Trademark
January 16, 2024
I closed out 2023 by writing about one lawsuit over AI and copyright and we’re starting 2024 the same way. In that last post, I focused on some of the issues I expect to come up this year in lawsuits against generative AI companies, as exemplified in a suit filed by the Authors Guild and some prominent novelists against OpenAI (the company behind ChatGPT). Now, the New York Times Company has joined the fray, filing suit late in December against Microsoft and several OpenAI affiliates. It’s a big milestone: The Times Company is the first major U.S. media organization to sue these tech behemoths for copyright infringement.
As always, at the heart of the matter is how AI works: Companies like OpenAI ingest existing text databases, which are often copyrighted, and write algorithms (called large language models, or LLMs) that detect patterns in the material so that they can then imitate it to create new content in response to user prompts.
The Times Company’s complaint, which was filed in the Southern District of New York on December 27, 2023, alleges that by using New York Times content to train its algorithms, the defendants directly infringed on the New York Times’ copyright. It further alleges that the defendants engaged in contributory copyright infringement and that Microsoft engaged in vicarious copyright infringement. (In short, contributory copyright infringement is when a defendant was aware of infringing activity and induced or contributed to that activity; vicarious copyright infringement is when a defendant could have prevented — but didn’t — a direct infringer from acting, and financially benefits from the infringing activity.) Finally, the complaint alleges that the defendants violated the Digital Millennium Copyright Act by removing copyright management information included in the New York Times’ materials, and accuses the defendants of engaging in unfair competition and trademark dilution.
The defendants, as always, are expected to claim they’re protected under “fair use” because their unlicensed use of copyrighted content to train their algorithms is transformative.
What all this means is that while 2023 was the year that generative AI exploded into the public’s consciousness, 2024 (and beyond) will be when we find out what federal courts think of the underlying processes fueling this latest data revolution.
I’ve read the New York Times’ complaint (so you don’t have to) and here are some takeaways:
- The Times Company tried (unsuccessfully) to negotiate with OpenAI and Microsoft (a major investor in OpenAI) but were unable to reach an agreement that would “ensure [The Times] received fair value for the use of its content.” This likely hurts the defendants’ claims of fair use.
- As in the other lawsuits against OpenAI and similar companies, there’s an input problem and an output problem. The input problem comes from the AI companies ingesting huge amounts of copyrighted data from the web. The output problem comes from the algorithms trained on the data spitting out material that is identical (or nearly identical) to what they ingested. In these situations, I think it’s going to be rough going for the AI companies’ fair use claim. However, they have a better fair use argument where the AI models create content “in the style of” something else.
- The Times Company’s case against Microsoft comes, in part, from the fact that Microsoft is alleged to have “created and operated bespoke computing systems to execute the mass copyright infringement . . .” described in the complaint.
- OpenAI allegedly favored “high-quality content, including content from the Times” in training its LLMs.
- When prompted, ChatGPT can regurgitate large portions of the Times’ journalism nearly verbatim. Here’s an example taken from the complaint showing the output of ChatGPT on the left in response to “minimal prompting,” and the original piece from the New York Times on the right. (The differences are in black.)
- According to the New York Times this content, easily accessible for free through OpenAI, would normally only be available behind their paywall. The complaint also contains similar examples from Bing Chat (a Microsoft product) that go far beyond what you would get in a normal search using Bing. (In response, OpenAI says that this kind of wholesale reproduction is rare and is prohibited by its terms of service. I presume that OpenAI has since fixed this issue, but that doesn’t absolve OpenAI of liability.)
- Because OpenAI keeps the design and training of its GPT algorithms secret, the confidentiality order here will be intense because of the secrecy around how OpenAI created its LLMs.
- While the New York Times Company can afford to fight this battle, many smaller news organizations lack the resources to do the same. In the complaint, the Times Company warns of the potential harm to society of AI-generated “news,” including its devastating effect on local journalism which, if the past is any indication, will be bad for all of us.
Stay tuned. OpenAI and Microsoft should file their response, which I expect will be a motion to dismiss, in late-February or so. When I get those, I’ll see you back here.
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.)
