Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law 2017

Annual Update

Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law

2017

Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017

Contents

PTO Cannot Deny Registration to “Disparaging” Marks ...... 2 University’s Ban on Use of Trademarks Violated the First Amendment ...... 2 Google Survives Genericide Claim ...... 3 Ninth Circuit Reaffirms High Standard for Infringement in Expressive Works ...... 3 Sony Nets First Amendment Win in Ninth Circuit ...... 4 Distribution of Counterfeits by Non-Controlled Retailers Does Not Infringe ...... 5 Green and Yellow Agricultural Equipment Violate John Deere’s Rights in Color Scheme ...... 5 Cheerios Loses Bid to Trademark Yellow Box ...... 6 Generic Name Plus TLD is Registrable, and PTO Can Win Fees Even if it Loses Case ...... 7 FanDuel and DraftKings Win Major Right of Publicity Case ...... 8 Recent Copyright and Trademark Publications ...... 9 Contacts in Covington’s Copyright and Trademark Practice ...... 10

1 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017

Below are the selections of Covington’s Intellectual Property Rights Group for the “Top Ten” most significant and interesting developments in U.S. trademark, false advertising, and right of publicity law during 2017.

which is not subject to the First Justice Kennedy reasoned, even PTO Cannot Deny Amendment and the government commercial marks are “part of the Registration to need not be viewpoint-neutral in its expression of everyday life,” and “Disparaging” Marks own speech. But as the Court allowing government viewpoint explained, private speech does not discrimination in that context In June, the Supreme Court issued a become government speech just amounts to censorship. highly anticipated trademark because it takes the form of a decision, Matal v. Tam. The Court federally registered trademark. Expression in a trademark remains University’s Ban on Use held that the “disparagement clause” of the Lanham Act violates the First the expression of the filer—not the of Trademarks Violated Amendment right to freedom of government. Such speech is thus the First Amendment speech and is facially entitled to full First Amendment protections. The Court was unconstitutional. Ruling on First Amendment grounds, unanimous on this point. the Eighth Circuit held in favor of a The disparagement clause prohibits student organization that had been In his four-justice opinion, Justice the registration of trademarks that banned from using Iowa State Alito also explained that a trademark may “disparage . . . or bring . . . into University trademarks. contemp[t] or disrepute” any is not a government program that subsidizes speech, like federal “persons, living or dead.” The student organization in question funding for public libraries or grants was the Iowa State chapter of the for artists. In those contexts, the This case centered on “The Slants,” National Organization for the Reform government is not “required to a band whose name the Patent and of Marijuana Laws (“NORML”), an subsidize activities that it does not Trademark Office (“PTO”) deemed officially recognized student wish to promote.” Justice Alito disparaging and not registrable organization. Iowa State grants such explained that trademarks are not because “slant” is a derogatory term student organizations permission to analogous to subsidies because the for persons of Asian descent. The use its trademarks under certain PTO does not pay money to parties Asian-American band members circumstances. Originally, in 2012, seeking registration. Justice Alito chose the name for their group in the the organization won approval to use also rejected the government’s hopes of reclaiming the term and an Iowa State trademark on T-shirts argument that trademarks are “draining its denigrating force.” bearing a marijuana leaf. Later, commercial speech, which has less allegedly after press coverage and protection under the First The Court unanimously held that political pushback, the university Amendment than other types of denying registration on the basis of a reversed its decision. Soon speech. Justice Alito explained that mark’s content “offends a bedrock afterward, Iowa State revised its even under that standard, the First Amendment principle: Speech trademark guidelines to prohibit, disparagement clause is not narrowly may not be banned on the ground among other uses, designs that drawn enough to survive scrutiny. that it expresses ideas that offend.” suggest promotion of drugs and drug The justices unanimously agreed on paraphernalia that are illegal or In his separate four-justice this point, but took different paths to unhealthful. concurrence, Justice Kennedy stated that result. Justice Alito wrote an that he would have applied an even opinion joined by Justices Roberts, Two members of the student group more stringent standard for viewpoint Thomas and Breyer. Justice sued for violations of their First and discrimination—which would have Kennedy concurred for himself and Fourteenth Amendment rights. The obviated any other questions the Justices Ginsburg, Sotomayor, and students claimed that Iowa State parties raised. Essentially, Justice Kagan. implemented stricter trademark Kennedy explained, the policies designed “expressly to government’s discrimination against All justices agreed that a trademark restrict [NORML]’s message.” They viewpoints it found disparaging is so is a form of speech that the alleged that this is viewpoint severe that the nuances of government cannot constrain just discrimination, for which government commercial speech and subsidy law because it is offensive. The entities like Iowa State must meet a (which Justice Alito explored in some government argued that registered high bar to show that restrictions on detail) need not be examined. As trademarks are government speech,

2 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017 speech from a certain viewpoint are Google Survives be generic, the “what” must be a acceptable. Genericide Claim particular type of goods or services. For instance, the “Aspirin” mark The district court granted the became generic because consumers plaintiffs’ motion for summary On May 16, the Ninth Circuit ruled in started using it to mean any pain judgment on the allegation that Iowa Elliott v. Google that the “Google” medicine using acetylsalicylic acid— State’s trademark licensing trademark is not generic as a matter not just the medicine Bayer made decisions, as applied to the plaintiffs, of law just because the relevant containing that ingredient. violated their First Amendment public sometimes—even often—uses rights. The district court also granted it as a verb. The court rejected plaintiffs’ a permanent injunction prohibiting argument that verb use of a the defendants from enforcing The opinion clarifies that genericide trademark, on its own, constitutes “trademark licensing policies against occurs only when a trademarked generic use as a matter of law. Plaintiffs in a viewpoint term becomes commonly used to Plaintiffs claimed that a trademark is discriminatory manner.” refer to a particular type of good or only performing its source-identifying service, regardless of source. For function when used as an adjective, On appeal, the Eighth Circuit example, Google would become e.g., a “Kleenex tissue,” and affirmed, noting the “unique scrutiny” generic only if the relevant public therefore that the common use of the the defendants imposed on refers to any internet search engine verb “to google” indicates its NORML’s trademark applications. as “a google.” genericness. But the court noted that The panel pointed to evidence it had long required more than a showing that the school’s reversal The plaintiffs, two individuals, mark just being used as a common was politically motivated and that its acquired over seven hundred domain part of speech. In its 1982 opinion trademark office had never before names containing the word “google,” Coca-Cola Co. v. Overland, Inc., the rejected a student group’s design including “googledisney.com,” Ninth Circuit had noted that the fact application due to concern over “googlebarakobama.net,” and that people used the Coca-Cola endorsement of the group’s cause. “googlenewtvs.com.” trademark as a noun, “a coke,” did not indicate whether or not people The court rejected the defendants’ Google filed a complaint with the had a particular source in mind. The argument that its actions could be National Arbitration Forum (NAF), noun “a coke” might refer to either a construed as government speech, arguing that these registrations Coca-Cola beverage or a generic and therefore did not violate the constituted “cybersquatting” and soft drink. Noun use alone did not students’ First Amendment rights. violated the Uniform Domain Name indicate genericide. Similarly, the The government speech doctrine did Dispute Resolution Policy. The NAF court ruled that the verb “to google” not apply here because Iowa State agreed and transferred the domain can be used discriminately, meaning “created a limited public forum when names to Google. The plaintiffs sued “to use a Google search engine,” or it made its trademarks available for Google in federal court, petitioning indiscriminately “to search for student organizations to use if they for the cancellation of the “Google” something on the internet.” abided by certain conditions.” In trademark. The district court granted limited public forums, the First summary judgment for Google. The In a concurrence, Judge Watford left Amendment requires a higher bar on Ninth Circuit affirmed, applying its open the question of whether speech restrictions. genericide test. evidence of a trademark’s indiscriminate use as a verb might, in For the court, the evidence here The Ninth Circuit describes its another case, be relevant to a jury’s pointed to the conclusion that Iowa genericide test as a “who-are-you/ determination of generic use. State imposed “unique scrutiny” on what-are-you” test: does the relevant NORML. The First Amendment public primarily understand the mark clearly prohibits discriminating as referring to the producer (who) or Ninth Circuit Reaffirms against NORML because of the the product (what). If the relevant High Standard for group’s viewpoints, and under the public primarily understands a mark Infringement in heightened viewpoint-discrimination as describing “who” a good or test, Iowa State failed to show that its service comes from, the mark is Expressive Works actions were narrowly tailored to valid. But if the relevant public serve a compelling government primarily understands a mark as In November’s Twentieth Century interest. describing “what” a good or service Fox Television v. Empire Distribution, is, the mark is generic and invalid. To the Ninth Circuit ruled that the First

3 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017

Amendment protected the title of trademarks in titles and substance games’ incorporation of real-world Fox’s television show “Empire”—so were protected, but promotion of trademarks for realism’s sake. Fox did not violate the record label those same works was not. Empire Distribution’s trademark The case concerned Sony’s Gran rights in its name. Applying the two-part Rogers test, Turismo games, which simulate the court found that Fox’s use did not racing real-world cars on various The Empire TV show depicts a infringe under either prong. First, the real-world racetracks. One such fictional hip-hop music label named court found Fox’s use of the “Empire” racetrack is the National Autodrome “Empire Enterprises.” Each episode term artistically relevant. The show is of Monza in Italy, where the Rally of features songs, some original, which set in New York—the Empire State— Monza takes place. Features of the Fox releases as singles after each and concerns a business “empire,” Monza racetrack formed the basis of episode airs and in albums after the Empire Enterprises. On this part of the case. In the Gran Turismo conclusion of each season. Fox the test, the court rejected Empire’s games, Sony had replicated that promotes this music through live and argument that a mark must have racetrack so precisely that it copied radio performances, as well as acquired a certain cultural relevance the logo of Italian flooring company through merchandise bearing the or meaning beyond its source- Virag SRL, whose logo appears on a “Empire” mark. identifying function in order to be bridge over the track. Virag sued evaluated under the Rogers test. It Sony for trademark infringement, Empire Distribution is a record label, also rejected Empire’s claim that the among other claims. distributor, and publisher. It sent Fox defendant’s expressive work must a letter asserting its rights in the refer to the senior work. Rather, the The district court granted Sony’s “Empire” name. In response, Fox court affirmed that the first prong of motion to dismiss the Lanham Act sought a declaratory judgment that the Rogers test is extremely simple: claim, holding that the First its show and associated music a defendant satisfies it if the title is Amendment protected the games as releases do not infringe Empire’s minimally relevant to the work, expressive works. So under the two- trademark. The district court granted nothing more. prong Rogers v. Grimaldi test summary judgment to Fox on all applicable to trademark infringement claims and denied reconsideration, The court rejected Empire’s claims based on expressive works, holding that the First Amendment argument that Fox failed the second Virag could not state a claim against protected Fox’s title against any prong, which requires an explicitly Sony. First, the Rogers test requires trademark claims. Empire appealed. misleading statement. Fox never that the copied mark be artistically even referred to Empire Distribution, relevant to the work where it Empire argued that the court should so it could did not explicitly mislead appears. The district court ruled that have applied the likelihood of consumers about it. Sony’s use of the Virag logo to depict confusion test, which it believed the National Autodrome of Monza would favor it. The court had instead The Ninth Circuit’s ruling makes was artistically relevant because it used the Second Circuit’s Rogers v. clear that creators of expressive makes the games more realistic. Grimaldi, which the Ninth Circuit has works enjoy strong protections when Second, if artistically relevant, use of ruled applies when an allegedly they use another’s mark in some way the logo cannot be explicitly infringing use arises in an expressive that is artistically relevant to the misleading to consumers. The court work. Under that test, use of a mark work. held that using Virag’s logo was not is not infringing unless it (a) has “no misleading. Virag appealed. (It lost artistic relevance to the underlying on its non-trademark claims too, but work whatsoever” or (b) is relevant Sony Nets First did not appeal those.) but still “explicitly misleads” as to the Amendment Win in work’s source or content. Ninth Circuit On review, the Ninth Circuit affirmed the district court’s ruling in three The Ninth Circuit affirmed judgment quick paragraphs. The court began In an unpublished but significant against Empire. It first clarified, by holding the games clearly subject opinion, issued without oral contrary to Empire’s argument, that to First Amendment protection—they argument, the Ninth Circuit ruled in the Rogers test applies not only to contain expressive elements such as Virag SRL v. Sony Computer characters, plot, music, “and uses of a mark in the title or body of Entertainment America LLC that the an expressive work, but also to extensive interactions between First Amendment protects Sony’s related promotional efforts. As the players and the games’ virtual video games, affirming dismissal of a court explained, First Amendment world.” Virag claimed the games trademark suit based on those interests would be “destabilized” if were subject to the lower

4 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017 constitutional standard for States. Although Duracell has This case demonstrates the difficulty commercial speech, but the Ninth agreed not to use the mark in the of pinning responsibility for off- Circuit rejected the argument United States or its territories, it market goods on the original because the games “do not merely continues to use pink bunny marks in manufacturer, at least through propose a commercial transaction.” other countries. trademark law. It also shows that The Ninth Circuit also ruled that the influence in a business relationship is Rogers test applies regardless of Energizer discovered several insufficient to demonstrate control for whether the mark in question has physical and online stores selling purposes of secondary trademark independent cultural significance, or Duracell batteries bearing the bunny liability. whether the game’s use of a mark mark. It informed Duracell, which serves to communicate a message responded that the products were other than the mark’s source. “diverted, gray market, or Green and Yellow counterfeit.” Duracell explained that it Agricultural Equipment The Ninth Circuit affirmed the district was investigating the matter. After Violate John Deere’s court’s application of Rogers to bar follow-ups produced no more Virag’s claim. It noted that the artistic information, Energizer sued. A few Rights in Color Scheme relevance prong is not a high bar— months into the litigation, Duracell relevance need only be “above zero,” wrote to the offending retailers, In October, in Deere v. FIMCO, a which it was here. It also found that requesting that they immediately Kentucky federal court held that Virag had not even alleged any stop advertising and selling Duracell Deere & Company’s green and “explicit indication, overt claim, or bunny-branded batteries. Many did yellow color scheme for agricultural explicit misstatement” that would so. Duracell itself sued a retailer that equipment was infringed by a mislead consumers. At this point, did not. competing manufacturer. The court Virag could seek panel or en banc found that color scheme famous, rehearing, or petition for cert before Energizer claimed that Duracell had holding the competitor liable for the Supreme Court. But it has not yet breached its contract not to use the dilution as well. sought review. pink bunny marks in the U.S. That contract also applied to parties over Deere manufactures a variety of The opinion mainly restates settled which Duracell “exercise[d] control.” agricultural equipment, including its Ninth Circuit law. But it is notable for Energizer claimed Duracell could John Deere line of tractors and affirming a First Amendment win on control its retailers. various equipment meant to be the pleadings. Courts often decline to towed behind tractors (usually called apply that defense on a motion to The court rejected Energizer’s claim. “trailed equipment”). Deere paints dismiss, frequently finding it too fact- First, Duracell exercised no essentially all this equipment in its dependent. management or control over any of signature green and yellow colors, as the retailers at issue. The fact that it has since the early 20th century. many of the retailers responded to FIMCO, a competitor to Deere, Distribution of Duracell’s request to stop selling the makes only trailed equipment. It has Counterfeits by Non- infringing goods did not demonstrate existed since 1966, but was mainly a Controlled Retailers otherwise. Second, the contract did regional South Dakota company until not oblige Duracell to prevent non- 1998—at which point it began a very Does Not Infringe controlled parties from using the rapid nationwide expansion. It also bunny mark. began painting its equipment in In October’s Energizer Brands v. green and yellow colors identical to Procter & Gamble, a Missouri federal Energizer also asserted a claim of Deere’s colors. In 2012, Deere court found that Duracell did not contributory trademark infringement. learned of FIMCO’s use of the Deere infringe Energizer’s pink battery The court rejected this claim, too. colors and began trying to resolve bunny when retailers sold Duracell Contributory infringement requires the issue informally, as it had with batteries bearing a similar mark that that a party intentionally induce other infringers. But by 2014, FIMCO Duracell made for foreign markets. another to infringe a mark, or to had consolidated its various sub- continue to supply another having brands under the “Ag Spray” brand Both Energizer and Duracell reason to know the other is name, and painted virtually all its advertise their batteries using the infringing. But Duracell had neither goods green and yellow. Deere, image of a pink toy bunny, often induced nor supplied any of the represented by Covington, sued for playing a drum. But only Energizer stores selling the batteries. trademark infringement and dilution. has rights to that mark in the United

5 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017

FIMCO had two main defenses to the vague testimony of its owner, trial since the Supreme Court Deere’s claims. First, at summary which the court declined to credit. reviewed the judgment from the judgment, it argued that Deere’s Qualitex case in 1995. It is also one color scheme was “aesthetically Having dispensed with FIMCO’s of the only reported cases discussing functional” and not a protectable defenses, the court found that how a dilution plaintiff can prove trademark. Under this doctrine, FIMCO infringed Deere’s mark. Most fame in the more distant past. marks are functional—and invalid—if factors of the infringement test their exclusive use by one entity indicated a likelihood of confusion. Across the Atlantic, however, would put competitors at a The goods at issue, varieties of another color mark fell short of the “significant non-reputation-related sprayers and applicators farmers European Union’s standards for disadvantage.” FIMCO claimed it would use to grow crops, were distinctiveness. In the EU, as in the would be disadvantaged if prohibited closely related. The marks used U.S., a mark must be distinctive. Red from using Deere’s colors because were highly similar because the Bull argued that its juxtaposition of farmers wanted to match their colors were identical and FIMCO silver and blue on its cans had FIMCO equipment to their Deere placed them on its equipment exactly acquired distinctiveness. It filed two tractors. In its ruling on summary where Deere did on its own goods. applications to register a half blue judgment, the court rejected this Deere presented testimonial and and half silver mark for its energy theory because FIMCO’s purported survey evidence of actual confusion. drinks, and was initially successful disadvantage was due purely to Deere and FIMCO also advertised but then challenged. The EU Deere’s reputation—because through the same trade shows and Intellectual Property Office found that farmers wanted trailed equipment in dealerships, placing the goods in the marks had not acquired sufficient the same colors they identified with close physical proximity. Finally, distinctiveness and were Deere. because the products were related insufficiently precise as to the colors and competed, the parties had registered. Courts subsequently Second, as a defense to Deere’s already expanded into the same upheld the cancellation. dilution claim, FIMCO argued that— product lines. Though a few factors by acquiring the assets of a 1930s- did favor FIMCO, the court held the era company when it formed in balance weighed toward Deere. Cheerios Loses Bid to 1966—it used green and yellow Trademark Yellow Box colors on farm equipment before Turning to dilution, the court ruled for Deere’s use of those colors was Deere on each relevant factor. As In August, the United States famous. If true, that would have noted above, the court found Deere’s Trademark Trial and Appeal Board barred Deere’s dilution claim mark famous years before FIMCO (“TTAB”) rejected General Mills’ because the Lanham Act requires copied it. Deere also vigorously attempt to trademark what it called a not just that a plaintiff’s mark be enforced its mark, having shown mark for “Toroidal-shaped, oat-based famous, but that it was famous dozens of successful examples of breakfast cereal.” The public knows before the defendant’s use began. such. And Deere showed convincing these oaty toroids as Cheerios, and survey evidence that people actually as General Mills contended, the After a June 2017 bench trial, the associated FIMCO’s color scheme public associates that cereal with its court first examined Deere’s with Deere. predominately yellow packaging. evidence of its marks’ fame in history: reams of newspaper Most notably for its dilution analysis, With that argument, General Mills coverage, periodicals, and other the court relied on FIMCO’s own sought to register yellow documents referring specifically to affirmative evidence to find that packaging—namely boxes—as a Deere’s color scheme. The court FIMCO intentionally associated its trademark for its Cheerios cereal. found Deere’s colors famous by goods with Deere’s—a key factor for The Trademark Examining Attorney 1968—when national magazines like dilution. The evidence FIMCO had refused registration on the grounds Forbes touted the colors—but at advanced at summary judgment on that a single color mark is not least by the late 1980s when Deere aesthetic functionality—that farmers inherently distinctive, and General obtained registrations for its color want trailed equipment in colors that Mills had failed to show acquired marks. Moving to when FIMCO first match their Deere tractors— distinctiveness—so the yellow used green and yellow, the Court supported Deere’s dilution claim at packaging failed to function as a examined the record and found that trial. mark for Cheerios. General Mills FIMCO had produced no tangible appealed to the TTAB. evidence showing it used green and The decision appears to be the first yellow before 1998. FIMCO had only color trademark case to go through

6 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017

Since the Supreme Court’s 1995 significance for the goods. Indeed, secondary meaning.” The court ruling in Qualitex v. Jacobson even accounting for General Mills’ added, however, that a TLD has no Products Co., the law on color survey evidence, the TTAB source-identifying significance by trademarks has been fairly settled. concluded that general familiarity itself. And it noted that because Single colors and color schemes with the yellow Cheerios box was not generic names plus TLDs are only may function as trademarks and be enough to change the TTAB’s descriptive and require showings of entitled to registration, but they can mind—it did not discount the TTAB’s secondary meaning, these marks are never be inherently distinctive. So conclusion that yellow packaging relatively weak. The court remanded anyone seeking to trademark a color alone did not indicate the source of the case to the PTO. or color scheme must show that, in General Mills’ goods. the mind of the public, the primary Despite its loss, the PTO filed a purpose of a color or color scheme At this point, General Mills may seek motion for its expenses—including must be to identify the source of a review of the TTAB decision before attorney and paralegal time, expert product—e.g., General Mills—not the the Federal Circuit or by bringing a witness fees, printing, and travel. It product itself, e.g., Cheerios. civil action, though it is unclear premised its motion on a section of whether it will do so. the Lanham Act providing that “all With that standard in mind, the TTAB expenses of the proceeding shall be noted that General Mills sells paid by the party bringing the case, Cheerios in several flavors, not all of Generic Name Plus TLD whether the decision is in favor of which have yellow packaging. But it is Registrable, and PTO such party or not.” Booking.com also found General Mills had Can Win Fees Even if it protested that such a payment invested much time and money violates the “American Rule” that promoting the Cheerios brand, Loses Case each party pay its own attorneys’ including the yellow box on its fees unless otherwise provided. “regular” Cheerios cereal. Here, In August’s Booking.com v. Matal, a General Mills submitted evidence of Virginia federal court held—contrary In October, the district court ruled for media referring to the Cheerios to PTO practice and Federal Circuit the PTO, finding itself bound by “yellow box.” It also conducted a precedent—that a generic name plus Fourth Circuit precedent holding that survey in which over half the a top-level domain (“TLD”) like “.com” the statutory provision’s reference to respondents identified Cheerios as can be registrable as a descriptive “expenses” included attorneys’ and the brand related to an unmarked mark, if the combination also has paralegals’ fees. That decision yellow box. secondary meaning. Even so, the rested on both plain meaning and PTO was able to recover fees for its historical analysis of the word Even so, the TTAB found a fatal flaw loss. “expenses” as used in the Lanham for General Mills’ case: it did not Act. The court found that a Supreme have the requisite “substantially Booking.com sought to register its Court case discussing a related exclusive” use of yellow boxes for website’s name as a trademark. issue in the Bankruptcy Code had cereal. As the TTAB explained, When the PTO refused on grounds not overruled the Fourth Circuit, and “[N]on-exclusive use presents a that adding “.com” or another TLD to that a case on the same Lanham Act serious problem for the merchant a generic name does not make it provision pending before the Federal seeking to develop trademark rights distinctive, Booking.com sued the Circuit en banc would in any event in a word, symbol, or device that is PTO. have no effect on the law of the not inherently distinctive, because it Fourth Circuit. interferes with public perception that The district court determined that it serves as an indicator of a single Booking.com’s mark was eligible for The court also rejected source[.]” protection. This broke with longtime Booking.com’s argument that forcing PTO practice not to register marks a prevailing party to pay the PTO’s The TTAB found that many others— that were generic names plus a TLD. expenses violates the First including General Mills’ main Reviewing Federal Circuit precedent Amendment right of access to the competitors—sold even toroidal- and PTO practices, the district court courts. It noted that other courts shaped, oat-based cereals in yellow ruled both that (1) a TLD generally have rejected this principle, and that packages. It concluded that the has source-identifying significance, the PTO is funded by user fees. The number and nature of third-party and (2) a mark composed of a court also pointed out that an cereal products in yellow packaging generic word plus a TLD “is usually a applicant who does not wish to pay meant consumers do not perceive descriptive mark eligible for the expenses of a de novo review of yellow as having source-indicating protection upon a showing of the PTO’s decision may appeal

7 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017 directly to the Federal Circuit, where The contests in question are online likeness in material that has political fees will not be due. versions of fantasy football. or newsworthy value, defined very Customers pay FanDuel or broadly. The court ruled that athletic The PTO’s broader interpretation of DraftKings a fee, select a group of achievements are newsworthy, even “expenses,” first asserted in 2013, collegiate players from a list of when a defendant is not a news thus survives in the Fourth Circuit. available athletes, then win or lose outlet. Second, the court ruled that But it may not in a case before the based on the athletes’ real-world the “public interest” exception Federal Circuit. Concerns about the game performances. For instance, if exempted the defendants’ websites accessibility of de novo review may a player drafted one of the plaintiffs, for the same reasons the find greater purchase there, and and that plaintiff scored a touchdown newsworthiness exception did: could also set up a potential case for in his real-life game, the customer namely, athletic achievements are the Supreme Court. would receive points redeemable events and topics of general or toward cash prizes if the customer’s public interest. team outperformed the other contest FanDuel and DraftKings entrants’ teams. These types of The court did not, however, rule for Win Major Right of contests made money for FanDuel the defendants on their First Publicity Case and DraftKings—but the plaintiffs Amendment or copyright argument. It contended the companies should not held that it could not rule on the be allowed to earn money by letting applicability of the fact-intensive First In October, Fantasy sports customers “draft” them. Amendment defense on a motion to companies FanDuel and DraftKings dismiss. It lacked the proper factual obtained dismissal of a lawsuit in FanDuel and DraftKings made three and evidentiary basis to evaluate the Indiana federal court—Daniels v. arguments in support of their motion websites based just on the FanDuel, Inc.—that claimed the two to dismiss: (1) that statutory pleadings, and it did not find the companies’ use of athletes’ names exceptions to Indiana right of defense so clearly applicable when and likenesses violated the athletes’ publicity law exempt their contest taking those pleadings as true. As to rights of publicity. materials from coverage under the the copyright argument, the court law; (2) that their First Amendment pointed to binding appellate law The plaintiffs were a group of college rights trump any publicity rights the holding that the Copyright Act does football players, who alleged that plaintiffs have; and (3) that federal not preempt Indiana’s right of FanDuel and DraftKings used their copyright law preempted the publicity statute. names and likenesses to promote plaintiffs’ claims. online fantasy sports contests, The case is not over, though. The without the plaintiffs’ consent. This, The court ruled for the defendants on plaintiffs have appealed to the they contended, violated the their first argument. Specifically, the Seventh Circuit. And this case is just plaintiffs’ rights of publicity under court found their contest websites one of several that have been Indiana law. That law forbids anyone were subject to two different brought against fantasy sports to use someone else’s name or statutory exceptions. First, the companies in recent years, asserting likeness for commercial purposes “newsworthiness” exception specifies right of publicity claims under various without having obtained prior written that the right of publicity does not states’ laws. consent. apply to the use of a name or

8 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017

Recent Copyright and Trademark Publications

 Jacqueline Charlesworth and Michelle Choe, “New Chance To Bypass DMCA Copyright Circumvention Ban,” Law360 (July 14, 2017)  Simon Frankel and Theodore Karch, “Brand owners rejoice at Google trademark ruling,” Daily Journal (June 26, 2017)  Simon Frankel, Ronald Dove, Kathleen Gallagher-Duff, Marie Lavalleye, and Neil Roman, “Supreme Court Rules That Law Prohibiting Offensive Trademarks Offends First Amendment,” Covington Alert (June 20, 2017)  Simon Frankel and Neema Sahni, “9th Circ. Ruling Generates Copyright Preemption Confusion,” Law360 (April 20, 2017)  Jacqueline Charlesworth, “Star Athletica v. Varsity: Ceci N’est Pas Une…Useful Article,” Law360 (March 26, 2017)  Simon Frankel, Jacqueline Charlesworth, Ronald Dove, and Marie Lavalleye, “Supreme Court Sets the Standard for Separability in Copyright,” Covington Alert (March 24, 2017)  Simon Frankel and Ronald Dove, “Significant Developments in U.S. and European Copyright Law,” Covington Advisory (February 22, 2017)  Simon Frankel and Ronald Dove, “Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law,” (February 22, 2017)

9 Significant Developments in U.S. Trademark, False Advertising, and Right of Publicity Law: 2017

Contacts in Covington’s Copyright and Trademark Practice

Beijing San Francisco Washington Jason Goldberg Simon J. Frankel Ronald G. Dove Jr. +86 10 5910 0501 +1 415 591 7052 +1 202 662 5685 [email protected] [email protected] [email protected] London Clara J. Shin Kathleen T. Gallagher-Duff +1 415 591 7058 +1 202 662 5299 Lisa Peets [email protected] [email protected] +44 20 7067 2031 [email protected] Seoul Marie A. Lavalleye +1 202 662 5439 Morag Peberdy Charles Kim [email protected] +44 20 7067 2107 +82 02 6281 0003 [email protected] [email protected] Bingham B. Leverich +1 202 662 5188 Los Angeles Shanghai [email protected] Mitchell A. Kamin Weishi Li Lee J. Tiedrich +1 424 332 4759 +86 21 6036 2502 +1 202 662 5403 [email protected] [email protected] [email protected] New York Silicon Valley David Haller Emily Henn Additional information about the +1 212 841 1057 +1 650 632 4715 firm and its practice [email protected] [email protected] can be found at: www.cov.com. Neil K. Roman +1 212 841 1221 [email protected] Jonathan M. Sperling +1 212 841 1153 [email protected]