Michael Skidmore v. Led Zeppelin et al., Case No. 20-142 (S.Ct. 2020).

Author: Richard Sybert

The greatest rock band in recorded history is back in the news. And who, hearing their music blast through the dormitory corridors of UC-Berkeley in the fall of 1969, could have predicted that a half-century later, Led Zeppelin would be at the center of a raging copyright law controversy on its way to the United States Supreme Court? Will Jimmy Page have to wear a tie?

Fresh from its sacrilege at being turned into elevator music, the band’s “Stairway to Heaven”—perhaps the closest heavy metal could ever get to a love ballad—is the subject of court rulings and a petition for certiorari filed August 11 over claims that it plagiarized the opening bars and intro from a 1967 song called “Taurus” by the band Spirit.

A Los Angeles jury cleared Zeppelin of this infringement charge in 2016. A Ninth Circuit panel reversed the verdict, but it was reinstated by an en banc panel whose decision has sent shock waves roiling through the musical copyright world.

Notably, the Court of Appeal ruled that music copyright—and, therefore, analysis of infringement allegations—is limited to the deposit copy of the music on file at the Copyright Office. (All copyright registration applications must include a “deposit” at the Copyright Office of the work, or a representation of it, being copyrighted.) In the case of music copyrights, this tends to be “bare-bones,” often simple sheet music which is a far cry from the final version(s) actually produced and recorded. Put another way, the Courts will not compare the accused music against derivative versions of the copyright.

Lawyers for the estate of Spirit’s front man, which brought the suit, claimed in their cert petition to the Supreme Court that this ruling would have dire consequences for the music industry and effectively divest writers and composers (or their publishers) of copyright protection of the fruits of their labors. No doubt this is overstated, but also no doubt if this ruling stands it will represent a major change in music copyright law.

It is rare, of course, that cert petitions are accepted, which requires the votes of 4 of the 9 justices; of the 7,000 to 8,000 petitions filed each term, only about 80 are granted. Given their age, however, maybe some of the Supremes are Zeppelin fans. All we know is that right now there doesn’t seem to be a whole lotta love in the music world.

A Generic.com Term is Not Per Se Generic

Author: Julia Whitelock

A generic term combined with a non-source-identifying term is just a generic term, right?  In United States Patent and Trademark Office v. Booking.com B.V., Case No. 19-46, 2020 U.S. LEXIS 3517, 591 U.S. ___ (June 30, 2020), the U.S. Supreme Court rejected a sweeping rule that the combination of a generic word with “.com” is automatically generic and, therefore, unregistrable per se.

Procedural History

Booking.com, a digital travel company that provides travel-related services under the brand “Booking.com,” filed applications to register the mark “Booking.com.”  A USPTO examining attorney and the Trademark Trial and Appeal Board (“TTAB”) concluded that the term “Booking.com” was generic for the services offered and denied registration.  According to the Trademark Manual of Examining Procedure (“TMEP”) (Oct. 2018), “[portions of the uniform resource locator (‘URL’), including the beginning, (‘http://www.’) and the top-level Internet domain name (“TLD”) (e.g., “.com,” “.org,” “.edu,”) indicate an address on the World Wide Web, and therefore generally serve no source-indicating function.”  TMEP § 1209.03(m).  Because “.com” “generally indicate[s] the type of entity using a given domain name, and therefore serves no source-indicating function, their addition to an otherwise unregistrable mark typically cannot render it registrable.”  Id.  TTAB found that “booking” was a generic term for “making travel reservations” and “.com” only served to identify a commercial website.  It therefore concluded that “Booking.com” is unregistrable because it is generic or, in the alternative, descriptive and lacking secondary meaning.

The U.S. District Court for the Eastern District of Virginia and the U.S. Court of Appeals for the Fourth Circuit disagreed with the PTO.  Generic terms are the “common name of a product or service itself.”  Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 464 (4th Cir. 1996).  The District Court, relying on Booking.com’s new evidence of consumer perception, concluded that the compound term “Booking.com,” as opposed to “Booking,” is not generic.  Instead, consumer perception evidence indicated that “Booking.com” is descriptive and had acquired secondary meaning as to hotel-reservation services.  The USPTO appealed only the District Court’s ruling on genericness.  The Fourth Circuit affirmed the District Court’s determination that “Booking.com” is not generic, finding no error in its assessment of consumer perception and rejecting the USPTO’s contention that combining a generic term with “.com” is “necessarily generic.”  The Fourth Circuit applied the three-step test for genericness: “(1) identify the class of product or service to which use of the mark is relevant; (2) identify the relevant consuming public; and (3) determine whether the primary significance of the mark to the relevant public is as an indication of the nature of the class of the product or services to which the mark relates, which suggests that it is generic, or an indication of the source or brand, which suggests that it is not generic.”  Booking.com B.V. v. United States Patent and Trademark Office, 915 F.3d 171, 180 (4th Cir. 2019) (citing Glover v. Ampak, Inc., 74 F.3d 57, 59 (4th Cir. 1996)).

The Supreme Court’s Ruling Reaffirms the Primary Significance Test for Analyzing Genericness

The Supreme Court affirmed the Fourth Circuit, concluding that “Booking.com” is not generic.  The Court held, “[w]hether any given ‘generic.com’ term is generic…depends on whether consumers in fact perceive that term as the name of a class or, instead, as a term capable of distinguishing among members of the class.”  2020 U.S. LEXIS 3517, *16.  The Supreme Court’s ruling rejected the USPTO’s assertion of a blanket rule that deemed all “generic.com” terms as generic.

The Booking.com Court’s holding does not materially change the test for genericness as announced in Kellogg Co. v. Nat’l Biscuit Co., 305 U.S. 111, 118, 83 L. Ed. 73, 59 S. Ct. 109 (1938).  In Kellogg, the Supreme Court stated that the owner of the mark “must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.”  Id.  In Booking.com, the Supreme Court held that the owner of the mark must show that “consumers in fact perceive that term…as a term capable of distinguishing among members of the class.”  Accordingly, the Booking.com opinion reinforces the primary significance test in determining whether a mark is generic or descriptive in the context of a generic.com term.  To do so, the Court necessarily had to reject the USPTO’s position that a generic term combined with a generic corporate designation (in this case “.com”) is basically per se an unregistrable generic term.    

In Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., the Court held that “Goodyear Rubber Company” was not “capable of exclusive appropriation.”  128 U.S. 598, 602, 32 L. Ed. 535, 9 S. Ct. 166 (1889).  “Goodyear Rubber” was a class of goods and the combination of a generic term with “Company” “only indicates that parties have formed an association or partnership to deal in such goods.”  Id.  In Booking.com, however, unlike a generic term combined with “company,” a generic term combined with “.com” refers to a specific entity due to the exclusivity of domain name ownership.  2020 U.S. LEXIS 3517, *14.  Therefore, “consumers could understand a given ‘generic.com’ term to describe the corresponding website or to identify the website’s proprietor.”  Id. *15.  The Booking.com Court clarified Goodyear’s principles, in conjunction with the subsequent enactment of the Lanham Act, as “A compound of generic elements is generic if the combination yields no additional meaning to consumers capable of distinguishing the goods or services.”  Id. *15-16.  However, “[a] ‘generic.com’ term might also convey to consumers a source-identifying characteristic: an association with a particular website.”  Booking.com, 2020 U.S. LEXIS 3517, *14.  The point is that a court must look at consumer perception to determine whether the combined “generic.com” term identifies a class of goods or a particular producer. 

Impact

The decision may increase the cost of trademark prosecution.  The ruling seemingly opens the gates for an onslaught of generic.com applications.  However, applicants will need to show consumer perception that the generic.com term identifies a brand, not a class of goods.  The Booking.com Court provided a non-exhaustive list of support for consumer perception of a term’s meaning, to include: “consumer surveys, but also dictionaries, usage by consumers and competitors, and any other source of evidence bearing on how consumers perceive a term’s meaning.”  2020 U.S. LEXIS 3517, *16 n.6.  Compiling such evidence may be costly to trademark applicants seeking to register facially generic terms.

The decision may create a path for federal registration for other combination generic terms and non-source-identifying terms.  The Booking.com Court’s holding specifically identifies the factual circumstances for which to apply its rule – when analyzing whether a “generic.com” term is generic.  However, the analysis could likely be extended to other generic terms that lack a source-identifying term (such as other TLDs like “.org” or “.net”, or # or HASHTAG).

While a generic.com mark may be registrable (assuming proof of the mark’s primary significance as source to consumers), Booking.com does not alter the tenets of trademark law – likelihood of confusion and fair use.  “[E]ven where some consumer confusion exists, the doctrine known as classic fair use, [4 McCarthy] § 11:45, protects from liability anyone who uses a descriptive term, ‘fairly and in good faith’ and ‘otherwise than as a mark,’ merely to describe her own goods.”  2020 U.S. LEXIS 3517, *18 (citing 15 U.S.C. §1115(b)(4); KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 122-23, 125 S. Ct. 542, 160 L. Ed. 2d 440 (2004)).   

However, the decision may ultimately increase the instance of trademark bullying.  Even though a generic.com mark is registrable, as the Court explains and Booking.com concedes, the mark is a weak descriptive mark with a more difficult path to showing likelihood of confusion.  First, Booking.com concedes that “Booking.com” is a weak mark and as a descriptive mark, it is “harder…to show a likelihood of confusion.”  2020 U.S. LEXIS 3517, *18 (quoting Tr. of Oral Arg. 42-43, 66).  Second, Booking.com accepts that close variations of “Booking.com” are unlikely to infringe.  Id.  And finally, the federal trademark registration of “Booking.com” “would not prevent competitors from using the word ‘booking’ to describe their own services.”  Id.  However, it is conceivable that a generic.com trademark owner could and would use its federal registration to scare users of the generic term into ceasing use for fear of a costly, protracted legal battle.

About the author: Julia Whitelock is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property and Commercial Litigation Practice Groups.  Her practice focuses on litigating matters involving trademarks, copyrights, trade secrets, commercial disputes, and consumer claims, and advertising & e-commerce law.

Trademark Battle Heats Up Over Fizzy Way To Cool Down

Author: Tessa Carberry

In the past few years, cooling off with a hard seltzer on a hot summer day has become increasingly popular. While the two biggest players in the market, White Claw and Truly, enjoy the lion’s share of the market, many other companies are looking to capitalize in the hard seltzer market. And, as the Summer of 2020 begins to heat up, so does the trademark battle between two of these companies: Future Proof Brands, LLC (“Future Proof”) and Molson Coors.1

The Products and the Marks

On September 1, 2019, Future Proof launched “Brizzy,” a seltzer cocktail offering consumers a refreshing alcoholic beverage with only 100 calories, 2 carbs, 1 gram of sugar and 5% alcohol by volume. Brizzy flavors include Watermelon Mule, Strawberry Rose, and Mixed Berry Mojito. Future Proof applied to register the Brizzy mark with the USPTO in November 2018. Originating in Austin, Texas, the products can now be found in over 1,000 retail locations in four states with plans to expand into more states this year.

Molson Coors’s hard seltzer, “Vizzy,” is advertised as “the only hard seltzer with antioxidant Vitamin C.”2 It similarly offers 100 calories, 2 carbs, 1 gram of sugar and 5% alcohol by volume. In September 2019, Molson Coors filed an application to register the Vizzy trademark. Vizzy flavors include “hint of” pineapple mango, black cherry lime, blueberry pomegranate, and strawberry kiwi.

Future Proof Attempts to Protect Brizzy

In February 2020, after filing an action for trademark infringement, Future Proof filed a motion seeking a preliminary injunction prohibiting Molson Coors from selling and marketing Vizzy on the grounds that Vizzy was confusingly similar to Brizzy.3 Future Proof sought to enjoin Molson Coors from: (1) advertising or selling alcoholic beverages with Vizzy or any other confusingly similar mark to Brizzy; and (2) using, registering, or applying to register the Vizzy mark or any variation thereof.

However, the court refused to grant the preliminary injunction finding Future Proof did not meet its burden on the first requirement of the Rule 65 standard—namely, that it was likely to succeed on the trademark infringement claim. The court held that Future Proof failed to show it would succeed on the merits of the claim because there was not a likelihood of confusion between the marks – one of the two elements of infringement. The court examined the eight factors for confusion, discussed below, before concluding that, taken as a whole, there was insufficient evidence to demonstrate a likelihood of success on the merits.

The strength of the mark allegedly infringed

While Future Proof asserted that Brizzy was a strong mark, the court disagreed for two reasons. First, relying on precedent, the court reasoned that because the two marks share in the common root word “fizzy,” “which is certainly an adjective that a customer looking for a flavored, alcoholic seltzer product would desire…Plaintiff cannot realistically hope that by obtaining a mark based on and characterized dominantly by one word…it can prevent competitors from doing the same.” Second, the court points out there is a “plethora of competing products humorously close to [Future Proof’s] mark” such as Malibu’s Fizzy, Izzie Beverages, and Bizzy Cold Brew, among others. For these reasons, the court weighed this factor strongly in favor of denying the injunction.

The similarity between the two marks

Here, the court considered the similarity of the two marks by looking at their appearance, sound, and meaning. The court acknowledged that the letter “B” and “V” are easily confused4, but agreed with Molson Coors that the “logos, font, coloring, cans and packing could not be more different.” Since this factor is considered through the lens of how the customer perceives the marks, the court did not believe there was a high likelihood a customer would think the marks are similar, favoring denial of the injunction.

The similarity of the products or services, identity of the retail outlets and purchaser, and the advertising media used

The court considered these elements together and, with relatively minimal discussion, concluded they weigh in favor of granting the injunction.

The defendant’s intent

The court focused its inquiry on whether Molson Coors intended to derive benefits from Future Proof’s reputation. Future Proof presented no evidenced that Molson Coors intended to derive such a benefit and the court noted Molson came up with Vizzy months before Brizzy hit the market. This factor weighed in favor of denying the injunction.

The evidence of actual consumer confusion

Future Proof offered one instance of actual confusion wherein a wholesaler asked a Future Proof employee to talk about “Vizzy” when referring to the Future Proof product. However, the court drew the distinction that this was not consumer confusion, but wholesaler confusion and added this was a “fleeting mix-up of names.” Again, the court weighed this factor in favor of denying the injunction.

The degree of care exercised by potential purchasers

The court did not spend much time on this factor, stating “given the low cost of the products at issue, this factor provides little or no relevance to the court’s determination.”

Future Proof Refuses to let its Argument Fall Flat

On April 20, 2020, Future Proof filed a notice of interlocutory appeal of the court’s denial of the preliminary injunction motion. On June 10, 2020, Future Proof, refusing to let its argument fall flat, filed its 54-page brief opening brief on appeal, raising the overarching question of whether the “trial court erred in applying the factors…for evaluating a likelihood of confusion.”5 Future Proof asserted that Molson Coor’s use of Vizzy is “textbook trademark infringement” and focused its argument on four of the eight confusion factors: strength of the mark; similarity of marks; actual confusion between marks; and consumers’ degree of care and Molson Coor’s intent.

Strength of the Mark

Future Proof argues the trial court erred in finding Brizzy is a “weak” mark because it misapplied precedent by: (1) ignoring the presumption of distinctiveness enjoyed by a trademark holder and; (2) ignoring the tests adopted by the 5th Circuit to assess descriptiveness. Future Proof asserts that “a trademark is presumed to be inherently distinctive where, as here, the PTO registered the mark without requiring evidence of secondary meaning,”6 while also acknowledging this is a rebuttable presumption. Future Proof claims the only evidence Molson Coors has offered is an empty assertion that Brizzy comes from the word fizzy. Future Proof also challenges the court’s descriptiveness analysis, arguing that the court did not consider any of the four applicable tests under 5th Circuit precedent, under which Future Proof asserts its mark is not descriptive.

Mark Similarity

Similarly, Future Proof asserts the trial court erred in two distinct ways by: (1) focusing on certain visual differences in product packaging instead of the marks; and (2) ignoring the aural similarities between the marks. Future Proof relies on 5th Circuit authority stating the words should be the focus of the analysis, not the product packaging. Further, Future Proof states that the rhyming and audible difficulty in distinguishing between the “V” and “BR” consonants when spoken establishes similarity. Future Proof raises an interesting point in that sound in this case is particularly important as alcoholic beverages are likely to be ordered orally at a restaurant or bar.

Actual Confusion

Future Proof relies on authority suggesting that actual confusion is the best evidence of a likelihood of confusion and that “testimony of a single known incident of actual confusion by a consumer has been found to be sufficient evidence to support the district court’s finding of actual confusion.”7 Future Proof refuted the trial court’s distinction between a wholesaler and a consumer, citing 5th Circuit authority to support the proposition that a retailer or distributor’s confusion is consumer confusion.

Degree of Care and Intent

Future Proof argues that the trial court failed to give due weight to these two factors. Concerning the degree of care consumers use in selecting the products, Future Proof asserted that in the hard seltzer market, with a relatively low price point, consumers are making quick decisions among a “crowded array” of products in fast-paced environments, tilting this factor in its favor. Finally, Future Proof asserted that Molson Coors did have the intent to infringe based on a Molson Coors executive’s awareness of Brizzy before launching its media blitz for Vizzy.

*********

While we await a ruling from the 5th Circuit to determine whether there is a likelihood of confusion between Brizzy and Vizzy, let the arguments of each side percolate and bubble as you come to your own conclusion.

About the author: Tessa Carberry is a litigation associate in the Denver office of Gordon Rees Scully Mansukhani and a member of the firm’s Intellectual Property Practice Group. With a background in biology and mathematics, and as a former emergency medical technician, Ms. Carberry’s interests include the overlap between healthcare and IP law.
________________________________________________________________________

1 Molson Coors refers collectively to both named defendants in the lawsuit: Molson Coors Beverage Company F/K/A Molson Coors Brewing Company and MillerCoors, LLC.
2 https://www.vizzyhardseltzer.com/#about-us
3 Future Proof Brands, LLC v. Molson Coors Beverage Company, et al., No. 1:20-cv-00144-JRN (W.D. Tex. Feb. 6, 2020).
4 Examining Krim-Ko Corp. (Krim-Ko Div., Nat. Sugar Ref. Co.) v. Coca-Cola Bottling Co. of New York, 390 F.2d 728, 731-32 (C.C.P.A. 1968)
5 Future Proof Brands, LLC v. Molson Coors Beverage Company, et al., 5th Cir. Court of Appeals Case No. 20-50323, Appellant’s Opening Brief.
6 Alliance for Good Gov’t v. Coalition for Better Gov’t, 901 F.3d 498, 507- 508, 510 (5th Cir. 2018).
7 Streamline Prod. Sys. v. Streamline Mfg., 851 F.3d 440, 457 (5th Cir. 2017)

SDNY: Instagram Sublicense Protects Against Liability for Embedding of Public Posts

Author: Kara Kaplan

As is the case for most social media networks, photos and videos can be shared in seconds and thousands of users can view the same image or video within the first few moments after clicking the post. And, in a matter of minutes, that new funny photo or quarantine workout can be shared with hundreds of followers.

So, how are intellectual property rights being protected in the chaos of evolving social media? More specifically, what is the effect on your intellectual property rights if you have a public profile? In a recent decision, Sinclair v. Mashable Ziff Davis, LLC and Mashable, Inc., No. 18-CV-790 (KMW), 2020 U.S. Dist. LEXIS 64319, at *2 (S.D.N.Y. Apr. 13, 2020), the United States District Court for the Southern District of New York ruled that a photographer’s public Instagram post could be used on other websites, without her prior approval, as a result of Instagram’s Terms of Use.

Copyright & Instagram – Terms of Use

Instagram is one of the most popular social media platforms to date. It allows members to access and share photographs or videos. Accounts can be either private or public. Private accounts require the account holder’s permission to follow the account and see posts or stories. Public accounts do not, and posts are readily available for anyone to see.

In the past, it has been generally understood that in order to avoid copyright infringement, you should obtain permission prior to re-posting or sharing an image, story or video on social media platforms. However, the court in Sinclair concluded that Plaintiff’s claims against Mashable, who re-posted Sinclair’s public Instagram post containing a photograph on Mashable.com, failed as a matter of law and granted Mashable’s motion to dismiss even though Mashable did not have direct authorization from Sinclair for the re-post.

Plaintiff Stephanie Sinclair is a gender and human rights photographer known for her visual expressions of those issues around the world. In this case, Sinclair claimed she owns an exclusive United States copyright in the image titled “Child, Bride, Mother/Child Marriage in Guatemala,” a photograph she took herself and posted to her public Instagram page.

Defendant Mashable, an entertainment and media website, contacted Sinclair and sought a license for that photograph to use in an article for publication on its website. Sinclair was offered $50 for licensing rights. She declined the offer. Mashable posted the article and used Sinclair’s photograph anyway. Sinclair demanded the photograph be taken down, Mashable refused and the lawsuit ensued.

Mashable filed a motion to dismiss the operative complaint, on the primary grounds that it was a sublicensee of Instagram, who granted Mashable sublicensing rights for the re-post. The court agreed, holding that Mashable’s re-post of the photograph was authorized pursuant to a valid sublicense from Instagram.

It is well-recognized that a copyright owner may license her rights to works. And where those licenses permit sub-licenses, the copyright owner cannot bring an infringement lawsuit against that sublicensee. United States Naval Inst. v. Charter Commc’ns Inc., 936 F. 2d 692, 695 (2d Cir. 1991).

Here, the Court reasoned that when Sinclair created an Instagram account, she agreed to Instagram’s Terms of Use. Instagram’s Terms of Use state that all users, including Sinclair, “grant to Instagram a non-exclusive, fully paid and royalty-free, transferrable, sub-licensable, worldwide license to the Contract that you post on or through [Instagram], subject to [Instagram’s] Privacy Policy,” which details the difference between a public and private account.

The important and relevant difference in this case, and between a private and public account, is Instagram’s API. The API allows public posts to be searchable, subject to use, and enables users to embed public content on their websites. Ultimately, because Sinclair posted “Child, Bride, Mother/Child Marriage in Guatemala” on her public Instagram page, she agreed to permit websites, including Mashable, to embed her photograph to its website. According to Instagram’s Terms of Use, such websites are Instagram’s sublicensees.

Sinclair’s rejoinder was that the user agreements are “circular,” “incomprehensible,” and “contradictory;” but the Court disagreed and ruled in favor of Mashable, citing precedent where many similar types of terms of use are upheld as enforceable agreements. The Court stated, “by posting the Photograph to her public Instagram account, [Sinclair] made her choice. This Court cannot release her from the agreement she made.” This case certainly is neither the first nor the last to arise as a result of an Instagram post. Critics argue that this ruling could be detrimental to the creative individuals who rely upon social media exposure for business promotion and growth, while proponents laud the ruling as furthering the social nature of social media platforms like Instagram—i.e., to share content among users.

About the author: Kara Kaplan is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on transactional and litigation matters involving copyrights, trademarks, and trade secrets. Ms. Kaplan’s biography can be found here.

Who Owns the Ink?

Author: Jill Ormond

U.S. copyright laws provide creators the rights to (1) reproduce a work, (2) prepare derivative works, (3) distribute copies of the work, (4) publicly perform the work, and (5) publicly display the work. 17 U.S.C. § 106.

Questions related to these rights arise when an artist creates a tattoo either from his/her design or with input from the client and then inks the tattoo on the client. What rights does the artist retain? Do any of the rights pass to the tattoo recipient? If so, what rights pass? With the increasing popularity of tattoos inked on people including celebrities who frequently appear in public and whose images are reproduced, these questions are becoming legal questions for courts to consider. Most recently, the United States District Court Southern District of New York considered these issues in Solid Oak Sketches, LLC (“Solid Oak”) v. 2K Games, Inc. and Take-Two Interactive Software, Inc. (“Take-Two”), Case No. 16-CV-724-LTS-SDA. See March 26, 2020 Memorandum Opinion and Order.

Solid Oak obtained exclusive copyright licenses from tattoo artists for five tattoos the artists inked on professional basketball players Eric Bledsoe, LeBron James, and Kenyon Martin. One tattoo was based on a photograph provided by a player, the other tattoos included traditional tattoo images (grim reaper, flames, basketball, stars, script, and numbers). Each was created with input from the player. The license agreement was done after the designs had been inked on the players. The rights Solid Oak licensed were not for the application of the tattoos to a person but for use in a clothing line that never came to fruition. According to the case record, Solid Oak’s owner testified that before moving forward with selling apparel he would “need permission from the players . . . to not infringe on their right of publicity.”

Take-Two is a video game developer that annually releases a basketball simulation video game that includes realistic renderings of NBA teams and players. Take-Two licenses its rights to depict the logos, uniforms, and players’ likenesses in their video games from the NBA. Solid Oak alleged that Take-Two infringed its copyrights by including the five tattoos on NBA players Eric Bledsoe, LeBron James, and Kenyon Martin appearing in its video games. After licensing the tattoo designs from the artists, Solid Oak sought to impose an obligation on the NBA players and the video game developer working with them to obtain permission from, and pay license fees to, Solid Oak because the players were realistically depicted with their tattoos in video games.

After years of discovery, experts, motions, and analysis, Defendants moved for summary judgment arguing four points. Take-Two’s initial argument was its use of the tattoos was de minimis because the tattoos were but a “fractional, fleeting part” of the game “‘creating realism’ but no more noticeable than a simulated player’s nose shape or hairstyle.’”

Take-Two next contended that its use of the tattoos was authorized by an implied license because both the tattoo artists and players understood when the tattoos were inked the players had the right to display and recreate the tattoos as part of the player’s likeness. Take-Two supported this argument with declarations from each of the tattoo artists. Also supporting this argument, Defendants established that the players gave the NBA the right to license their likeness. The NBA in turn licensed the right to the players’ likenesses to Take-Two.

Take-Two’s third argument was that judgment should be granted on its counterclaim because its use of the tattoos constituted fair use with each of the four factors—“(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”—weighing in its favor.

Finally, Take-Two argued Solid Oak’s infringement claim failed because it could not establish ownership of a valid copyright since the tattoos were not independently created by the author. Instead, it presented evidence that the tattoos were copies of pre-existing works or included common elements of tattoos.

The court found Take-Two’s de minimis argument persuasive considering the average game play is unlikely to include the players with tattoos, and even when the players were included, the display of the tattoos was so small and indistinct that they could not be identified or observed. The court also noted that the tattoos were not featured in the game’s marketing materials.

Take-Two’s argument that it had an implied license for use of the tattoos because the tattoos were part of the players’ likenesses was also well-taken. Citing Weinstein Co. v. Smokewood Entm’t Grp., LLC, 664 F.Supp.2d 332, 344 (S.D.N.Y. 2009), the court concluded that an implied non-exclusive license would exist “where one party created a work at the other’s request and handed it over, intending that the other copy and distribute it.”. The court noted that the undisputed facts supported a reasonable inference that the tattoo artists necessarily granted the players nonexclusive licenses to use the tattoos as part of their likenesses, and did so prior to any grant of rights in the tattoos to Plaintiff.

Lastly, the court determined Take-Two was entitled to judgment as a matter of law on its counterclaim because the uncontroverted evidence demonstrated that all four fair use factors weighed in favor of Take-Two and its use of the tattoos constituted fair use. Take-Two’s originality argument was considered by the court when reviewing the nature of the copyrighted work factor instead of invalidating Solid Oak’s copyright.

What’s Next?

The Southern District’s ruling could have an impact on similar cases involving the reproduction of tattoos. IP practitioners can take note of the court’s findings not only with litigation concerning tattoos but also when drafting licenses and right of publicity agreements involving tattoos and clearing rights for creative projects.

About the author: Jill Ormond is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on litigation and transactional matters related to the entertainment industry, including film, animation, gaming, music, live performance and literary. Ms. Ormond’s biography can be found here.

SCOTUS: Willfulness Not Required for Trademark Infringement Plaintiff to Recover Defendant’s Profits

Author: Patrick Mulkern

On April 23, 2020, the Supreme Court resolved a long-standing circuit split regarding whether a trademark infringement plaintiff must show willfulness as a prerequisite to recovery of the defendant’s profits. In Romag Fasteners, Inc. v. Fossil, Inc., Case No. 18-1233 (Apr. 23, 2020),1 a near-unanimous Court2 lowered the bar for half the country, announcing: no, a trademark holder need not show willfulness before it can recover the accused infringer’s profits.

Summary of Underlying Dispute

Petitioner Romag Fasteners, Inc. (“Romag”) sells magnetic snap fasteners for use with leather goods, while Respondent Fossil, Inc. (“Fossil”) sells fashion accessories. The parties entered an agreement under which Fossil would use Romag’s fasteners in Fossil’s handbags. Eventually, Romag learned that Fossil’s manufacturer was using counterfeit fasteners instead of authentic Romag products.

At trial, the jury agreed with Romag, finding that Fossil had infringed and acted “in callous disregard” of Romag’s rights—but ultimately rejected the contention that Fossil had acted “willfully” as that term had been defined by the judge. Therefore, pursuant to then-applicable Second Circuit precedent under which a trademark plaintiff must first prove the infringement was willful, Romag could not recover Fossil’s profits. A well-defined split among the circuit courts on this issue led to the Supreme Court’s grant of certiorari.

Court’s Decision

The Court’s decision can be broken down into three sections: a statutory interpretation portion, a historical analysis portion, and a policy argument portion.

The statutory interpretation segment began with the language of the Lanham Act, noting the only limitation on recovery under Section 1117(a) (including “defendant’s profits”) was “subject to the principles of equity.” The Court explained why this limitation was significant, as the Lanham Act does explicitly require willfulness as a precondition for profits under Section 1125(c) (governing dilution)—but Romag had proceeded under Section 1125(a) (relating to false or misleading use of trademarks). The Court identified a slew of instances in which the Lanham Act clearly required specific mental states,3 and concluded that “this court [does not] usually read into statutes words that aren’t there. It’s a temptation we are doubly careful to avoid when Congress has (as here) included the term in question elsewhere in the very same statutory provision.”

The Court then reviewed Fossil’s argument that “principles of equity” provided a historical basis for requiring willfulness—an argument that the Court characterized as a “curious suggestion.” Citing first to Black’s Law Dictionary, then treatises from the 1800s, as well as several of the Supreme Court’s own decisions, the Court held “principles of equity” is a “trans-substantive” concept and does not relate or call to mind any trademark-specific requirements. Even if the Court were to assume the Lanham Act sought to incorporate common law principles, it was “far from clear whether trademark law historically required a showing of willfulness before allowing a profits remedy.” On this point, the Court acknowledged competing authority—with Fossil’s cases seeming requiring willfulness, and the fact that “Romag cites other cases that expressly rejected any such rule”—and then reiterated “the ordinary, trans-substantive principle that a defendant’s mental state is relevant to assigning an appropriate remedy.”

Finally, the Court’s decision concluded by identifying the parties’ competing policy arguments, then punted, stating, “the place for reconciling competing and incommensurable policy goals like these is before policymakers” (i.e., Congress).

Concurring Opinions

Justices Alito, Breyer, and Kagan wrote one of two concurrences, in which they simply reiterated the point that “willfulness is a highly important consideration in awarding profits under § 1117(a), but not an absolute precondition.” Justice Sotomayor wrote the other concurrence, in which she rejected the majority’s suggestion that profits would (or should) ever be awarded for innocent infringement, but agreed in the ultimately judgment. In so finding, she wrote to explicitly disagree with any interpretation of the Lanham Act in which profits could be awarded “for innocent or good-faith trademark infringement[.]”

Impact

This decision lowers the bar for nearly half the country, as the First, Second, Eighth, Ninth, Tenth, and D.C. Circuits had previously used willfulness as a threshold requirement in trademark infringement claims seeking defendants’ profits. Now, it is likely that defendant’s profits analysis will track that which has been used in the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits, where willfulness was just one of several factors in a flexible analysis. See, e.g., Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 349 (5th Cir. 2002) (stating that “willful infringement” is “an important factor”).

Ultimately, the following passage from the Court’s opinion (together with the language found in both concurring opinions) will likely serve as support for those circuit courts that wish to make willfulness a key factor in their analysis going forward:

[I]t is a principle long reflected in equity practice where district courts have often considered a defendant’s mental state, among other factors, when exercising their discretion in choosing a fitting remedy. . . . Given these traditional principles, we do not doubt that a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate. But acknowledging that much is a far cry from insisting on the inflexible precondition to recovery Fossil advances.

About the author: Patrick J. Mulkern is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on intellectual property litigation and transactional matters, with a particular emphasis on patent, trademark, and trade secret litigation. Mr. Mulkern is a registered patent attorney and his biography can be found here.
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1 https://www.supremecourt.gov/opinions/19pdf/18-1233_5he6.pdf.
2 Justice Gorsuch delivered the opinion of the court, with which all but one justice joined. Justice Sotomayor concurred in the judgment only.
3 See, e.g., § 1117(b) (requiring treble damages and attorney’s fees when certain conduct is intentional); § 1117(c) (increasing cap on statutory damages for certain willful violations); § 1118 (permitting courts to destroy infringing items for any violation of section 1125(a) or any willful violation of section 1125(c)); § 1114 (providing certain innocent infringers subject only to injunction); § 1125(d)(1)(A)(i) (prohibiting certain conduct only if undertaken with “bad faith intent”).

Lions, Tigers, and Trademarks: IP Lessons from “Tiger King”

Author: Alison Pringle

Netflix’s recent docu-series “Tiger King” has quarantined Americans captivated—a reported 34 million viewers binged the series within the first ten days of its release alone. Amongst the series’ tiger-related exploits lies a bitter trademark lawsuit brought against the series’ mullet-sporting anti-hero Joseph Maldonado-Passage (known to viewers as “Joe Exotic”).

Maldonado-Passage created the Oklahoma-based “GW Exotic Animal Memorial Park” and filled it with tigers, lions, and other exotic animals. Throughout the 2000s, Maldonado-Passage became infamous in animal rights circles for breeding tiger cubs and exhibiting his animals at malls across the country.

The “Tiger King” series chronicles the long-standing feud between Maldonado-Passage and Carole Baskin. Baskin is the founder of “Big Cat Rescue,” a non-profit sanctuary for big cats. Maldonado-Passage was eventually put on trial after an unsuccessful plot to murder Baskin went awry. While Maldonado-Passage is currently serving a twenty-two year prison sentence for attempted murder-for-hire and violations of the Endangered Species Act, it was a trademark judgment that served as the catalyst for Exotic’s downfall.

Trademark Litigation

In 2005, the Big Cat Rescue Corp. registered a BIG CAT RESCUE logo for charitable fund raising services, animal rescue services, and entertainment services such as animal exhibition1:

After trying to shut down Maldonado-Passage for years, it was Baskin’s trademark rights that allowed her to finally pounce and take legal action against him. In 2011, Big Cat Rescue filed a lawsuit in the Middle District of Florida against Maldonado-Passage and GW Exotic after the latter adopted the trade name “BIG CAT RESCUE ENTERTAINMENT.” Big Cat Rescue alleged Maldonado-Passage and GW Exotic sought to disparage Big Cat Rescue through the “BIG CAT RESCUE ENTERTAINMENT” mark by causing the public to believe Big Cat Rescue was engaged in the exploitation of exotic animals.

For a trademark infringement claim, a plaintiff must show that: (1) it has developed a protectable trademark right in a trademark; (2) the defendant uses a confusingly similar mark in such a way that creates a likelihood of confusion, mistake and/or deception with the public; and (3) the plaintiff incurred damages as a result of the defendant’s infringing actions.

Big Cat Rescue’s trademark registration evidenced its rights in the “BIG CAT RESCUE” mark. Big Cat Rescue also did not have a large hurdle to jump in demonstrating Maldonado-Passage’s “BIG CAT RESCUE ENTERTAINMENT” mark was confusingly similar to the “BIG CAT RESCUE” mark. Big Cat Rescue further presented three key facts demonstrating Maldonado-Passage willfully infringed its mark.

First, Maldonado-Passage created the below ad featuring the “BIG CAT RESCUE ENTERTAINMENT” mark over a photo of a snow-leopard’s eyes, which Big Cat Rescue alleged was “virtually identical” to a photograph Big Cat Rescue used as the banner for its website at the time. The ad for the Oklahoma-based zoo displayed a Florida telephone number and the words “Florida Office,” which Big Cat Rescue argued would confuse the public into believing “Big Cat Rescue Entertainment” was affiliated with the Florida-based Big Cat Rescue.

Second, Big Cat Rescue demonstrated Maldonado-Passage used the BIG CAT RESCUE ENTERTAINMENT mark to try to divert Google traffic to his sites rather than those of Big Cat Rescue. A Facebook post created by a user named “Joe Exotic” stated, “If you must know, I registered Big Cat Rescue Entertainment and leased the name out so you could ruin BCR on Google all by yourself, and it is working. LOL.” Another “Joe Exotic” post referred to Big Cat Rescue Entertainment as “My new company LOL.” Maldonado-Passage attributed both posts to hackers.

Finally, Big Cat Rescue alleged Maldonado-Passage had also sought to file the trade name “The Caroll Baskin Entertainment Group.”

In defense of the infringement claim, Maldonado-Passage argued in his pre-trial statement that his actions were a necessary response to BCR’s campaign of disseminating misinformation about him in an effort to shut him down:

Defendants had no alternative but to respond, in part, by reflecting the egregious conduct of BCR and the Baskins back upon BCR through a counter-campaign designed to do nothing more than cause BCR to suffer from its own misconduct.

This lawsuit, and BCR’s abuse of copyright laws, is merely one more tool for the Baskins and BCR in their all-out assault on Defendants.

This argument did not absolve Maldonado-Passage from liability for the trademark claims brought against him. The parties ultimately stipulated to entry of a consent judgment against Defendants prior to trial.

References to Baskin’s Late Husband Excluded from Trademark Trial

Of note for fans of the series and legal procedure buffs, Big Cat Rescue filed a motion in limine to exclude any reference at trial to Baskin’s late husband, Jack Donald Lewis. Lewis’s 1997 disappearance remains a significant source of controversy and was featured heavily in the docu-series. Throughout his feud with Baskin, Maldonado-Passage frequently spouted his belief that Baskin killed Lewis and fed him to one of her tigers. Maldonado-Passage even went so far as to reference Lewis’s disappearance in his pretrial statement and press releases related to the lawsuit. As Big Cat Rescue argued, and the Court affirmed in granting the motion (unsurprisingly), mention of Lewis’s disappearance would likely prejudice a jury against Big Cat Rescue and had no relevance to the trademark infringement claims at issue.

Trademark Judgment

 The docu-series demonstrates the power and value of a trademark as well as the potentially high stakes of an infringement suit. The trademark judgment aided in eventually bringing down the “Tiger King.” Big Cat Rescue was able to recover all of Maldonado-Passage and GW Exotic’s profits from their mall road shows during the time period Defendants adopted the “BIG CAT RESCUE ENTERTAINMENT” mark. Total gross receipts from Defendants’ road shows between 2010 and 2011 equaled $653,000.00. Big Cat Rescue was also entitled to $300,000 for its attorneys’ fees and costs related to the trademark lawsuit, amounting to a total judgment of $953,000.

As shown in the series, the judgment financially ruined Maldonado-Passage and GW Exotic. Big Cat Rescue’s aggressive judgment enforcement actions seem to have sent Maldonado-Passage into a tailspin that eventually led to him hiring a hitman to take out Baskin.

Tiger King offers much in the way of Jerry Springer-esque entertainment and nothing when it comes to moral guidance. Viewers can take away one lesson, though: don’t use your competitor’s trademark as a weapon and brag about it on the internet.

Alison Pringle is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on intellectual property and commercial litigation, with an emphasis on trademark, copyright, contract, technology, and privacy disputes. She also counsels clients on transactional intellectual property issues. Ms. Pringle’s biography can be found here.
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1 USPTO Serial No. 76568568. In 2014, the Big Cat Rescue Corp. also registered the word mark BIG CAT RESCUE under USPTO Serial No. 85850084.

SCOTUS Redefines State “Piracy”

Author: Alison Pringle

The Supreme Court recently ruled in favor of keeping state governments immune from copyright infringement lawsuits in Allen v. Cooper (Case No. 18-877). The decision affirmed the Fourth Circuit’s dismissal of a videographer’s infringement claim against the state of North Carolina.

The Shipwreck Footage in Dispute

The copyrighted material at issue involved footage of wreckage from the Queen Anne’s Revenge, famed pirate Blackbeard’s ship that ran aground off North Carolina’s coast in 1718. Videographer Frederick Allen spent over a decade creating videos and photos of the ship’s underwater excavation. Allen later registered copyrights in the works.

The dispute began when North Carolina used Allen’s footage as part of an online marketing campaign. The State hosts frequent Blackbeard-festivals and its Maritime Museum features artifacts from the Queen Anne’s wreckage. The State used Allen’s works to promote its Blackbeard-related tourism.

Lower Court Rulings

Allen sued for monetary damages after the State posted his photos of the shipwreck online allegedly without payment or permission.

North Carolina argued sovereign immunity precluded Allen’s suit against the State and moved to dismiss. The District Court for the Eastern District of North Carolina refused to dismiss Allen’s claims but the Fourth Circuit reversed, finding Congress had not abrogated the States’ immunity from copyright infringement suits.

The Supreme Court affirmed by ruling Congress lacked a valid constitutional basis to abrogate North Carolina’s sovereign immunity under existing legislation. The ruling required a deep dive into constitutional interpretation and congressional power.

Congressional Action and Constitutional Limitations

Generally, under Eleventh Amendment sovereign immunity, federal courts cannot hear lawsuits brought by individuals against a non-consenting state. However, a court may permit such suits if: (1) Congress has enacted “unequivocal statutory language” abrogating the States’ immunity from suit;1 and (2) a constitutional provision allows Congress to encroach on the States’ sovereignty.2

In the early 1990’s, Congress passed two acts abrogating the States’ sovereign immunity with respect to copyright and patent litigation via the Copyright Remedy Clarification Act (“CRCA”)3 and “Patent Remedy Act” (“PRA”)4—fulfilling the first prong for abrogation based on unequivocal statutory language.5 The remaining issue for the Allen Court was whether Congress had the power to abrogate the States’ immunity from copyright infringement suits via the CRCA.

The Court considered two constitutional provisions that would arguably allow Congress to pass such legislation: Article I, Section 8 and Section 5 of the Fourteenth Amendment.

Congress Lacked Authority to Abrogate State Immunity Under Article I, Section 8

Article I, Section 8, Clause 8, also known as the Constitution’s “Intellectual Property Clause,” gives Congress the power to grant copyrights and patents.6 Under this Clause, copyright holders are entitled to certain “exclusive” rights in their creations and generally have the right to exclude others from using their works without permission.

Allen argued the Intellectual Property Clause should be construed as granting Congress the power to pass legislation abrogating the States’ sovereign immunity as to copyright lawsuits. Allen contended the Intellectual Property Clause could not provide an “exclusive” right to copyright holders if government infringers could pillage their works with immunity. According to Allen, it was “antithetical” to allow any government to infringe the rights Congress has secured:

When states infringe the exclusive federal rights that Congress is charged with securing, Congress can make states pay for doing so.7

The Court rejected this argument under precedent from Florida Prepaid v. College Savings Bank, determining that Article I did not confer such power on Congress.8

In Florida Prepaid, the Court ruled Congress lacked the power to abrogate State immunity from patent litigation pursuant to the Intellectual Property Clause. Thus, the Intellectual Property Clause could not support the PRA. The Allen Court extended its Florida Prepaid ruling with respect to the CRCA: Congress could not use its Article I powers to circumvent the limits sovereign immunity places upon federal jurisdiction. In delivering the Allen opinion, Justice Elena Kagan stated:

[T]he power to ‘secur[e]’ an intellectual property owner’s ‘exclusive Right’ under Article I stops when it runs into sovereign immunity.

With the Intellectual Property Clause negated as a potential source of Congressional authority for the CRCA, the Court next turned to the Fourteenth Amendment.

The CRCA Exceeded Congress’s Authority to Abrogate State Immunity Under the Fourteenth Amendment

The Fourteenth Amendment’s Due Process Clause provides that no State shall deprive any person of life, liberty, or property without due process of law.9 As the Court acknowledged in Allen, copyrights are a form of property.

Section Five of the Fourteenth Amendment authorizes Congress to enforce the commands of the Due Process Clause by creating legislation limiting the States’ authority. Thus, Congress can abrogate the States’ sovereign immunity under this clause. However, this abrogation must be “congruent and proportional” to the Fourteenth Amendment injury.10 In other words, Congress must only create remedies that are a proportionate response to the constitutional rights at issue.

The Allen Court ruled the CRCA exceeded Congress’s Section Five authority because it went too far in abrogating sovereign immunity for any and every infringement suit.

The Court looked to the nature and extent of State copyright infringement at the time of the CRCA’s passing in relation to the scope of Congress’s response. The Court found the CRCA’s broad abrogation of immunity was disproportionate where Congress identified only twelve instances of State-instigated copyright infringement. Further, of those twelve instances, only two constituted willful infringement (i.e. sufficient to raise a constitutional issue.).11 In the Court’s view, these examples did not identify a serious constitutional problem justifying complete abrogation of States’ sovereign immunity against infringement claims.

The Court emphasized that, like the PRA, the CRCA was overly broad where it did not set any limits on abrogation. For example, neither statute confined abrogation to suits alleging willful infringement or infringement authorized by state policy. Rather, both the PRA and CRCA impermissibly “exposed all States to the hilt—on a record that failed to show they had caused any discernible constitutional harm (or, indeed, much harm at all).”

Consequently, the Court ruled the CRCA failed the “congruence and proportionality” test. Evidence of Fourteenth Amendment injury supporting the CRCA was “exceedingly” slight and the CRCA’s “indiscriminate scope” was too out of proportion to any due process problem.

Can States Now Use Copyrighted Material Without Permission and With Impunity?

The Allen ruling presents uncertainty for copyright holders who fear States can now use their works without permission and consequence. For example, as the ruling stands, States can theoretically upload and use copyrighted movies and music onto government websites. As Justice Breyer posited to North Carolina’s counsel during oral argument:

What the state decides to do with its own website, charging $5 or something, is to run Rocky, Marvel, whatever, Spider-Man, and perhaps Groundhog Day, all right? Now, great idea. Several billion dollars flows into the treasury. Okay? Now, if you win, why won’t that happen?12

The future of copyright law as it pertains to States is indeed unclear. However, as the Court noted in its opinion, States generally respect copyright law and intentional infringement is uncommon.13 Additionally, while States are currently immune from infringement suits for monetary damages, copyright holders may still seek an injunction against an individual state employee responsible for the infringement under Ex Parte Young, 209 U.S. 123 (1908). Further, any third parties who facilitate or participate in state-sponsored infringement cannot expect immunity.

The Court also suggested States might be subject to private infringement suits in the future. Justice Kagan invited Congress to create new legislation addressing State copyright infringement that, unlike the CRCA, is narrowly tailored and designed to redress or prevent unconstitutional conduct, stating:

That kind of tailored statute can effectively stop States from behaving as copyright pirates. Even while respecting constitutional limits, it can bring digital Blackbeards to justice.

Read the Court’s opinion in its entirety here.

Alison Pringle is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on intellectual property and commercial litigation, with an emphasis on trademark, copyright, contract, technology, and privacy disputes. She also counsels clients on transactional intellectual property issues. Ms. Pringle’s biography can be found here.
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1 Seminole Tribe of Fla. v. Florida, 517 U. S. 44, 54 (1996)
2 Kimel v. Florida Bd. of Regents, 528 U. S. 62, 78 (2000)
3 Any State “shall not be immune, under the Eleventh Amendment [or] any other doctrine of sovereign immunity, from suit in Federal court” for copyright infringement. 17 U. S. C. § 511(a)
4 Also known as the “Patent and Plant Variety Protection Clarification Act”
5 17 U.S.C. § 511(a); 35 U.S.C. § 296(a)
6 “The Congress shall have power … to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Article I, § 8, cl. 8.
7 Transcript of Oral Argument heard November 5, 2019, p. 3:11-14
8 527 U.S. 627 (1999)
9 Amendment XIV, § 1
10 City of Boerne v. Flores, 521 U.S. 507, 520 (1997)
11 In Florida Prepaid and Allen, the Court defined an unconstitutional infringement as “intentional conduct” for which there is no adequate state remedy.
12 Transcript of Oral Argument heard November 5, 2019, p. 36:17-37:2
13 Copyright Office, Copyright Liability of States and the Eleventh Amendment 103 (1988) (Oman Report)

High Fashion Invades Runeterra – Fascinating IP Issues in the Collaboration Between League of Legends and Louis Vuitton

Author: Jing Zhao

In September of 2019, Riot Games (“Riot”) announced its partnership with Louis Vuitton (“LV”). Riot is the video game developer, publisher, and eSports tournament organizer for the popular multiplayer online battle arena game League of Legends (“League”). League is a strategy game where players control an in-game character, called a “Champion,” to battle other players’ Champions and to achieve an objective.

Riot’s two-way partnership with LV allows LV to design a travel case for League’s World Championship trophy. In addition, LV will also design in-game cosmetic items for League. These cosmetics, called skins, modify the Champion’s appearance. Riot sells skins and other virtual cosmetic items to its players via in-game micro-transactions. For its part, LV unveiled the LVxLoL collection, a League-themed set of real-world merchandise, which sold out within an hour of launch. The collection included shirts, parkas, trousers, shoes, and accessories inspired by two League characters, and featuring the bespoke “Louis Vuitton x League of Legends” monogram pattern.

While the license agreement between Riot and Louis Vuitton remains confidential, several fascinating issues arise in the unique setting of video game collaborations.

1. Ownership and control

The core of this partnership is that both companies, Riot and LV, get to use the other’s intellectual property to promote their own goods in their own established markets. But LV operates in the real world, whereas League resides in the virtual realm. Thus, the cross-licensing between the companies require different considerations as applied to each company.

For LV’s real-world merchandise, LV does not maintain control over its items after the merchandise is sold. On the other hand, in-game cosmetic items are game-specific, meaning upon purchase, the user can only use that item in the video game the item was designed for. This also means that Riot still possesses ultimate control over the item itself. Riot can modify the item or even take it back from the player.

As a result, the cross-license should address what happens to these items if Riot and LV ever part ways. After all, conceptually, Riot can not only stop selling LV-inspired cosmetics in-game, but it could also remove the ones that already exist in game. But doing so will likely irk players who bought and paid for the items. As a result, Riot may insist on a perpetual license that exists post-termination for existing virtual LV items.

2. Unauthorized Duping

One of the known and common problems in video games, including League, is “duping,” whereby players use unauthorized or unintended mechanisms to duplicate cosmetic items for free. This can either be accomplished through finding “glitches” or “bugs,” which are in-game coding mistakes that the game developer inadvertently created, or “hacks” or “cheats,” which are external programs that a player either impermissibly injects into the game, or attaches onto the game through third-party software.

Duping LV-designed virtual items is an added complication, as the duplicated item not only impermissibly uses LV’s IP, but could diminish the overall prestige of the brand itself. After all, LV is a luxury brand, built upon the idea that its products are exclusive and hard-to-obtain, and wide-distribution of its products dilutes that image. In addition, while Riot is the sole seller of its virtual items now, this micro-transaction model might change with its expansion of games. Other gaming platforms, most notably Steam, uses a marketplace model, where players are able to buy and sell their own items to each other, while giving the game developer a cut of their profits. If Riot changes to a marketplace model, then duping may also dilute the market value of existing LV items in League.

The Riot-LV agreement therefore should address Riot’s responsibility to protect LV-designed virtual items, or alternatively, grant LV the right to enforce infringement in Riot games.

3. Champion availability and viability

Nike makes the uniforms for NFL teams. So no matter which teams wins the Super Bowl, the NIKE mark can be seen on the teams. LV likely wants the same thing here – for an entire new customer audience (gamers) to see and be exposed to the LV brand, especially at the biggest e-sports events and tournaments. But, as with all competitive video games, certain Champions are better than others. Thus, they are picked more often and appear more often in games, especially at the highest levels with the largest number of viewers. And LV may not create skins for every character. In fact, there are currently only two skins released, and League currently hosts 148 Champions, the majority of which are not free-to-play. A Champion that is not unlocked to all players creates a disincentive for players to purchase skins on that Champion.

The Riot-LV agreement may therefore contain a clause that obligates Riot to ensure player access to Champions and to ensure a Champion is competitive, for Champions which LV designed skins for, so as to promote the sale of those skins.

About the author: Jing Zhao is a registered patent attorney and a member of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Ms. Zhao has a degree in computer science, and her commercial litigation practice focuses on intellectual property and ERISA disputes, with a special interest in emerging intellectual property and other legal issues in the eSports industry. Ms. Zhao’s biography can be found here

SCOTUS Grants Google’s Cert Petition in Oracle API Dispute

Author: Mary E. Csarny

On November 15, the Supreme Court granted certiorari in Google v. Oracle, indicating potential resolution on the contentious litigation that has been dubbed Silicon Valley’s “Lawsuit of the Decade.”i On January 6, 2019, Google filed its Petitioner Brief, with Respondent Oracle’s brief due next month.

Background

As followers of this litigation will recall, Oracle sued Google in 2010, alleging Google’s use of the Java programing language and declarations (specifically 37 Java APIs) in building the Android platform amounted to copyright and patent infringement.ii A victory for Oracle would not only result in significant damages for unpaid royalties, but also impact the future of API use. At the District Court, a jury determined Google did infringe the copyright as to the compilable code for the 37 Java API packages, and then deadlocked on the issue of whether the use constituted fair use. The jury found no copyright infringement as to the documentation for the Java API packages, but found infringement as to one snippet of code. However, on the issue of copyrightability of the APIs generally (which was simultaneously tried to the presiding District Court judge), Judge William Alsup concluded that APIs were not copyrightable in the first place as a matter of law.iii The jury found no patent infringement.

On appeal, the Federal Circuit considered the Copyright Act’s legislative history explaining that literary works subject to copyright protection include computer programs to the extent that the expression of original ideas is distinguished from the ideas themselves.iv The Federal Circuit reversed, holding that the structure, sequence, and organization of an API is copyrightable and remanded on the issue of whether Google’s use was a permissible fair use.v Following this reversal, Google filed its first petition for writ of certiorari, with the Supreme Court’s inviting the U.S. Solicitor General to express the United States’ views regarding whether the petition should be granted. The Court denied the petition in accordance with the Solicitor General’s position that no review was necessary.

On remand from the Federal Circuit, a jury determined Google’s use of the 37 Java APIs was protected by the fair use doctrine. Oracle appealed and the Federal Circuit overturned the jury verdict holding that, as a matter of law, Google’s use was not protected by the fair use doctrine.vi

Google’s second and current petition for a writ of certiorari raises two issues: (1) Whether copyright protection extends to a software interface; and (2) whether, as the jury found, the petitioner’s use of a software interface in the context of creating a new computer program constitutes fair use.

What’s Next

When viewed alongside its June 2019 grant of certiorari in Georgia v. Public Resource Org., Inc.vii concerning the copyrightability of legislative annotations in light of the government edicts doctrine, the Supreme Court’s grant of certiorari may indicate a willingness to re-examine copyrightability. The Court’s 21st century copyright jurisprudence has generally favored strengthening protections for copyright holders.viii Indeed, its initial refusal to grant Google’s first petition for certiorari following the Federal Circuit’s holding that APIs are copyrightable at least passively reinforced a broad approach to copyrightability.

The Court’s most recent copyright decisions rely on textualist reasoning and were both unanimously decided. It upheld the lower court’s reliance on the plain text of 17 U.S.C. § 411(a) requiring “registration” (rather than application for registration) to occur before commencing an infringement suit in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, et al.I,ix and limited the statutory damages for copyright infringement to those six categories of costs provided in the federal statute authorizing district courts to award costs in Rimini Street, Inc., et al. v. Oracle USA, Inc., et al.x Although the present matter does not present so obvious a conclusion as Fourth Estate and demands a more technical analysis than required in Rimini Street, the Justices’ textualism in both cases instruct followers of this matter to give particular credence to the parties’ textual arguments. Although much of the narrative surrounding this litigation has focused on the practical impact on technology and innovation,xi the litigants focus briefing on the Copyright Act’s text and judicial interpretation. Google’s petition for certiorari cites the Copyright Act’s exclusion of “method of operation[s]”xii and the correlating legislative history arguably demonstrating Congress’ intent “‘to make clear that the expression adopted by the programmer is the copyrightable element in a computer program’ while ‘the actual processes or methods embodied in the program are not within the scope of the copyright law.’”xiii Oracle, too, presents at least one textualist argument, pointing out that the Copyright Act covers “literary works,” defined as works “expressed in words, numbers, or other verbal or numerical symbols.”xiv

The Court’s last attempt to consider whether innovation in the software space was entitled to copyright protection ended in deadlock,xv but the court has since replaced six justices who appear willing to reface this challenge. Justice Kavanaugh has entered the fray of copyright jurisprudence by authoring the recent Rimini Street, Inc. decision and before his appointment Justice Gorsuch faced the issue of copyrightability of new technologies in the 10th Circuit, where he faced the issue of whether a party held a valid copyright on digital models.xvi He drew guidance from prior Supreme Court reasoningxvii regarding the copyrightability of photographs, finding instructive the Court’s application of copyrightability standards to the new technology of the day.xviii Justice Gorsuch’s conclusion in Meshwerks, that digital models can possess the originality required to be fully protectable in copyright but the particular digital models were not copyrightable might predict his approach to the copyrightability issue in Google v. Oracle.xix

No matter the outcome on the copyrightability and fair use questions raised in Google’s petition, the decision in this case is a much anticipated resolution to the decades-long dispute and could mark a new beginning for the use of software interfaces.
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i Ward, Aaron “Google v. Oracle: Silicon Valley Braces for ‘Lawsuit of the Decade’ as Google Petitions for Cert to decide API Copyrightability” Jolt Digest (March 13, 2019). https://jolt.law.harvard.edu/digest/google-v-oracle-silicon-valley-braces-for-lawsuit-of-the-decade-as-google-petitions-for-cert-to-decide-api-copyrightability.
ii Oracle America, Inc. v. Google Inc., 3:10-cv-03561-WHA (N.D. Cal. Aug. 12, 2010).
iii Oracle Am., Inc. v. Google Inc., 872 F. Supp. 2d 974 (N.D. Cal. 2012).
iv Oracle Am., Inc. v. Google Inc., 750 F.3d 1339, 1354 (Fed. Cir. 2014).
v Id., 1381.
vi Oracle Am., Inc. v. Google LLC, 886 F.3d 1179, 1210 (Fed. Cir. 2018).
vii Georgia v. Public.Resource.Org, Inc., 139 S. Ct. 2746 (June 24, 2019).
viii See “Institutional Fracture” Minnesota Law Review 102:803, 820-821 (2017).
ix Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, et al., 139 S.Ct. 881 (2019)
x Rimini Street, Inc., et al. v. Oracle USA, Inc., et al, 139 S. Ct. 873 (2019).
xi See Hardy, Quentin “Oracle-Google Dispute Goes to Heart of Open-Source Software” NY Times (May 19, 2016) (https://www.nytimes.com/2016/05/20/technology/oracle-google-dispute-goes-to-heart-of-open-source-software.html); Liptak, Adam “Supreme Court to Hear Google and Oracle Copyright Case” NY Times (Nov. 15, 2019) (https://www.nytimes.com/2019/11/15/us/supreme-court-google-oracle.html).
xii 17 U.S.C. 102(b)
xiii Supreme Court Docket No. 18-956, Petition for a Writ of Certiorari p. 17 (citing H.R. Rep. No. 1476, 94th Cong., 2d Sess. 56-57 (1976); S. Rep. No. 473, 94th Cong., 1st Sess. 54 (1975)).
xiv Supreme Court Docket No. 18-956, Brief in Opposition, p. 13 (citing 17 U.S.C. 102(a); 101).
xv Lotus Dev. Corp. v. Borland Int’l, Inc., 516 U.S. 233 (1996)
xvi Meshwerks, Inc. v. Toyota Motor Sales U.S.A., Inc., 528 F.3d 1258 (10th Cir. 2008)
xvii Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 58 (1884)
xviii Id., 1263.
xix Id. 1266.