Trademark Cases to Watch in 2016

Trademark Cases to Watch in 2016

From headline-grabbing appeals like the Washington Redskins', to the U.S. Patent and Trademark Office's quieter showdown with an Alabama federal judge, 2016 has plenty of trademark fun in store. Here are the key cases to follow.
The Redskins and The Slants

A billion-dollar football franchise. A rock 'n' roll band. Sensitive issues of race in America. And dueling constitutional challenges to a decades-old statute. There might be plenty of big trademark battles in 2016, but nothing comes close to those being waged by the Washington Redskins and The Slants.

The central issue in each case is the Lanham Act's Section 2(a), which bars the trademark office from registering any marks that “disparage” people. Both the NFL team and band were denied registrations on the names because of the provision, and both are now making the same argument against it: That the rule violates the First Amendment by discriminating against unpopular speech.

A circuit split is brewing over the question. In the team's case, a federal judge ruled in Julythat trademark registrations are “government speech,” meaning how the USPTO chooses to issue them isn't subject to First Amendment scrutiny. But in the band's case, the Federal Circuit ruled en banc in December that the provision is an unconstitutional penalty against based on speech.

The team's case is on pace for a Fourth Circuit ruling in 2016; if it comes to a different conclusion than the Federal Circuit as to the constitutionality of Section 2a, that could set the stage for a trip to the U.S. Supreme Court.

“If the Fourth Circuit and Federal Circuit disagree on the constitutionality issue, then the basis for SCOTUS granting cert becomes more attractive, as in addition to the constitutional issue, a conflict would between the circuits,” said Mark Sommers, a partner at Finnegan Henderson Farabow Garrett & Dunner LLP.

The band's case was argued in October before the Federal Circuit; the football team's case is set to wrap up briefing in January.

The team's case is Pro-Football Inc. v. Blackhorse et al., case number 15-1874, in the U.S. Court of Appeals for the Fourth Circuit.

The band's case is In re: Simon Shiao Tam, case number 14-1203, in the U.S. Court of Appeals for the Federal Circuit.

Converse and the Chuck Taylor

All eyes in fashion IP will still be on Converse in 2016, as the company continues to wage war against Wal-Mart Stores Inc., Skechers USA Inc. and others that are allegedly selling what amount to knockoff versions of the iconic Chuck Taylor sneaker.

The Nike Inc. subsidiary sued more than two dozen companies in 2013 for selling Chuck-esque shoes, claiming the similar-looking sneakers infringed certain physical elements of the famous shoe that Converse says are protected trade dress.

Most of the companies involved have since settled, but Wal-Mart, Skechers and New Balance — which has sold the similar-looking PF Flyer for decades — have stuck it out, aiming to prove that Converse cannot claim a monopoly on the design elements in question.

A judge from the U.S. International Trade Commission, where Converse filed its claims, issued a mixed preliminary ruling in November, affirming that the shoemaker has protectable rights in the shoe but letting Skechers mostly off the hook for infringement. A full opinion was released in mid-December.

In the new year, the case will proceed to the full commission, which must choose whether to affirm or reverse the initial decision. After that, either side can appeal the ruling to the Federal Circuit — setting up a high-profile appellate ruling on the extent to which apparel designs can be protected by trademark law.

The case is In the Matter of: Certain Footwear Products, investigation number 337-TA-936, before the U.S. International Trade Commission.

Costco's "Tiffany" Rings

Costco Wholesale Corp. and Tiffany & Co. will continue to duke it out in 2016 over whether the big-box retailer violated trademark law by selling diamond rings with the term “Tiffany” on the package — a term Costco says is merely a generic name for a type of engagement ring.

The two have been fighting for more than two years over the unauthorized use of the jeweler's name on Costco's rings. Tiffany called it infringement, but Costco argued that “Tiffany setting” had become a widely used generic term for the popular style of pronged ring setting created by Tiffany's founder more than a century ago.

In September, U.S. District Judge Laura Taylor Swain came down hard on Costco, ruling that the use of the name was not only trademark infringement, but outright counterfeiting. She said the retailer had “no affirmative evidence” to show that name was recognized by consumers as a generic descriptor, while Tiffany had plenty to show that consumers view it as a brand designator.

Costco wanted an immediate appeal of that ruling, but the Second Circuit ruled in November that the case was not yet ripe for an appeal. That means the next stage in the case will be a jury trial, scheduled for early January, on potential damages against Costco.

Once that wraps up, Costco is likely to appeal once more, giving the Second Circuit a chance to weigh in on big questions about genericness and how you prove it.

“The case raises some very interesting issues,” said J. Michael Keyes, a partner at Dorsey & Whitney LLP. “Can a world-famous brand have certain little portions of its very famous mark be carved out and become generic?”

The court will also be weighing in on whether Costco's use of the name, even if it was improper, rises to the level of counterfeiting — a charge usually reserved for egregious copying of a protected brand.

“Traditionally, we've thought of counterfeiting as someone clearly trying to create the impression that a knockoff watch is in fact a Rolex,” Keyes said, using that brand as an example. “Costco is going to argue that 'perhaps we didn't use this name as artfully as we should have, but our conduct certainly doesn't rise to that level.'”

The case is Tiffany & Co. v. Costco Wholesale Corp., case number 1:13-cv-01041, in the U.S. District Court for the Southern District of New York.

The USPTO's Showdown in Alabama

Barring some kind of agreement, 2016 will see the U.S. Patent and Trademark Office continuing its unusual showdown with Judge R. David Proctor — an Alabama federal judge who's demanding that the Trademark Trial and Appeal Board erase one of its precedent-setting opinions.

Judge Proctor signed off on a settlement in 2014 between the University of Alabama and a small T-shirt company, an agreement that included a clause requiring TTAB to vacate the decision that was being appealed to his court. The board's 78-page precedential ruling said UA didn't have any trademark rights in the houndstooth pattern that was famously worn by a former football coach.

Judges like Proctor have the right to review and overturn TTAB rulings, but it's hard to argue that he ever actually reviewed the decision against UA. The case record from the board was never sent to his court, and he never issued a substantive ruling critiquing the board's decision. He merely signed off on a private agreement to wipe the slate clean.

In June, TTAB declined to do so. The board said that legal precedents belong to the public, and that they could not be wiped away by a backroom deal and with little or no explanation as to how or why the decision is flawed.

That rankled Judge Proctor, who said in an August hearing that he was well within his rights to toss out TTAB's decision.

“The court got it wrong. It wasn't even in the same ballpark,” the judge said of the board's ruling. He later added, “I'm not sure I'm required to explain myself to an administrative agency," or if the board was allowed to say “nanny nanny boo boo” to a federal judge.

The USPTO has now intervened in the case, likely to put itself and TTAB in line to appeal the decision if he sticks to his guns and issues a formal order requiring the board to vacate the decision.

It’s flying under the radar, but the fight in Alabama is a big deal.

Private parties, particularly deep-pocketed ones, would love the chance to nix case law that doesn't go their way, but precedential opinions are hugely important to the wider trademark community, allowing both attorneys and the public understand what can be protected under trademark law.

The case is Board of Trustees of the University of Alabama et al. v. Houndstooth Mafia Enterprises LLC et al., case number 7:13-cv-01736, in the U.S. District Court for the Northern District of Alabama.

The Fight For Flanax 

After oral arguments in November, the Fourth Circuit is set to weigh in on whether Bayer AGhas standing to stop an unauthorized third party from registering the Mexican name for painkiller Aleve in the U.S. — a case the German drugmaker says could rob millions of immigrant consumers of the Lanham Act's protections.

Back in 2014, Bayer had won a ruling from TTAB that canceled a registration held by Belmora LLC for "Flanax," the name the company uses for Aleve in the Mexican market. The board said Belmora was trying to dupe recent Mexican-American immigrants with a familiar brand name from their home country.

But in February, a federal district court overturned TTAB's decision. The German company had never used "Flanax" in U.S. commerce, the court said, and thus lacked standing to initiate the cancellation proceeding in the first place.

The case, now before the Fourth Circuit, poses a real dilemma. American trademark rights rely on actual commercial use, so it stands to reason that Bayer would have no right to protect a name that it has never used in the U.S. But can the Lanham Act, designed to protect against consumer deception, really not provide any relief against what appears to be a naked knockoff targeted at Mexican-Americans?

How the court crafts a decision to deal with those competing concerns will be one of the must-watch trademark stories of 2016.

“If Bayer wins, this could give owners of trademarks in China or Europe new claims against their U.S. competitors,” said Eric Ball, an attorney with Fenwick & West LLP. “With a flattening world, especially with apps and Internet companies, this could have a significant impact on trademark enforcement actions.”

The case is Belmora LLC v. Bayer Consumer Care AG, case number 15-1335, in the U.S. Court of Appeals for the Fourth Circuit.

The Battle Over Coke "Zero"

Following oral arguments in December, TTAB is set to decide whether Coca-Cola can win trademark registrations on the name “Zero” — a name that giant soda rival Dr. Pepper/Seven-Up Inc. says is merely a generic or descriptive term for calorie-free soda.

The two have been duking it out for years over “Coke Zero” and 17 other “Zero” marks that Coke wants to register. Coke wants the names without disclaiming the “Zero” aspect, but Dr. Pepper says the vast majority of consumers view the word as product information rather than a brand designator — akin to “diet” or “light.”

At arguments in December, Dr. Pepper pointed to numerous examples of Zero that don’t belong to Coke, like Pepsi’s Propel Zero, Arizona’s Arnold Palmer Zero and Royal Crown’s Diet Rite Pure Zero.

The board’s eventual ruling, which will almost certainly be appealed, could shed helpful light on what it takes for a fairly descriptive word to become a protectable mark.

The case is Royal Crown Company Inc. et al. v. The Coca-Cola Co., case number 91178927, before the Trademark Trial and Appeal Board.

--by Bill Donahue

--Editing by John Quinn and Edrienne Su.


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