March 3, 2017—This post is a follow-up to my post a couple weeks ago regarding the Zenimax v. Oculus case.  As expected, Zenimax filed its motion for an injunction on February 23.  The motion itself pulls no punches.  It directly and angrily argues that Oculus’s entire business was built on Zenimax’s intellectual property.  At the same time, Zenimax also filed its motion to have judgment entered on the jury verdict, which as I mentioned in my earlier post is a first step in transforming the jury verdict into something that Zenimax can attempt to collect on.  Both documents provide interesting insights into the case.  Some highlights:

1. While the requested injunction covers a lot of different things, the real nuclear component of the requested injunction is stated as follows:

Defendant Oculus is permanently enjoined, on a worldwide basis, from using, marketing, selling, distributing, modifying, servicing, copying, or offering for sale or license any products, in whole or in part, that utilize in any form or for any purpose any of the Copyrighted Materials, including but not limited to (i) system software for Oculus PC (including the Oculus PC SDK); (ii) system software for Oculus Mobile (including the Oculus Mobile SDK); (iii) Oculus integration with the Epic Games Unreal Engine; and (iv) Oculus integration with theUnity Technologies Unity Game Engine.

This is really the teeth of the injunction, as it would basically put Oculus’s entire business on hold.  It will also be the most difficult thing for Zenimax to obtain.  Perhaps realizing his, Zenimax requested a 20% royalty on all future sales for ten years in the event the Court did not believe an injunction should be issued.

2. Zenimax is seeking prejudgment interest on a variety of different parts of the money judgment.  This interest is substantial.  According to Zenimax’s calculations, if judgment were entered today, the prejudgment interest should be approximately $78,797,000.  Post judgment interest would also accrue during the pendency of the appeal, although the post-judgment interest rate for federal court judgments currently sits at a paltry .83%.
3. Zenimax is also requesting an award of its attorneys’ fees, which it estimates at $40,000,000.

Thus, as you can see, the financial and existential stakes for Oculus are only getting higher.

March 2, 2017—As we have discussed previously, trademark protection isn’t an exclusive club for words and pictures. Shapes, sounds, and even the tactile feel of a product can all qualify for trademark protection. And as a recent application from Hasbro shows, even the smell of a trademark might qualify for trademark protection.

The mark set forth in the application is technically the standard character mark “NON-VISUAL PLAY-DOH SCENT MARK.” After an amendment or a refiling though, Hasbro will provide a more detailed description of the mark. Hasbro did provide a miscellaneous statement that describes the scent in more detail as:

A unique scent formed through the combination of a sweet, slightly musky, vanilla-like fragrance, with slight overtones of cherry, and the natural smell of a salted, wheat-based dough.

Scent marks are not unheard of, but can be difficult to successfully register. Legend has it that the first scent mark was registered in 1990, following an appeal to the Trademark Trial and Appeal Board. The mark was described as “high impact, fresh, floral fragrance reminiscent of Plumeria blossoms” used for sewing thread and embroidery yarn (Reg. No. 1,639,128). In re Celia, dba Clarke’s Osewez, 17 USPQ2d 1238 (TTAB 1990).

Like other non-traditional trademarks, registration of a scent mark imposes additional hurdles. A scent mark cannot be inherently distinctive and therefore the Applicant must establish that the mark has acquired distinctiveness, as set forth in the Trademark Manual of Examining Procedure 1202.13. Also, the claimed mark cannot be functional. Accordingly, if the smell is the natural result of a manufacturing process or provides non-reputational related advantages over competitive products, then the mark is likely functional and non-registrable.

Other scent marks have been registered, but not many are on the Principal Register. One company owns a registration for a “bubble gum” scent mark for shoes and flip flops (don’t ask me why). Another entity owns a registration for a cherry scent for automobile lubricants.  There are many more scent marks that could not clear the acquired distinctiveness hurdle, but were not deemed functional so were eligible for registration on the Principal Register. This would include Verizon’s “flowery musk scent” for its retail stores or another company’s strawberry-scented toothbrushes.

Will Hasbro will be able to overcome the functionality hurdle? Presumably some of the ingredients are included in order to get the right consistency. However it seems less likely that the cherry and vanilla fragrances are necessary, so my best guess is that functionality won’t prevent registration. Acquired distinctiveness is the bigger hurdle for scent marks, but I can already imagine the smell of Play-Doh just by thinking about it. The mark certainly has recognition. However to be completely honest, I never noticed the “vanilla” or “cherry” overtones. But maybe my toy clay palate isn’t sufficiently advanced to pick up on those notes.

February 22, 2017—You don’t have to be a sports fan to be aware of MARCH MADNESS, the name associated with the annual tournament to determine the college basketball national champion. The tournament is organized by the National Collegiate Athletics Association. The name MARCH MADNESS is derived from the fact that the tournament occurs almost exclusively in March. Conferences big and small from throughout the country participate in the tournament. But one of those conferences, the Big Ten Conference, is entering a legal battle with the NCAA over the scope of the NCAA’s rights in its MARCH MADNESS trademark.

The Big Ten wants to use the tagline MARCH IS ON! to promote, sponsor, organize, and broadcast its sporting events. It filed an intent-to-use application to register the mark with the U.S. Patent and Trademark Office (USPTO). The USPTO reviewed the application and determined that the mark was eligible for registration and published the application. Unfortunately for the Big Ten, the NCAA thinks that the Big Ten’s use of MARCH IS ON! will harm the NCAA’s rights in MARCH MADNESS. On February 13, the NCAA filed a Notice of Opposition to the application (available here).

The Notice of Opposition doesn’t include much detail in support of the claimed harm. Instead, other than the claim of priority, the Notice of Opposition includes a conclusory allegation that the Big Ten’s proposed use “is likely to result in confusion, mistake, or deception with [the NC, or the goods and services marketed in connection with [the NCAA’s] MARCH MADNESS mark.” The Notice of Opposition does not even allege that the marks are similar or that the goods or services are related. In light of the narrow scope of authority, pleading requirements are pretty liberal at the Trademark Trial and Appeal Board (TTAB), but even the NCAA’s Notice of Opposition is pretty sparse on factual allegations.

While establishing the services are related should be an easy layup, demonstrating that the marks are similar might be a big more challenging. After all, the only similarities in the marks consist of the shared term MARCH. There is no similarity of meaning (as you might have with MARCH INSANITY) or similarity in sound (MARCH MAYHEM). Sharing a single term can be sufficient to establish a likelihood of confusion in some circumstances, but confusion may be avoided if the shared term is descriptive of the services or weak in some other way. If the NCAA’s mark was BASKETBALL MADNESS, it would be difficult to claim that consumers would be confused with the Big Ten’s use of BASKETBALL IS ON!

While MARCH isn’t as weak as BASKETBALL, the term describes when the NCAA tournament occurs and when the Big Ten basketball tournament occurs. It seems like the claim may be an overreach by the NCAA. But who knows, perhaps this claim will be another of the many Cinderella stories associated with the NCAA. We’ll have to check back in the second half.

February 10, 2017—President Trump has been in office for less than a month. Yet, it would be fair to say that his time in office has been, if nothing else, eventful. While the more important aspects of his policies have received far greater attention, President Trump has also had a profound impact on trademarks. In fact, he is a one man machine for generating catchy slogans. As expected, a number of individuals have sought to capitalize on these slogans, with applications filed for “Drain the Swamp,” “Lock Her Up,” “Bad Hombres,” “Fake News,” and more. As of the time of publication, it does not appear that any one has yet filed for “I’m, Like, a Smart Person” yet.

The validity of these applications is a question for another day. Yet the deluge of applications raises a new rallying cry for anyone about to launch a new product or service: TRADEMARKS FIRST!

Before you unveil your catchy new product or company name to the public, ask yourself: am I adequately protected? It can be very difficult to force a third-party to give up a domain name, Twitter handle, or other social media account, even if you later obtain a trademark registration. Instead, button up these important items early. Register any available domain names. Sign up for any social media accounts that you might want.  You can always cancel the account later. Plus, the domain names are likely cheaper now than they will be after you generate a buzz.

You should also take these steps before, or at the same time, as filing a trademark application. The USPTO database is a public database. As you know, people are constantly trying to use the internet to make money as easily and unscrupulously as possible. It should be no surprise that third-parties often scan the records and attempt to register domain names for recently filed applications, with the goal of reselling them to the trademark owner at a profit. Trying to buy back a domain name can cost a lot of time and money; avoid it if you can.

So please, include some down time in your product rollout for a conversation with an attorney, a review of your intellectual property, and a summary of your social media strategy and, together, we can put Trademarks First again.

February 3, 2017—Many of you interested in the video game and media industry have undoubtedly heard that Oculus recently lost a jury trial to Zenimax which resulted in a $500 million jury verdict.  However, what many (or at least some) of you don’t know is that a jury trial really is only a first step in the world of high stakes civil litigation.  Here’s what’s going to happen next.

1.  Additional fencing in the district court

While its not the same in every case, a jury verdict is usually recorded in something called the Court’s Charge to the Jury, or a Verdict Form.  In this case, for example, the jury returned its verdict in a “Charge to the Jury” form which included a series of instructions from the Court about the law, and some questions which were then filled out by the jury.  A copy of the 90 page form with the handwritten jury responses is here for those who are interested in seeing what it looks like.  Now that the jury has returned the verdict, the parties will likely end up filing a variety of “post-trial motions” which will argue about things like whether the evidence presented at trial actually supports the jury’s verdict, and whether the court should have let in or excluded particular evidence over the course of the trial.  Oculus may even claim it is entitled to a new trial.  Not until after all of these issues are resolved will there be an actual judgment for the $500 million which Zenimax can try to collect on.

2.  The likely appeal

Even after the district court enters its judgment, the parties will still have the right to appeal to the United States Court of Appeals for the Fifth Circuit.  The arguments that will be made here will very likely be similar to arguments made in the post-trial phase before the district court (i.e. the evidence didn’t support the verdict, there were improper decisions made about which evidence the jury could see and hear, or the court instructed the jury improperly on the law).  Depending on how the appellate court views the matter, possible outcomes include a new trial or an alteration to the damages amount.  If the parties are unhappy with the Fifth Circuit’s decision, they can ask the United States Supreme Court to review it, although it would be very unlikely that the Supreme Court would take the case.

3.  The post-trial  posturing

Even after a trial, there are still likely to be discussions between the parties about how to resolve the matter without further litigation.  Each party is also likely considering various legal and strategic options to improve its position in the marketplace.  By way of example, Zenimax has stated it intends to seek an injunction which, in this case, would be a Court order prohibiting the sale of Oculus headsets.  Zenimax could theoretically seek a “permanent” injunction, which would bar sale of the headsets for a substantial period of time, or it could at least seek an injunction pending the resolution of any appeals.  Depending on Zenimax’s success with this motion, it could substantially damage Oculus’s business.  This might lead Oculus to pay the $500 million judgment (and more) to get the matter resolved immediately.  It might also damage Oculus to the point that it has no reasonable alternative but to sell its business to Zenimax.  Interestingly, one of the defense arguments during the trial was that Zenimax brought the lawsuit because it was embarrassed about its prior decision to pass on an opportunity to acquire Oculus.  With an injunction hanging over Oculus’s head, Zenimax could realistically get a second chance to acquire Oculus at a very reasonable price.

As we often say in the legal profession, litigation is a process not an event.  This case is a perfect example of that cliché playing out.  Now that the trial has concluded, the real fun is about to begin.

January 25, 2017—Regardless of whether you’re a fan of “classic rock,” there are some songs that everybody knows. The song Hotel California by the Eagles is one of those songs.  Not everyone likes the Eagles (looking at you, Dude), but most people at least like Hotel California. So it’s no surprise that the Eagles want to prevent others from trying to make money off the name. Most recently, the band filed an opposition with the Trademark Trial and Appeal Board to oppose an application to register the mark HOTEL CALIFORNIA (the pleading is available here).

The application is owned by Hotel California Baja LLC (HCB), who apparently operates a hotel south of the border in the town of Todos Santos in Baja California, Mexico. Notably, HCB’s application does not seek registration in connection with “hotel services.” Instead, HCB appears to be seeking registration of its name to sell a wide variety of merchandise in the U.S., including cosmetics, body care products, eyewear, phone accessories, jewelry, and other products. Although the Eagles do not allege that they own any trademark registrations for the HOTEL CALIFORNIA mark, the band claims common law rights in connection with licensed goods such as clothing, guitar picks, posters, and others back to 1977. Along with the Notice of Opposition, the band filed an application to register the mark on Jan. 18, 2017.

But do the Eagles have trademark rights in the song name? We’ve broached the subject briefly before (here). Generally speaking, use of a word or phrase as a song, album, or movie title does not create trademark rights in that name because consumers aren’t likely to view such use as designating the source of the goods. Instead, consumers are likely to view the use simply as a title of a creative work, or some other expressive content. The issue is similar to merely ornamental refusals, where a name or phrase is used on a shirt, coffee mug, etc. as a design element or as informational phrase (like my BEST BLOGGER EVER mug, or a FEAR THE BROW t-shirt). However, it is possible through licensing the name and/or using the name on other products or services that the mark can come to signify a secondary source. Based on the pleadings, it appears that the Eagles may have a reasonable claim that the HOTEL CALIFORNIA mark, when used on licensed products, serves as a source identifier.

Even then, it’s possible the Eagles could claim that the mark falsely suggests an association with the band. HCB’s website includes the following information as part of its “history”:

During the 1960s and 1970s, the precise details of the hotel’s history are a bit “hazy” – not uncommon for the culture of that particular era in general… There are numerous stories. Whether fact or myth, nobody knows for sure. However, one rumor, fabricated in the 1990’s by someone with no connection to any owners of the hotel, states that the Eagles once owned it. This is unequivocally false. Many of the other legends are less black and white and continue to fascinate the public. Although the present owners of the hotel do not have any affiliation with the Eagles, nor do they promote any association, many visitors are mesmerized by the “coincidences” between the lyrics of the hit song and the physicality of the hotel and its surroundings.

1. Hotel California is accessed by driving down a long desert highway from either Los Cabos to the south or La Paz to the east
2. The Mission Church of Pilar is located directly adjacent to the hotel and mission bells are heard daily. Since the Church is so close it sounds like they are almost inside the hotel at times
3. Countless stories and firsthand witnesses relating to spirits and ghosts in the courtyard of the hotel.
4. During the ‘Hippie Era” of the 1960s and 1970s, people were know to easily grow their own marijuana in the extremely fertile land of the Todos Santos area and then roll them into “Colitas” which is a Mexican slang term for ‘Joint” or Marijuana cigarette
5. The simple fact that the Hotel California in Todos Santos was built in 1947 which was of course far before the “Hippie” or “Classic Rock” eras

It certainly seems like the hotel is trying to suggest an association with the band and the song. Accordingly to the Eagles (via Wikipedia), there is no “Hotel California,” as the hotel was more symbolic of Hollywood and L.A. generally. If the Board were to find that the use of the HOTEL CALIFORNIA does create a false association with the band, then the disclaimer is not likely to help. Even if HCB claims that the rumor was started by “someone with no connection to any owners of the hotel.”

HCB’s website does not clarify whether guests are allowed to “check out” or, more importantly, “leave.” Luckily for the applicant though, the Trademark Office does allow them to voluntarily abandon the application.

January 12, 2017—According to recent reports, the Chargers will announce this week that they are leaving sunny San Diego for also sunny Los Angeles. Over a short two year span, Los Angeles will have gone from zero NFL teams to two NFL teams, as the Rams moved from St. Louis to Los Angeles just last year. However unlike the Rams, the change may extend beyond zip codes, as the team is also reportedly considering a full rebrand of the team. This will mean crowds of sad San Diegans, a number of discarded powder blue jerseys, and a lot of wasted governmental filing fees paid to the U.S. Patent and Trademark Office.

Yes, each time a sports team moves cities, a number of people rush to file trademark applications. Perhaps they have a great idea for a team name and want to be the person that named the team. More likely, however, is that there is a hope they can “get in first” and force the team to buy the application from them. Back in September when the Oakland Raiders publicly considered  moving, there were no less than six applications filed for the LAS VEGAS RAIDERS mark over a 48 hour period.

Unfortunately for those applicants (and others with similar plans), the applications are likely dead in the water. Unlike some countries where trademark rights are given out on a “first to file” basis, in the U.S. trademark rights are created through use of the mark in commerce. This requirement was relaxed slightly to allow for “intent to use” applications, where a party can file an application based upon its intent to use the trademark in commerce, even if they haven’t begun use yet.

However, when Congress created the new rules, there was concern that persons may abuse the system by applying for trademarks for the sole purpose of selling them to third-parties for increased sums. In order to prevent this from happening, the law requires that an applicant have a “bona fide” intent to use the trademark in commerce. Even if an applicant obtains a registration, that registration may be vulnerable to cancellation if the applicant did not have a bona fide intent to use the mark as of the filing date.

As you might imagine, trying to claim rights to the LA BOLTS mark to sell to the Chargers organization is not likely to qualify as a bona fide intent to use. This is particularly true if the application seeks protection in connection for “professional football team exhibition services.”

So if you’re considering capitalizing on the Chargers move to LA by filing a new trademark application, please reconsider. If you instead just want the glory of naming the newest NFL team, take to Twitter instead. If it worked for the RRS Boaty McBoatFace, it could work for you, too.

December 28, 2016—If you’re still looking for a holiday gift for that special someone, the Second Circuit has your back. Fresh off the docket, the Second Circuit gave its blessing to My Other Bag’s line of parody canvas tote bags. For additional background, you can read our discussion of the District Court’s grant of summary judgment to the defendant here. However, here’s the short version: My Other Bag (“MOB”) sells canvas tote bags that cost about $30 – $60. The line of bags is a parody of the “My Other Car Is a … [BMW, Mercedes, etc.]” bumper stickers and states on one side of the bag “My Other Bag…” with a cartoonish drawing of a luxury handbag on the other side (see example below). Louis Vuitton sued, claiming the bag infringed and diluted its trademarks and also infringed its copyright in the bag design. The District Court granted summary judgment to MOB and Louis Vuitton appealed to the Second Circuit.

If Louis Vuitton hoped for a more friendly reception at the Second Circuit, the oral arguments might have been a wake up call. During the oral argument, one member of the three judge panel told told Louis Vuitton’s counsel “This is a joke. I understand you don’t get the joke. But it’s a joke.” Although statements during oral argument don’t consistently predict how a court may rule, that is not the case here. On December 22, the Second Circuit issued a summary order affirming the District Court’s grant of summary judgment on all of Louis Vuitton’s claims. Perhaps this will be the end of the road for Louis Vuitton and MOB, or maybe Louis Vuitton will seek to continue the appeal. The more interesting aspect will be to see whether Louis Vuitton adjusts its aggressive approach to trademark enforcement in light of the loss.

November 30, 2016—The records of applications and registrations at the U.S. Patent and Trademark Office are publicly available, allowing individuals and companies to evaluate the registered trademark rights of third-parties. Unfortunately, these same records are also accessible by individuals for more sinister purposes, including sending “invoices” to applicants that appear to be official requests for required payments. While these scams have been occurring throughout the world for a number of years, New Zealand recently scored a significant win in the fight against these scams.

While most attorneys advise clients of the likelihood of receiving these notices, it does not prevent some unrepresented applicants from mistakenly making a payment. Thankfully, governments have begun to fight back against these scams. Over the last year, New Zealand has sought to obtain refunds from TM Publisher, an entity that sent misleading notices to companies in New Zealand. The company requested a payment of $1,600 NZ in order to “publish” an applicant’s trademark. Over the last six months, the New Zealand government identified and refunded more than $600,000 NZ from TM Publisher. While this is a large sum, TM Publisher is just one example of many scams, suggesting the number of payments could be even greater.

To provide some context in the U.S., it is common for applicants and registrants to receive misleading notices regarding publication, renewal, and other services. Some solicitations offer to publish your trademark in an international database, such as the Trademark Patent Publications solicitation, but doing so provides no benefit to the trademark owner. Other solicitations offer “renewal” services, which may or may not result in the actual renewal of your registration with the relevant authority. Most solicitations are printed to appear to be official, government notices. Some of the solicitations, like this notice, come from misleadingly named companies, like the “Patent and Trademark Office” in New York.

In the U.S., there have been criminal charges brought against individuals running at least one similar scam. The first indictment issued in October of 2015 and two more individuals were charged earlier in July 2016. The charges include bank fraud, mail fraud, and money laundering.

Notwithstanding these minor successes, there are still significant numbers of misleading notices sent to represented and unrepresented applicants and registrants. If you receive any notice regarding your trademark application or registration in the mail or in your e-mail, consult with your attorney. Although the Trademark Office has recently begun reminding owners of renewal deadlines, the Trademark Office does not request payment in these notices (especially through a wire to a bank account in the Czech Republic). If you don’t have an attorney, you can consult the USPTO’s information page regarding these invoices here or contact the Trademark Assistance Center.

November 11, 2016—The cause and effect relationship between art and culture has been a long-debated topic.  Does art depict what actually exists in our culture, or does the art dictate what exists.  It’s a classic chicken/egg debate.   And this ongoing debate occasionally rears its head in the video game space in the form of criticisms, and even lawsuits, suggesting that violence in video games begets violence in real life.  There are loud voices on either side of this debate.

Perhaps the most famous video game violence lawsuit came after the Columbine school shooting tragedy.  In that case survivors of a teacher that was shot and killed by Dylan Klebold and Eric Harris sued a bunch of media sources, including video game companies Acclaim Entertainment, Activision, Apogee Software, Atari, Capcom Entertainment, Eidos Interactive, ID Software, Nintendo, Sega, and Sony claiming that they were liable for having manufactured and supplied violent video games which included Mortal Kombat, Wolfenstien, Mech Warrior, Nightmare Creatures, Doom, Resident Evil, Final Fantasy, and Quake.  According to the Complaint, these games “made violence pleasurable and attractive and disconnected the violence from the natural consequences thereof, thereby causing Harris and Klebold to act out the violence… and trained them how to point and shoot a gun effectively without teaching either of them any of the constraints, responsibilities, or consequences necessary to inhibit such an extremely dangerous killing capacity.”  Interestingly, the lawsuit sought $5 billion in damages, while the families of the victims had reached a $2.5 million settlement with those responsible for providing the real life guns used.  The Court dismissed the claims after concluding, among other things, that “there is no basis for determining that violence would be considered the likely consequence of exposure to video games or movies” and “imposing liability would “burden these Defendants’ First Amendment rights to freedom of expression.” See Sanders v. Acclaim Entertainment, Inc., 188 F. Supp. 2d 1264 (D. Colo. 2002).  The Sanders lawsuit was filed in 2001 and was actually the second lawsuit that accused video game manufacturers of being responsible for school shootings.  The first was filed in 1997 and related to the Heath School Shooting in Kentucky. Since those lawsuits, there have been other various legal skirmishes arising primarily from efforts to limit access to such games.  Those efforts have generally resulted in the laws being found unconstitutional.

There have been various studies over the years concluding that violence in video games or other media do not cause real world violence.  Erik Kain at Mother Jones has done a fairly exhaustive summary of the science.  However, as with a lot of issues in our society, science doesn’t necessarily end the debate.  Notably, according to the Kain article, President-elect Trump previously tweeted that “Video game violence & glorification must be stopped–it’s creating monsters!”  We can reasonably expect that video games will be part of the debate anytime people are looking for reasons behind an incomprehensible tragedy.  That may ultimately result in a misguided effort to regulate the gaming industry, but for now, the science and the courts are against this.