Trademark
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.
July 11, 2023
Did you know that every time you say “Taco Tuesday,” you’re using someone’s trademark?
At least for right now… But a new legal petition is looking to change that. In May, Mexican fast-food behemoth Taco Bell filed a proceeding with the United States Patent and Trademark Office (“USPTO”) against Taco John’s, a Wyoming-based fast-food chain that, unbeknownst to the average burrito lover, actually trademarked the phrase “Taco Tuesday” way back in 1989.
Taco Bell’s petition is a rare work of legal writing — written, at times, in colloquial English, it has moments where it’s even pretty funny. One extract: “People like tacos on Tuesday. They just do. It’s even fun to say: ‘Taco Tuesday.’ Tacos have the unique ability to bring people together and bring joy to their lives on an otherwise mediocre day of the week.” (For another great example of this kind of “brand voice” legal writing, see this Netflix cease and desist letter.) In support of its campaign, Taco Bell has even enlisted LeBron James, who himself tried to trademark the phrase “Taco Tuesday” in 2019, but had his application rejected because the USPTO found the term to be too common to serve as a trademark.
Suffice it to say that Taco John’s, which currently owns the trademark for “Taco Tuesday” in every state except New Jersey (don’t ask; that’s a topic for another blog post), is not amused. It responded to Taco Bell’s petition to cancel its trademark by noting, among other things, that Taco Bell is not seeking to cancel Taco John’s trademark in order to bring people happiness, but rather “in an effort to sell more tacos.”
In a statement released by Taco Bell, James — the NBA’s all-time leading scorer and self-appointed taco promoter — said, “‘Taco Tuesday’ is a tradition that everyone should be able to celebrate. All restaurants, all families, all businesses — everybody…it’s a celebration that nobody should own.”
Taco John’s will probably lose the right to prevent others from using the phrase “Taco Tuesday” because, as the USPTO pointed out in connection with James’ application, the phrase has become ubiquitous and, as such, has lost its ability to function as a trademark. This is what’s called “genericide,” when trademarks cease to be associated with a brand and the brand loses its rights.
However this spicy little kerfuffle pans out, it’s a lesson in what trademark owners should and can do to prevent genericide from happening to them (NB: the following tips may be most productively read while enjoying a chalupa supreme):
- Keep in mind the purpose of a trademark. Trademarks are intended to indicate the source of a good or service. When, for example, the Xerox Corporation started making photocopiers, the intent was that a consumer who saw the word “Xerox” on a copy machine would know that the machine was made by the Xerox Corporation and not some other manufacturer like Pitney Bowes.
- Use your mark as a trademark and make sure others do too. Problems arise when a trademark is used to describe the thing or the service itself instead of a specifically-branded thing or service. For example, Xerox ran into trouble when consumers started using the word “Xerox” to refer to both the process of copying a document and the copied document itself, instead of a machine made by Xerox or a copy made by a Xerox machine. Once upon a time, the company addressed this through a clever ad campaign informing consumers “when you use ‘Xerox’ the way you use ‘aspirin,’ we get a headache.” (This was a clever play on the fact that “aspirin” was once a brand name but became generic.) Their goal was to get people to use the word “photocopy” instead of “Xerox,” and while the impact on conversation in the copy room is certainly debatable, Xerox maintained its trademark.
- Have a generic noun ready to go. When you develop your trademark make sure you have a generic noun to be used with the trademark when communicating your brand to consumers, competitors, and the media. For example, Xerox is careful to say “Xerox photocopiers,” not “Xeroxes.”
- Enforce your rights. It’s great to get a trademark, but that’s just half of the battle. If a trademark ceases to be associated solely with the company that owns it, the mark no longer identifies the source of the goods or services. This means that to keep a trademark, the party that owns it has to constantly stop others from using its trademark and not wait for years until someone disputes their right to it. Stopping others can be through sending cease and desist letters, bringing an action to enforce trademark rights, or opposing efforts by another company to register a similar trademark.
- Use the Ⓡ symbol. This lets others know that a word or a phrase has been registered as a trademark. But remember: if the word or phrase hasn’t been registered as a trademark with the USPTO, you can’t use the Ⓡ symbol.
- Keep detailed records. This includes records of your advertising costs, revenue figures, and unsolicited press mentions, all of which help to prove “acquired distinctiveness.”
However the taco case turns out, rest easy knowing nothing can stop us from eating tacos on Tuesday . . . or on any other day.
May 2, 2023
The last few months have seen an explosion in chatter about AI, specifically, freely available AI chatbots and apps like ChatGPT, DALL-E-2, Soundful and more that can create text, images, and music in response to prompts entered by a user. Internet forums are overflowing with examples of people using these apps to create “a love song that sounds like it was played by the Beatles in 1966” or “a painting of a three-legged horse in the style of Picasso” or “a 2,000-word story about colonizing the moon by Ernest Hemingway.” ChatGPT is already the fastest-growing app of all time and, naturally, people fear these AIs will quickly replace actual humans for the creation of commercial art and entertainment. We’re also starting to see some lawsuits involving AI-generated art infringing on copyrights. Everything is pretty much at the complaint stage, so there’s not too much to report on — yet. With that said, what follows are some of the places where I think we’re going to see legal battles.
Before diving into the legal issues, it’s worth taking a step back and thinking about how AI works. At a high level, AI platforms take in a ton of information and “learn” patterns about that information. Show an AI a coffee cup, and it “knows” what a coffee cup is. “Feed” it a banana, and it can create another banana in any color or pattern a user asks of it. Everything an AI can do begins from something that already exists.
Ok. On to the legal issues that will have to be sorted out by creators or, ultimately, in the courts.
- How similar is the output of an AI platform to the material it was trained on? If it’s too close, the output could be infringing. On the other hand, if the output is based on unprotectable components, then there’s no infringement. However, the line between copyrighted and unprotected is not always clear.
- Do AI platforms need to license the underlying materials used to create a new image or song to avoid claims of copyright infringement? In order for an AI platform to review information, it needs to make a copy of it. If work being used as a basis for an AI-generated product is copyrighted (or copyrightable), unless the platform has obtained a license, the act of copying may be infringing.
- If AI imitates an artist, does the output infringe on the artist’s right of publicity which, in some states, extends to an artist’s persona?
- What happens if the output from an AI platform includes a trademark? It’s not hard to imagine AI creating works that include trademarks. One doubts trademark owners will be happy about this.
- Sometimes the AI platforms are just wrong or false. These statements could be defamatory, but who is legally responsible? The platform, or the person who gave the platform the prompts?
We’ll follow the action here as it unfolds.
February 21, 2023
Following up on an earlier blog post, on February 2, 2023, the Court in Hermès’ trademark suit against the artist known as Mason Rothschild issued a decision explaining his denial of both parties’ motions for summary judgment. If you want a refresher about this case, you can find the earlier blog post here.
On February 8, 2023, after an eight-day trial, a federal jury found in favor of Hermès and awarded the fashion company $133,000 in damages. Fundamentally, the jury decided the digital images were not art, not protected by the First Amendment and, as such, subject to trademark laws. This is an important case as it is the first trial to look at trademark infringement and NFTs.
Let’s dig into both decisions.
The Judge’s Order
There are a couple of interesting elements in the judge’s decision.
Hermès argued that Rothschild’s work was devoid of any artistic value because he could at any time replace the digital images of fake fur bags with other images. According to Hermès, this meant the term “MetaBirkins” referred to the NFTs and not the digital images themselves. Judge Jed Rakoff rejected this’ argument, finding that potential consumers believed they were purchasing ownership of the digital image, not just the NFT. Therefore, he concluded that the term “Metabirkin” “should be understood to refer to both the NFT and the digital image with which it is associated.”
Judge Rakoff also (again) concluded that this case was governed by Rogers v. Grimaldi because Metabirkins originated, at least in part, “as a form of artistic expression,” and the fact that Rothschild may have also had commercial motives didn’t remove First Amendment protections.
In rejecting the parties’ motions for summary judgment, the judge held that a jury needed to decide whether Rothschild viewed the Metabirkins project as primarily one of artistic expression or whether, as Hermès, argued, his motives were purely pecuniary and he fabricated the claim of artistic expression in order to seek refuge in the First Amendment.
The judge also noted that the Second Circuit Court of Appeals hadn’t provided a lot of guidance as to what “artistically relevant,” as used in Rogers, means. Despite this, the judge concluded that the central inquiry in determining whether something is “artistic” is whether “the trademark was used to mislead the public about the origin of the product or the parties that endorse or are affiliated with it.” And that, he determined, required a jury to consider the so-called Polaroid factors. He also noted that the likelihood of confusion under these factors must be particularly compelling in order to abrogate First Amendment protection.
The Jury’s Decision
It’s impossible to know exactly why the jury reached its verdict, but looking at the Court’s Instructions of Law to the Jury and the jury’s verdict sheet, an educated guess (at least on the trademark claim) is that the jury concluded there was a likelihood consumers would believe that Rothschild’s MetaBirkins were sponsored or otherwise connected with or approved by Hermès and that Hermès had proved that Rothschild intended to confuse potential consumers.
Interestingly, in instructing the jury on the applicability of Rothschild’s First Amendment defense, the court seemed to assume that Rothschild’s use of the term “Metabirkin” was artistically relevant.
A few other things here: (1) the judge did not instruct the jury that it should look to the Polaroid factors to determine if something was explicitly misleading; (2) the jury instructions dropped any reference to the Polaroid factors from the discussion of whether the MetaBirkin NFTs were explicitly misleading; and (3) the judge seems to have substituted the “explicitly misleading” language from Rogers with an instruction that the jury needed to determine whether “Hermès had prove[n] that Mr. Rothschild actually intended to confuse potential customers” and, if it had, that he had waived his First Amendment protection.
In its verdict, the jury found Rothschild liable for trademark infringement, trademark dilution and “cybersquatting” (using a brand name in bad faith with the intent of making a profit from a trademark belonging to someone else).
We’ll see if Rothschild appeals (he and his lawyers have stated they will) and, if so, whether he raises those issues on appeal.
