 2008, Mayweather, a famous boxer, entered into a contract with WWE to perform at Wrestlemania XXIV.  Mayweather chose to enter the arena to a song called “Yep.”  Mayweather’s manager told the WWE that Mayweather owned all of the rights to the song.  The song was played for around 3 minutes while Mayweather entered the arena.  Dash alleges that “Yep” added lyrics to TGB.  In 2009, Mayweather entered into another contract with the WWE to appear as a guest host.  “Yep” was played in connection with his appearance.

Dash alleges that he created TGB in 2005, however he did not file a copyright application until 2009.  Dash alleges that Defendants’ use of “Yep” at both WWE events violates his copyright in TGB.  Thus, this alleged infringement occurred after creation but before copyright registration.  The lower court separated the litigation into two sections: liability and damages.  The parties jointly moved for summary judgment regarding Dash’s entitlement to damages under § 504 of the Copyright Act (actual and profit damages).  Dash’s motion contained a report by expert Dr. Michael Einhorn (the “Einhorn Report”), which concluded that Dash’s actual damages were no more than $3,000 based on licensing fees paid to other copyright holders for use of songs at Wrestlemania XXIV.  The Einhorn Report concluded that (1) $541,521 of the WWE’s net profit from Wrestlemania XXIV was attributable to the use of TGB; (2) $480,705 of Mayweather’s net profits from his appearance at Wrestlemania XXIV was attributable to the infringing use; and (3) Dash should receive at least $1,019,226 in profit damages plus actual damages.  The lower court held that Dash was not entitled to damages because he failed to meet his burden of proof.

§ 504(a) states that “an infringer of copyright is liable for either (1) the copyright owner’s actual damages and any additional profits of the infringer, as provided in subsection (b); or (2) statutory damages, as provided by subsection (c).”  17 U.S.C.  § 504(a).  “ The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.” 17 U.S.C. § 504(b).  First, the Fourth Circuit looked at whether Dash was entitled to actual damages under § 504(b), which is typically measured by the extent of injury caused to the copyrighted work’s market value at the time of infringement.  It is the copyright holder’s burden to prove the existence of a causal connection between the alleged infringement and loss of anticipated revenue.  The lower court concluded that Dash was not entitled to actual damages because he did not offer sufficient evidence to indicate the value of TGB.  Dash argues on appeal that the Einhorn Report provides evidence of TGB’s value, which is based on the $3,000 lost licensing fee.  Defendants moved for summary judgment regarding Dash’s damages, and thus had to show no genuine dispute as to the existence of any actual damages.  Defendants satisfied this requirement with Dash’s admission that he never received revenue from TGB.

The Fourth Circuit concluded that the Einhorn Report was too speculative to show actual damages.  First, the Einhorn Report failed to expressly conclude that TGB had a market value, instead it stated that Dash could have earned a maximum sum of $3,000 as a licensing fee.  This is not enough to establish that Dash was entitled to actual damages.  “The Einhorn Report’s failure to clearly state that TGB had a fair market value is notable in light of the fact that Dr. Einhorn was retained for the express purpose of evaluating the economic damages resulting from [Defendants’] alleged infringement of [TGB]. His omission of a clear statement of value suggests that he could not conclude, either with certainty or sound reasoning, that Dash would have been paid a licensing fee for [Defendants’] use of TGB.”  Dash, Slip Op. P. 27.  Even if the Einhorn Report had concluded that the use of TGB at the WWE events was of some value to Defendants, that evidence would still be too speculative to support Dash’s contentions that there was a genuine dispute regarding actual damages.  Further, Dash did not present any evidence that he ever received compensation for any of his works.

“Evidence of licensing fees paid to other artists for the use of other works may, in some cases, be sufficient to support the conclusion that a copyright holder would have been entitled to such a fee for the use of his work; however, such evidence may properly be rejected as a measure of damages if it is too speculative.”  Dash, Slip Op. P. 33.  Evidence of WWE’s licensing deals with other copyright holders can be sufficient if those licenses were based on a comparable use and on whether the work was comparable to TGB.  The WWE’s licensing deals were with well-known artists, and thus were too speculative and inapposite to be used to compare with Dash.  “[A]lthough the Einhorn Report acknowledged that ‘Yep’ was ‘a new derivative work based purportedly on [TGB],’ it failed to explain at all how this fact impacted the analysis of Dash’s actual damages claim.”  Dash, Slip Op. P. 40.  Thus, the Fourth Circuit affirmed summary judgment in favor of Defendants regarding actual damages.

Turning to profit damages, the Fourth Circuit noted that the lower court granted summary judgment in favor of Defendants because “it found that Dash had failed to present evidence that [Defendants’] revenues bore any causal link to the infringement.”  Dash, Slip Op. P. 50.  Dash had an affirmative duty to prove that the Defendants’ gross revenues were reasonably related to the alleged infringing use of TGB.  Thus, Dash had the burden to prove that the connection was at least hypothetically possible.  If Dash could prove a conceivable connection between the infringement and the claimed revenues, then his next step would be to prove a causal connection between the infringement and the level of Defendants’ revenues.  “In order to demonstrate a causal link, the plaintiff must show that the infringement could reasonably be viewed as one of the causes of the claimed revenues. In order to rebut a defendant’s evidence that the claimed revenues are not attributable to the infringement, the plaintiff must show that at least some portion of the revenues was actually generated by the infringement, rather than by other factors.”  Dash, Slip Op. P. 63.

The Fourth Circuit noted that many of the revenue streams claimed by Dash had no conceivable connection to the infringement because they involved revenues that customers and businesses paid to Defendants prior to discovering that “Yep” would be played.  Dash presented no evidence that the playing of “Yep” increased any of the WWE revenue streams.  Dash argued that he did not have to prove this, instead he argued that because the WWE broadcasts included “Yep,” the revenues from the events were derived exclusively from TBG.  If the infringement forms a significant part of the product generating the claimed revenue, then this can be enough to establish a causal link.  “However, when, as here, the infringing content forms only a small, incidental portion of the products that generated the claimed revenue streams, further evidence is necessary to link the claimed revenues to the infringement.”  Dash, Slip Op. P. 66.  As a result, the Fourth Circuit affirmed summary judgment in favor of Defendants regarding profit damages.

Former Customer’s Initial Contact Is Not Unauthorized Solicitation Of Customer But Beware Of Persistent Contact

The First Circuit Court of Appeals held that although an initial contact between a former employee and a customer was not a decisive factor, persistent contact does violate employee’s non-solicitation agreement.  Corporate Technologies, Inc. v. Harnett, et al., Case No. 13-1706 (1st Cir. August 23, 2013) (available here).  Corporate Technologies, Inc. (“CTI”) sued former employee Harnett to prevent him from doing business with CTI’s customers in violation of the signed CTI-Harnett  non-solicitation agreement. The lower court had granted a preliminary injunction restraining Harnett from doing business with those customers, and the injunction extended to Harnett’s current employer, co-defendant OnX USA LLC (OnX).  Defendants appealed the preliminary injunction.  The First Circuit affirmed the injunction.

For 10 years, Harnett worked as an account executive and salesman for. At the time Harnett was hired, he signed a non-solicitation and non-disclosure agreement with CTI. In 2012, Harnett left CTI to work for OnX.  At OnX, Harnett had sales-related communications and activities with CTI customers.  CTI sued, alleging tortious interference with contractual rights and advantageous customer relations and moved for preliminary injunction, which was granted.  The injunction restricted Harnett from engaging in any marketing or sales efforts for one year with respect to the CTI customers he had formerly serviced.  The injunction also required OnX to withdraw any bids that Harnett had helped to develop for those customers.  OnX and Harnett appealed.

“The non-solicitation provision contained in the Agreement prohibits Harnett from ‘solicit[ing], divert[ing] or entic[ing] away existing [CTI] customers or business’ for a period of twelve months following the cessation of his employment. The dispute between the parties turns on the distinction between actively soliciting and merely accepting business” which is an abstract distinction.  Corporate Technologies, Inc., Slip Op. P. 6.  Defendants argued that the customers had contacted Harnett, and thus he was allowed to deal with them without violating the non-solicitation contract.  However, the customers only contacted Harnett after he sent out a mass email stating that he was leaving CTI for OnX.  Thus, Defendants’ argument “is simply a linguistic trick: creative relabeling, without more, is insufficient to transform what is manifestly a question of fact into a question of law.”  Corporate Technologies, Inc., Slip Op. Pp. 7-8.

CTI’s non-solicitation and non-disclosure agreement was created to protect CTI’s established good will.  Allowing Harnett to do business with CTI customers solely because they contacted him first would undermine this protection.  Further, initial contact can be easily manipulated, such as by sending out a mass email to a large group of people, including some CTI customers.  The First Circuit also pointed out that the initial contact tends to be preliminary, and thus unlikely to lead to any business without further solicitation. Harnett’s actions, testimony, calendar, and email all show significant business communications with at least four of his former CTI customers on behalf of OnX.  “This persistent pattern of pursuing patronage permits a plausible inference that he was urging those customers to do business with OnX rather than CTI (in other words, an inference that he was trying to entice them away).”  Corporate Technologies, Inc., Slip Op. P. 11.  As such, the First Circuit affirmed the preliminary injunction.

Broad Discovery Demands Approved by TTAB Given Scope Of Trademark Opposition

The USPTO Trademark Trial and Appeal Board [“TTAB”] denied an opposer’s motion for protective order, finding that applicant’s high number of requests for admission was neither burdensome nor unduly oppressive when the opposer broadly pleaded its opposition to trademark registration.  The Phillies v. Philadelphia Consolidated Holding Corp., Opposition No. 91199364 (TTAB, August 19, 2013) (available here).  Philadelphia Consolidated (“Applicant”) filed several applications to register the marks “GREENPHLY” and “TEAMPHLY” for insurance in Class 36, and for organizing community sport and cultural events in Class 41.  The Phillies (“Opposer”) opposed the registrations, alleging priority and likelihood of confusion.  The Applicant served 507 requests for admission on the Opposer, which requested Opposer to admit or deny whether Opposer is selling or licensing specific goods and services under each mark plead in the notice of opposition (similar to a complaint). Asserting an undue burden, Opposer moved for a protective order to limit the 507 requests for admission.  The TTAB denied the motion except for a few of the requests.

Opposer argued that the protective order was necessary because (1) it appeared that Applicant did not attempt to seek only proper and relevant discovery; (2) while the scope of Opposer’s use of the marks is relevant, it is cumulative of other discovery requests; (3) the burden on Opposer to search through innumerable documents is unreasonable; and (4) the burden of time and expense on Opposer to respond to all 507 requests is unreasonable.  Applicant argued that its discovery was proper because it would narrow the issues in the case, because there were more than 14 different registrations at issue, each with a separate number of goods and services.  Since Opposer filed a motion for protective order, Applicant’s requests to admit were not deemed automatically admitted.

The TTAB ruled that discovery in these proceedings is broad. “While it is a general rule that parties involved in an adversary proceeding are entitled to seek discovery as they may deem necessary to help them prepare for trial, it is not the practice of the Board to permit unlimited discovery to the point of harassment and oppressiveness.”  The Phillies, Slip Op. P. 9.  In looking at Applicant’s requests for admission the TTAB concluded that the requests were not individually improper.  The TTAB also noted that the requests were not harassing or oppressive as a whole.  “While the Board recognizes that having to respond to hundreds of requests for admission may, in the abstract, appear excessive and unduly burdensome, in this case opposer has pleaded at least twenty-six marks, many of them cumulative and repetitive, as bases for its Section 2(d) claim and applicant’s requests for admission seek thirty-two admissions or denials for each of only fourteen of opposer’s pleaded marks.”  The Phillies, Slip Op. P. 11.  Thus, the requests are not per se oppressive or unduly burdensome.

If Opposer had narrowed its opposition, the scope of discovery would have been narrowed as well.  However, the TTAB did find that several of the requests were duplicative, and that several of the requests were regarding registrations that had not been pleaded by Opposer, and were thus outside of the scope of discovery.  The TTAB denied Opposer’s motion for a protective order except for the few requests for admission deemed duplicative or those regarding registrations not at issue.

“AWSHIT” Cannot be A Registered Trademark Due to Scandalous Nature

The USPTO Trademark Trial and Appeal Board (“TTAB”) has held that an applicant’s proposed mark was vulgar and scandalous by using the word “shit.”  In re Star Belly Stitcher, Inc., Serial No. 85247730 (TTAB, August 12, 2013) (available here).  In 2011, Star Belly Stitcher, Inc. (“SBSI”) filed an application to register “AWSHIT WORKS” as a trademark for hats, shirts, jackets, vests, and scarves, claiming first use on July 5, 2009 and alleged first use in commerce on July 10, 2009.  The Trademark Examining Attorney refused registration becuase the mark contained immoral or scandalous matter.  SBSI appealed.

SBSI argued that “AWSHIT WORKS” is a fanciful term that it created.  SBSI also argued that the Trademark Examining Attorney erred in separating “AW” from “SHIT,” stating that the “AWSHIT” portion of the mark was meant to be considered as a unitary term.  Further, SBSI argued that “Even if consumers perceive the word ‘shit’ within the mark, and equate it with ‘feces,’ the literal interpretation of the mark, ‘aw feces works,’ makes no sense.”  In re Star Belly Stitcher, Inc., Slip Op. P. 2.  SBSI also pointed to words, such as “shitake,” that contain the letters “s-h-i-t” but are not recognized or equated with the term “shit.”  Finally, SBSI stated that the trademark register has countless marks that are more offensive than “AWSHIT WORKS” and therefore any doubts regarding “AWSHIT WORKS” as a scandalous or immoral mark must be resolved in favor of SBSI.  In the USPTO’s brief, the examining attorney maintained that the term “shit” is offensive and produced online dictionary definitions of “aw,” “shit,” “awshit,” “aw shit,” and “works.”

Under the Trademark Act (the Lanham Act), an application to register a trademark can be denied if the nature of the mark is scandalous, immoral, or deceptive.  However, what constitutes “immoral” or “scandalous” material changes over time.  In order to refuse to register “AWSHIT WORKS,” the USPTO “must demonstrate that the mark is ‘shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; … giving offense to the conscience or moral feelings; … [or] calling out [for] condemnation.’” In re Mavety Media Grp. Ltd., 31 USPQ2d 1923,1926 (Fed. Cir. 1994).  Specifically, the Office must prove a mark is scandalous by showing that the mark is vulgar.

If the meaning of the mark is ambiguous, dictionary evidence of a possible vulgar meanings may be insufficient to establish the vulgarity of the mark.  However, if the dictionary evidence clearly shows that the mark as used by the applicant in connection with the products listed in the application calls to mind a vulgar meaning to the general public, then mark cannot be registered.  Here, the Examining Attorney presented various dictionary entries that defined the term “shit” as vulgar or offensive.

The term “aw” was defined to express sympathy or disapproval.  “Awshit” and “aw shit” were defined on the slang dictionary website Urban Dictionary as a term used when something bad happens.  Finally, “works” was defined as an industrial building.  While the dictionaries demonstrate that “shit” and “aw shit” are vulgar, the examining attorney also produced an article explaining how when former President George W. Bush casually said the word “shit,” many newspapers refused to print the word in full.  The examining attorney also pointed out that the U.S. Supreme Court used “s***” instead of “shit” in a recent opinion.  See FCC v. Fox TV Stations, Inc., 132 S.Ct. 2307, 2314 (2012) (“There, a person named Nicole Richie made the following unscripted remark while presenting an award: ‘Have you ever tried to get cow s*** out of a Prada purse?’”).

In considering the evidence presented, the TTAB concluding that SBSI’s proposed mark of “AWSHIT WORKS” is scandalous.  “We find that the totality of the evidence is sufficient to establish prima facie that the term ‘aw shit’ is an interjection, which is scandalous or vulgar to the conscience of a substantial composite of the general public, notwithstanding the fact that contemporary attitudes toward coarse language are more liberal than they were just a generation ago.”  In re Star Belly Stitcher, Inc., Slip Op. P. 9.  The TTAB noted that the subordinate word “WORKS” did not diminish the vulgarity of the mark.

The TTAB clarified that the dictionary definitions were sufficient to find the mark vulgar, but additional evidence proved that the mark is scandalous to the general public.  Thus, SBSI’s argument that “shit” has alternative meanings other than those presented by the examining attorney is irrelevant.  Similarly, the existence of words such as “shitake” is also irrelevant.  In addition, because SBSI presented its mark in standard characters, it did not matter whether SBSI’s goods had “Awshit Works” or “AwShit Works.”

Turning to SBSI’s argument that there were more scandalous marks already registered, the TTAB noted that SBSI only presented the listing of the registrations, not a copy of the registrations themselves.  This is insufficient, and even if SBSI had presented the registrations it would be untimely because SBSI should have included such registrations in its application.  Further, the existence of other scandalous marks does not justify the registration of another scandalous mark.  As a result, the TTAB affirmed the refusal to register “AWSHIT WORKS.”  However, “Nothing in this decision, of course, precludes applicant from continuing to sell its merchandise under the proposed mark; or from uttering the vulgar portion of its proposed mark upon its receipt of this decision.” In re Star Belly Stitcher, Inc., Slip Op. P. 14.

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