Trademark
December 19, 2023
This year has brought us some of the early rounds of the fights between creators and AI companies, notably Microsoft, Meta, and OpenAI (the company behind ChatGPT). In addition to the Hollywood strikes, we’ve also seen several lawsuits between copyright owners and companies developing AI products. The claims largely focus on the AI companies’ creation of “large language models” or “LLMs.” (By way of background, LLMs are algorithms that take a large amount of information and use it to detect patterns so that it can create its own “original” content in response to user prompts.)
Among these cases is one filed by the Authors Guild and several prominent writers (including Jonathan Franzen and Jodi Picoult) in the Southern District of New York. It alleges OpenAI ingested large databases of copyrighted materials, including the plaintiffs’ works, to train their algorithms. In early December, the plaintiffs amended their complaint to add Microsoft as a defendant alleging that Microsoft knew about and assisted OpenAI in its infringement of the plaintiffs’ copyrights.
Because it is the end of the year, here are five “things to look for in 2024” in this case (and others like it):
- What will defendants argue on fair use and how will the Supreme Court’s 2023 decision in Goldsmith impact this argument? (In 2023 the SCOTUS ruled that Andy Warhol’s manipulation of a photograph by Lynn Goldsmith was not transformative enough to qualify as fair use.)
- Does the fact that the output of platforms like ChatGPT isn’t copyrightable have any impact on the fair use analysis? The whole idea behind fair use is to encourage subsequent creators to build on the work of earlier creators, but what happens to this analysis when the later “creator” is merely a computer doing what it was programmed to do?
- Will the fact that OpenAI recently inked a deal with Axel Springer (publisher of Politico and Business Insider) to allow OpenAI to summarize its news articles as well as use its content as training data for OpenAI’s large language models affect OpenAI’s fair use argument?
- What impact, if any, will this and other similar cases have on the business model for AI? Big companies and venture capital firms have invested heavily in AI, but if courts rule they must pay authors and other creators for their copyrighted works it dramatically changes the profitability of this model. Naturally, tech companies are putting forth numerous arguments against payment, including how little each individual creator would get considering how large the total pool of creators is, how it would curb innovation, etc. (One I find compelling is the idea that training a machine on copyrighted text is no different from a human reading a bunch of books and then using the knowledge and sense of style gained to go out and write one of their own.)
- Is Microsoft, which sells (copyrighted) software, ok with a competitor training its platform on copyrighted materials? I’m guessing that’s probably not ok.
These are all big questions with a lot at stake. For good and for ill, we live in exciting times, and in the arena of copyright and IP law I guarantee that 2024 will be an exciting year. See you then!
December 5, 2023
The web is rife with information and advice on how to register a trademark and, more importantly, how to protect one once you’ve got it. Much of the latter boils down to policing your mark by sending cease and desist letters whenever you suspect someone is infringing it. Good advice and, in many cases, all you need to ward off an infringer or potential infringer. But cease and desist letters aren’t always enough. Two recent cases highlight different routes that businesses traveled to protect their marks, one wrapping up quickly while the other dragged on for six years of litigation, with opposite results.
The rapid resolution came in a proceeding Mattel, Inc. brought this summer against Burberry Ltd. For anyone who has been living under a rock, Mattel makes Barbie — the dolls, the movie, the inescapable cultural “phenomenon.” The toy company brought an action before the United States Patent and Trademark Office to prevent fashion house Burberry — perhaps best known for its famous plaid-lined trenchcoats — from registering the mark “BRBY.”
Mattel claimed BRBY was likely to cause confusion because it is “visually similar” to Barbie and, “when spoken aloud, the marks are phonetically identical.” What’s more, according to Mattel, the likelihood of confusion was increased because many products sold by Mattel bearing the Barbie trademark overlap with the types of goods that Burberry was proposing to make with the BRBY mark, such as clothing, jewelry, and cosmetics. As the action stated, “[c]onsumers would be likely to wonder if, or assume that, [Burberry’s goods] are licensed by or affiliated with [Mattel].”
It’s impossible to tell exactly what went down in the proceeding because the parties reached an undisclosed settlement. However, Burberry subsequently withdrew its application to register the BRBY mark so I think we can take it as game over — in just under four months. If you ask me, it seems unlikely that anyone was going to get confused between Barbie and BRBY even though the vowelless mark could be pronounced in the same way. But clearly, Burberry figured the value of the BRBY mark wasn’t enough to justify protracted litigation.
At the other end of the spectrum, we have a federal litigation between Alfwear, Inc. and Mast-Jaegermeister US, Inc. (“MJUS”), initially filed in August 2017 and, after six years in the courts, concluded this September with the 10th Circuit Court of appeals affirming the lower court’s grant of MJUS’ motion for summary judgment.
Alfwear is a Salt Lake City company that makes outdoor apparel and gear under the brand name “KÜHL” (yes, it’s German for “cool”) and has registered trademarks for this brand name. MJUS is the US-based distribution arm of the German company that makes a herbal liqueur under the brand name — you guessed it — Jägermeister, which had a fairly repulsive shot of popularity in the mid-aughts as the drink of choice for frat parties.
As stated in the 10th Circuit’s decision, in 2016 MJUS “launched an advertising campaign to distance itself from its association with ‘pukey frat guys’ and spring break parties and remake the Jägermeister image as a ‘more premium’ brand and emphasize its German heritage.” Mast-Jaegermeister’s campaign did this by incorporating German words such as “kühl” “perfekt,” “and “dekadent ” into phrases such as “Drink it ice kühl” and “Be kühl — throw it back.” These phrases, which were intended to be easily understood by English speakers, were consistently accompanied by the Jägermeister mark.
In August 2017, Alfwear filed suit against MJUS, asserting that MJUS’s unauthorized use of the term “kühl” in connection with the advertising of MJUS’s goods or services infringed Alfwear’s registered trademarks and constituted federal and common law unfair competition. The district court held that MJUS’s use of “kühl” did not infringe on Alfwear’s “KÜHL” trademark, which it uses on its line of outdoor products, “because no reasonable juror could find a likelihood of confusion between the parties’ marks.” Yet Alfwear, refusing to back off, appealed and the case trundled on.
The 10th Circuit affirmed the district court, agreeing that MJUS’s use of “kühl” was unlikely to cause any consumer confusion and noting that MJUS had never put the word “kühl” on a Jagermeister bottle or any promotional clothing, and that Alfwear and MJUS’s products generally occupied distinct markets. (It is, however, worth mentioning that Alfwear has a pending trademark application for “KÜHL” in connection with wine, which presumably suggests that Alfwear is contemplating entering a market closer to that in which MJUS sells its products.)
So why did Mattel triumph in a matter of months while Alfwear fought MJUS for six years and, ultimately, lost? Was Mattel’s case really that much stronger than the one brought by the maker of KÜHL? Well, one key distinction is that there is overlap between Mattel’s Barbie-branded products and what Burberry sells, whereas there is no current overlap between KÜHL and Jägermeister. Knowing this, should Alfwear have realized it had a weaker case than Mattel and backed off earlier or not filed suit at all?
I think not. It isn’t always easy to accurately predict whether you’ll win or lose a trademark dispute because there are so many variables. Is your adversary going to be reasonable (like Burberry) or stand firm (MJUS)? How much time and effort have you and your adversary invested? Do you know all of your adversary’s motivations?
With that said, despite the risks, protecting a mark through litigation is a critical part of maintaining a mark and its value. Each time you don’t defend your mark, it potentially weakens your rights to it in the future. This is cumulative and can make it possible for others to obtain similar marks for their products. Moreover, even a loss might have a silver lining. It can aid in future decision-making when considering expansion into new markets.
September 26, 2023
Our last post was about who owns a social media account: the company whose products are featured or the individual in the role associated with that account. This week we have another case at the intersection of social media and intellectual property. At issue here is who owns a trademark: the user who first created it or the social media platform (in this case, Reddit) where the mark is first used?
In early-2012, Jamie Rogozinski launched a subreddit on Reddit called “r/WallStreetBets,” where users could share stock tips and other financial advice. Rogozinski was its first moderator. By early-2020, r/WallStreetBets had grown to more than a million subscribers and Rogozinski published a book titled WallStreetBets: How Boomers Made the World’s Biggest Casino for Millennials. Then, the pandemic happened and the subreddit exploded in popularity. Suddenly, WallStreetBets was a very valuable property.
On March 24, 2020, Rogozinski filed an application with the United States Patent and Trademark Office (“USPTO”) to register the mark WallStreetBets. Two weeks later Reddit notified Rogozinski that it had temporarily suspended his account because, in violation of Reddit’s terms of service, he had “attempted to monetize the community.” Subsequently, Reddit filed its own application to trademark WallStreetBets and sought to have the USPTO block Rogozinski from asserting a trademark in WallStreetBets.
Rogozinski sued Reddit. He claimed, among other things, ownership of the trademark and that Reddit was infringing on his mark. The heart of his argument was that he owns WallStreetBets because he created the phrase and it is associated with him. Reddit moved to dismiss the complaint and, on July 11, 2023, U.S. District Judge Maxine Chesney granted Reddit’s motion.
The court’s decision was based on the fact that the test for trademark ownership is “priority of use.” However, use alone isn’t enough. Rather, the party claiming ownership has to show that it was the first to use the mark in connection with the sale of goods or services.
Here, while Rogozinski created WallStreetBets, the Court found that Reddit, not Rogozinski, had been using the mark in commerce starting with its inception on January 31, 2012, because any content created on the site becomes a product against which Reddit sells ads. According to Judge Chesney, to own a trademark, you must be “the first to actually use the mark in the sale of goods or services,” and none of the things Rogozinkski did to grow his subreddit “constitutes a use in commerce.”
One big problem with the court’s conclusion here is it could mean that because social media platforms like Facebook, X (formerly Twitter), Instagram, and the like have become so integral to marketing products, these companies could be seen as the owners of trademarks in products offered through their platforms. I suspect future cases will need to draw a line between products or services that are part of the social media platform (i.e. the subreddit at issue here) and the products or services that are entirely separate from the social media platform.
September 12, 2023
Almost a year ago, we wrote about a dispute between bridal designer Hayley Paige Gutman and her former employer over who owned social media accounts bearing her name. With the prevalence of social media and its importance for marketing, it seemed like it was only a matter of time until this issue came up again. And here it is.
Vital Pharmaceutical, which makes an energy drink called Bang (we’ve written about Bang before), filed for bankruptcy in 2022. As part of the bankruptcy, Vital sought a declaration that it, not its former CEO John Owoc, owned the social media accounts @bangenergy.ceo (TikTok and Instagram) and @BangEnergyCEO (Twitter/X). In response, Owoc claimed that he had used these accounts to cultivate a personality and the accounts belonged to him, not Vital.
The bankruptcy court granted Vital’s motion for summary judgment against Owoc. In reaching this conclusion, the Court created its own, new test for determining ownership of social media accounts because, in its view, the law had failed to keep up with the times.
Specifically, the court examined: (1) the existence of a documented property interest, i.e. an employment agreement or similar stating that certain social media accounts belong to the company; (2) who controls access to the social media accounts; and (3) the use of the account, for example, whether the account is used to promote the company’s products or to create a persona that goes beyond the company’s products.
Based on these factors, the bankruptcy court determined that despite the social media account names referring to Vital’s CEO, they belonged to the company and not its former chief executive. While there was no agreement documenting that the accounts belonged to the company (one point to Owoc), the court noted that Vital employees had access to and created and posted content for the accounts. This included posting things without Owoc’s approval. In addition, a large majority of posts featured Bang-branded products rather than Owoc’s personal content, indicating that the accounts should be the property of Vital, and not Owoc. Two points to Vital.
The court declined to follow the test used by another bankruptcy court in an earlier, similar case because that case predated “the emergence of the social media influencer, among other changes” in the use of social media. Specifically, the prior decision did not consider the existence of agreements that may establish the ownership of social media accounts (factor #1 in the Vital Pharmaceutical case).
The big takeaway from all this is that brands need to be very careful about establishing and using social media accounts and, in a dispute over who owns an account, it’s important to establish how social media accounts are used.
(Epilogue: On July 31 Vital was purchased by Monster Beverage, so we can all hope someone other than Owoc will carry on as @BangEnergyCEO.)
August 1, 2023
The Rogers test is something we’ve talked about before (here and here).
This test comes from Rogers v. Grimaldi. In that case, the actress Ginger Rogers sued the studio that released a film titled Ginger and Fred, claiming the film’s use of her name implied that she sponsored the movie. Rogers lost in the lower court and appealed to the Second Circuit, which affirmed the lower court’s decision dismissing Roger’s case.
In its decision, the Second Circuit held that where the title of an artistic work includes a celebrity’s name “suppressing an artistically relevant though ambiguous[ly] title[d] film” on trademark grounds would “unduly restrict expression.” Thus, the Second Circuit concluded that trademark law does not apply unless the “title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or content of the work.”
This test was meant to allow artists to use trademarks without permission when the use has artistic relevance to their work and does not explicitly mislead consumers into thinking the celebrity endorsed the work. Put another way, it aimed to avoid conflicts between the First Amendment and federal trademark law (a/k/a Lanham Act), at least when it comes to the name of a film. Legally speaking, this isn’t crazy.
However, there’s a problem. The Rogers test is made up. The Second Circuit’s opinion in Rogers doesn’t provide any citations for this test or explain where it comes from. This has become a problem especially because courts have expanded the Rogers test far beyond its original confines.
Notably, in 2020 the Ninth Circuit in Jack Daniel’s Properties, Inc. v. VIP Products LLC dismissed a case brought by the bourbon manufacturer on grounds that it could not satisfy Rogers in a case against the manufacturer of a squeaky dog toy shaped like a bottle of Jack Daniels. The Ninth Circuit found that the dog toy at issue was “expressive” because it “communicates a ‘humorous message.’” This is pretty far from where we started — a film directed by Federico Fellini that told the story of fictional performers named Ginger and Fred.
In early June the Supreme Court unanimously reversed the Ninth Circuit’s decision in Jack Daniel’s Properties, Inc. The Supreme Court held that where a trademark is being used as a trademark — that is, to indicate the source of goods or services — the trademark owner does not have to satisfy Rogers. It further concluded that the dog toy shape and label parodying Jack Daniels branding was just that: a trademark being used to indicate the source of the dog toy.
In its main opinion, which was unanimous, the Supreme Court went out of its way to say that it was not explicitly overruling Rogers and took no view as to its ongoing viability. However, five Justices filed concurring opinions to make certain points. Notably, three justices — Gorsuch, Thomas, and Barrett — wrote a one-paragraph opinion “to underscore that lower courts should handle Rogers v. Grimaldi… with care.”
Since then, the Supreme Court sent another case that involved the application of Rogers back to the Ninth Circuit for reconsideration in light of its Jack Daniels ruling. In that case — Diece-Lisa Industries, Inc. v. Disney Store USA, LLC — toymaker Diece-Lisa sued a bunch of Disney-affiliated companies for trademark infringement, claiming that the “Lots-O’-Huggin’” (aka “Lotso”) character in the 2010 film Toy Story 3 too closely resembles Diece-Lisa’s “Lots of Hugs” bear. (The Ninth Circuit had previously declined requests that Rogers should not apply or should be limited and had instead ruled that Diece-Lisa’s case had to be dismissed under the Rogers test.)
It will be interesting to see what the Ninth Circuit does here particularly as not only was Lotso a character in an expressive work, but Disney also sold dolls based on the movie character. If the case does make its way back to the Supreme Court, that court may have to confront the continuing viability of Rogers as well as what happens when there is both an expressive use (i.e. Lotso the movie character) and a more purely commercial use (i.e. the toy sold by Disney).
This case will serve as an interesting test of the Supreme Court’s ruling in Jack Daniels and may help to clarify the reach of that case.
