Trademark Litigation

Intellectual Property FOLIO Trademark Litigation

Pre-Litigation Considerations Common Defenses to Trademark Infringement 1. Investigate facts supporting infringement and assess evidence in order 1. Abandonment – failure to use a mark for three consecutive years with to comply with pre-filing requirements for federal and/or state court intent to abandon the mark is prima facie evidence of abandonment; 2. Trademark owner may bring lawsuit in federal or state court for trade- failure to police and enforce a mark can also lead to abandonment mark infringement or unfair competition 2. Fraud – trademark owner misled or withheld information from the 3. Trademark owner may file with the International Trade Commission Trademark Office (ITC) to prevent the importation of infringing goods 3. Laches – unreasonable delay before asserting or enforcing rights against a. ITC participates as a party and conducts its own discovery defendant b. ITC decisions can be appealed to the U.S. Court of Appeals for the 4. Fair use – use of the mark that is descriptive or for identification Federal Circuit 5. Prior use – defendant used the mark before plaintiff used or registered 4. Failure of trademark owner to enforce its rights may reduce the strength its mark; for unregistered marks, this may be limited to a particular and value of the mark; trademark owner has obligation to “police” its geographic area mark 6. Generic – the mark is for a term that the relevant purchasing public 5. A party may oppose a pending trademark application on grounds of understands primarily as the common or class name for the goods or confusing similarity or may seek to cancel an existing registration in services an inter partes proceeding before the Trademark Trial and Appeal Board (“TTAB”) Remedies a. TTAB proceedings do not address infringement 1. Injunction – typically awarded to prevailing plaintiff b. TTAB proceedings are generally less expensive than federal court 2. If liability is established, lost profits of plaintiff, profits of defendant, a proceedings reasonable royalty or the cost of corrective advertising, and attorneys’ c. Discovery is available fees d. Evidence in TTAB proceedings is presented by written submissions; a. A remedy of lost profits requires proof that defendant would have and/or by deposition transcripts made the sales but for infringement – typically requires a market e. TTAB decision may be appealed to Federal Circuit or District Court survey 3. Courts may treble damages where infringement is willful; trebling must Incontestability be compensatory not punitive 1. A federal trademark registration that has been in use for five consecutive years may be eligible for “incontestable” status Unfair Competition a. Incontestability is conclusive evidence that the mark is valid and 1. State common law actions based on deceptive or wrongful business that its owner has exclusive rights to use the mark in commerce practices. b. An incontestable mark may nevertheless be cancelled on a number 2. Examples include: misappropriation, false advertising, “bait and switch” of grounds, including that the mark is: functional, abandoned, sales, use of confidential information by former employees to solicit generic, obtained by fraud, or used to misrepresent the source of customers, trade libel, and false representation of products or services. goods Dilution and Tarnishment Infringement 1. Action against use of a mark that is likely to dilute the distinctive qual- 1. Infringement occurs where the use of a similar mark on similar goods ity of a mark, tarnish the reputation of the mark and/or services is likely to cause confusion, mistake, or deception as to 2. Available only to owners of “famous” marks the affiliation, origin, sponsorship or approval of goods and/or 3. Defendant’s use of famous mark must be commercial and subsequent services to owner’s mark becoming famous a. In determining whether or not there is a likelihood of confusion, 4. Damages are available in dilution cases only where the defendant courts typically consider: willfully trades on the mark’s recognition or intends to harm the mark’s i. the similarity in the overall impression created by the reputation two marks (including the marks’ look, phonetic similarities, and underlying meanings); Defenses to Dilution or Tarnishment

ii. the similarities of the goods and services involved 1. Fair use. LLP (including an examination of the marketing channels 2. News reporting. for the goods); 3. Non-commerical use. iii. the strength of the plaintiff’s mark; 4. Ownership of a valid trademark registration. iv. any evidence of actual confusion by consumers; v. the intent of the defendant in adopting its mark; vi. the physical proximity of the goods in the retail marketplace; vii. the degree of care likely to be exercised by the consumer; and, viii. the likelihood of expansion of the product lines

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Pre-Litigation Considerations Remedies 1. Investigate facts supporting infringement and assess evidence in order 1. Injunction – typically granted where monetary damages are not suffi- to comply with pre-filing requirements for federal and/or state court cient 2. A work is entitled to copyright protection even without a federal 2. Actual damages suffered by copyright owner may be recovered – typi- registration cally in the form of lost profits a. In order to file a lawsuit for infringement, a federal registration is 3. Infringers’ profits may be recovered in addition to actual damages – required rationale is to discourage infringement b. Post-infringement registration is permissible but limits the type and a. No double recovery –lost profits cannot be recovered for sales made amount of damages available by infringer in addition to the infringer’s profits on the same sales 4. Indirect profits may be recovered –increased concession sales as a re- Infringement sult of infringing theatrical performance 1. Copyright infringement is the unauthorized reproduction, adaptation, 5. Statutory damages – as an alternative, generally when actual damages distribution, performance or display of a copyrighted work are difficult to prove and certain statutory prerequisites are met, the 2. Infringement requires proof of copying and improper appropriation court decides damages between statutory minimum and maximum a. Copying is typically proved by indirect evidence of access to the without proof of actual damages copyrighted work together with probative similarity of the work 6. Attorneys fees may be awarded at the court’s discretion based on the b. Copying may also be proved by direct evidence (e.g. eyewitness closeness, complexity and novelty of the issues and the conduct of the testimony) parties c. Copying does not require intent - subconscious copying is infringement Criminal Copyright Infringement d. Improper appropriation is typically proved by substantial similarity 1. Some acts of copyright infringement carry criminal penalties, includ- of the protected material ing imprisonment. Criminal acts include: 3. Copyright protects the expression of ideas, but not the idea itself a. Willful infringement for commercial advantage or private financial a. Merger – if an idea is capable of only one, or a very limited number gain of expressions, it is not copyrightable b. Reproduction or distribution of phonorecords having a value of more than $1,000 Indirect Infringement c. Distribution of work prepared for commercial distribution on 1. A party may be liable for inducement or contributory infringement a computer network accessible to the public where it has knowledge of the infringing activity and induces, causes, or materially contributes to the infringing activity of another 2. A party may be liable for vicarious infringement where it profits from direct infringement while declining to exercise a right to stop or limit it Defenses 1. The work does not contain copyrightable material 2. First sale – owner cannot control distribution after sale 3. De minimis – courts may excuse slight infringements 4. Fair use a. Statutory fair uses: use of a copyrighted work for criticism, comment, news reporting, teaching, scholarship, or research b. Parody – reasonable taking of copyrighted material for use as a parody may not infringe i. Parody used only for advertising is not a fair use c. Software - reverse engineering i. using a lawfully obtained copy of a computer program may be a fair use d. Considerations on whether use is fair include: i. Whether use is commercial or educational LLP ii. Nature of the copyrighted work iii. Amount of the copyrighted work used iv. Effect on the potential market or value of the copyrighted work

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