What you need to know

On 22 May 2013, Justice Bennett refused an application in the Federal Court of Australia, by Cheqout Pty Ltd (Cheqout), to register the trade mark "superman workout". Adopting the test relied upon by Justice Dodds-Streeton in Fry Consulting v Sports Warehouse Inc (No 2) (2012) (Fry), her Honour held that Cheqout made the application in bad faith as its "conduct fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons."

Background

On 2 June 2009, Cheqout lodged an application to register the trade mark "superman workout" in respect of the Class 41 services of "conducting exercise classes, fitness and exercise clinics, clubs and salons; health club services."

Cheqout's application consisted of the word "Superman" together with the BG Shield Device and used the red, white and blue colours traditionally used in conjunction with the DC Comics Superman character and DC Comics registered trade marks.

The case is an appeal against the decision of a delegate of the Registrar of Trade Marks to register the trade mark.

DC Comic's grounds for opposition

DC Comics opposed the application on the following grounds:

1. the word "Superman" has come to be associated with the Superman character and its use in association with health and fitness services would be likely to deceive or cause confusion; and

2. the application to register the trade mark was made in bad faith.

Federal Court's decision

There is limited Australian authority on the breadth of the concept of bad faith. In Fry, Justice Dodds-Streeton concluded that bad faith, in the context of s 62A of the Trade Marks Act 1955 (Cth), was conduct "of an unscrupulous, underhand or unconscientious character".

Justice Barrett was satisfied that Cheqout's "conduct fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons" for the following reasons:

• it was a "relevant circumstance" that in making the application Cheqout intended to use "superman workout" in combination with the BG Shield Device to "strengthen the allusion to Superman." Justice Barrett drew the inference that Cheqout was attempting to gain a benefit by accentuating the association between the trade mark and the DC Comics superhero;

• the red, white and blue colours traditionally used in conjunction with the Superman character were used by Cheqout together with the BG Shield Device; and

• the design of the BG Shield Device closely resembled that associated with the DC Comic's character and DC Comic's registered trade marks.

Justice Barrett found the fitness company had made the application for the trademark in bad faith. She set aside the Registrar's decision and refused the trade mark application.

In relation to DC Comic's other argument, Justice Barrett found that there was "no real, tangible danger or real risk of confusion arising by the normal and fair use of the word "superman" in connection with "workout." Justice Barrett was of the view that a word, such as "Superman," although "originally associated with a particular trade source, may over time become descriptive of a class of goods or characterisations". She held that without reference to any of the well-known indicia associated with the DC Comics superhero there was no likelihood that the public would "be caused to wonder whether "superman workout" came from the same source as the Superman character or DC Comics."

Tips for trade mark owners

We are seeing an increasing amount of cases in Australia in which a local company has filed for a trade mark that is essentially owned by an overseas business. There are ways to stop activity of this sort and one of the most popular grounds is the bad faith ground of opposition introduced in Australia in 2006. It's important to act swiftly if you are to retrieve your rights in your mark in a bad faith scenario.

UK IP legislation is changing.

First, the Enterprise and Regulatory Reform Act 2013 (which received Royal Assent on 25 April 2013), has just been published, and modifies UK copyright law (though not as drastically as some would have liked).

Secondly, the Government announced in the Queen's Speech that it will be introducing an Intellectual Property Bill to make changes to the law of design and patents.

Copyright provisions of the Enterprise and Regulatory Reform Act 2013 (ERRA)

The ERRA includes (among other things) significant copyright-related provisions. It repeals section 52 of the Copyright, Designs and Patents Act 1988 (CDPA). This provision previously limited the duration of copyright in artistic works exploited by an industrial process to make articles, to just 25 years. The new ERRA provision extends the copyright protection afforded to such works to the usual period for most copyright works, of the life of the author plus 70 years.

The ERRA also introduces a so-called "orphan works" licensing scheme. This allows a party which has undertaken a diligent search for, and been unable to locate, the owner of copyright in a work, to obtain a licence to use that work. The details will be established in secondary legislation.

A significant point to note following publication of the ERRA, is the removal from the final bill of the Secretary of State's standalone express power to amend the copyright exceptions. This broad power had originally been drafted into the ERRA following Professor Hargreaves' independent review of UK IP law in May 2011, which proposed various extensions of existing copyright exceptions. However, in the final version of the ERRA, and to the government's disappointment, the Secretary of State is left with the much more limited existing power for amendment derived from the European Communities Act 1972. This means that further amendments to copyright exceptions will be subject to greater legislative scrutiny than otherwise would have been the case; copyright owners will welcome this.

Intellectual Property Bill announced in Queen's Speech

The Queen's Speech was given on 8 May 2013, setting out the government's legislative plans for the next session of Parliament. Included in this was an Intellectual Property Bill. The Bill will include changes to the law of designs and patents, as outlined below.

Patents: Introduction of the Unified Patent Court (UPC)

In December 2012, two EU regulations were adopted which at last clear the path for a unitary patent (see our earlier alert here).

The UPC will be made up of a Court of First Instance, an Appeal Court and a Registry. The Court of First Instance will consist of a central division (with a seat in Paris and one in each of London and Munich) and several local and regional divisions in the contracting member states. The Court of Appeal will be situated in Luxembourg. The Intellectual Property Bill will include arrangements for the establishment of the UK division of the UPC.

Design Rights

The UK government published its Policy Statement on the 30 April 2013 on reform of UK designs law; see our alert here. The designs-related parts of the Bill are expected to follow the Policy Statement; the government has indicated that the Bill will:

• introduce criminal penalties for the deliberate copying of registered designs;

• allow the UK to join the Hague Agreement in its own right; and

• change the first owner of a commissioned design from the commissioner to the designer.

Background

The famous fox and boot logo was first used by Peal & Co, an English bootmaker. In 1964, Peal & Co sold the goodwill of its business and the use of its trademark to Brooks Brothers UK Limited (a subsidiary of the well-known US menswear group) and in 1965 it ceased trading.  Following the demise of the Peal & Co business, W.S Foster & Son Limited (a shoe retailer on London’s Jermyn Street), recruited an employee of Peal & Co and (apparently at the employee’s suggestion) commenced its own use of the fox and boot logo.  In 2005, Brooks Brothers opened a number of UK stores.  Having realized that some of Brooks Brothers’ shoes featured the fox and boot logo, W.S Foster brought proceedings against Brooks Brothers before the UK High Court.

Claim Of Passing Off

W.S Foster brought its claim under the tort of passing off, an English law concept which allows retailers to preclude competitors from “passing off” goodwill associated with the retailer (such as in a brand) as their own.  W.S Foster argued that the fox and boot logo was easily recognizable and that their customers would associate the logo with their brand.  The High Court agreed, finding that that it was highly likely that those who saw the logo on Brooks Brothers’ goods would assume that either they were manufactured by W.S Foster, or that the logo was connected to the company in some way.  This was notwithstanding the fact W.S Foster traded from Jermyn Street, since their customers in fact came from over 70 countries. Brooks Brothers UK Limited tried to defend itself on the grounds the logo was a part of “common ancestry”, and that fact they had a close business connection with Peal & Co gave them concurrent goodwill.  However, the decision went against Brooks Brothers, with the court finding that Peal & Co had abandoned its business, including its goodwill, when it ceased to trade.  Moreover, Brooks Brothers had, through its inactivity prior to 2005, failed to take steps to preserve that goodwill.  As a result, the use by Brooks Brothers of the fox and boot logo amounted to passing off.  The decision demonstrates that, while often regarded as a tricky cause of action to bring successfully, the English law of passing off is very much alive and kicking, providing an important remedy for owners of unregistered brands.

On May 6, 2013, DLA Piper’s Trademark, Copyright, and Media Group hosted a private VIP reception during the 135th International Trademark Association Annual Meeting (INTA) in Dallas, Texas. More than 90 attended the global networking event, including lawyers and guests from Africa, Asia, Europe, Australia, and North America. The reception was held at Wolfgang Puck’s acclaimed restaurant Five Sixty, which provided stunning views of the Dallas metropolitan area. The evening was an elegant and unique opportunity for DLA Piper partners to connect with clients, including in-house counsel for some of the world’s best-known brands.

This morning, DLA Piper's Fashion, Retail and Design Group brought out a commanding group of DLA Piper colleagues from around the world to discuss recent developments in their jurisdictions that affect brand owners of fashion and retail brands. The audience comprised of representatives of luxury and leading retail apparel brands, whom were treated to a breakfast of digestible presentations of useful fashion law and intellectual property news from China, Turkey, Brazil, Australia, Germany and the United States.

At the end of the program, London partner and Fashion, Retail and Design Group founder, Ruth Hoy invited guests to take home the DLA Piper fashion law e-magazine, Law à La Mode, and additional materials on China protection.  It was truly a remarkable event!

© 2013 Karen Campbell

© 2013 Karen Campbell

© 2013 Karen Campbell

© 2013 Karen Campbell

By Scott W. Pink

In a setback for resellers of digital products, a New York federal court issued a decision on March 30, 2013 holding that ReDigi’s online platform for reselling digital used music violated the copyrights owned by record companies in that music. In the case of Capitol Records v. ReDiGi, the court held that the resale of the digital files facilitated by ReDigi’s technology was not protected by the first sale doctrine, which allows one to resell a lawfully acquired copyrighted work, because the sale of the digital used music involves making an unauthorized copy of the digital file. This decision calls into question whether there could be any viable means for legally reselling any form of digital content through the Internet.

It has long been an accepted practice for music lovers to clean out their music collections by selling their used LPs and CDs. Indeed, you will still find retail stores that have used LPs and CDs for sale. With the advent of digital music distribution through such online services as iTunes, these traditional means for reselling music collections are not viable because the music is typically stored on the consumer’s computer or mobile device, and not on a separate medium. 

One company that tried to solve this problem is ReDigi, which markets itself as “the world’s first and only online marketplace for digital used music.” A consumer wanting to sell used music must download ReDigi’s Media Manager which first searches the user’s computer to build a list of eligible titles to sell by verifying they were legally purchased from iTunes or another ReDigi user. Once the list is built, the user can then upload eligible files to ReDigi’s “Cloud Locker” which results in them being completely removed from the user’s personal computer or other device and stored on a server controlled by ReDigi. If a user decides to sell the music, it is downloaded to the purchaser’s computer or other device and the seller no longer has access to it.

ReDigi launched its site in 2011. It was not long before it was challenged by the recording industry. Capitol Records, the recording label for many classic songs, such as The Beatles’ Yellow Submarine, filed a lawsuit in the United Stated District Court for the Southern District of New York claiming multiple violations of the Copyright Act, including direct copyright infringement, inducement of copyright infringement, contributory and vicarious infringement, and common law copyright infringement. Shortly after the case was filed the parties filed cross-motions for summary judgment, Capitol arguing that ReDigi directly and contributorily infringed Capitol’s reproduction and distribution rights and ReDigi arguing that it had no liability based on, among other things, the first sale and fair use doctrines. 

One of the threshold issues for the court to determine was whether the ReDigi technology involves a violation of Capitol’s exclusive reproduction right in the sound recordings. ReDigi’s contention was that no reproduction occurred because it was simply transferring the same digital file that had been purchased by the seller to the buyer. However, the court disagreed, noting that the reproduction right under the Copyright Act is the right to reproduce the copyrighted work in a “phonorecord.” The court noted that the ReDigi’s process of transferring the digital music file necessarily involving making a new “phonorecord” or “material object” of that copyrighted work because the digital file has moved from one material object — the user’s computer – to another – the ReDigi server.

Once the court had found that ReDigi’s process involved a reproduction, it was able to readily conclude that ReDigi was engaging in copyright infringement and to dispose of ReDigi’s main defense, the first sale doctrine. Under U.S. law, the first sale doctrine provides that the owner of a particular copy of a copyright work lawfully made under the Copyright Act may, without the permission of the copyright owner, sell or dispose of that particular copy. 17 U.S.C. §109. ReDigi had argued that the purchaser of the digital music file had the right to resell that digital file under the first sale doctrine. The court noted, however, that this doctrine was not applicable because it only applies to the distribution of the copyright work, not to its reproduction, which was the right that was being infringed in this case. The court further noted that ReDigi was not distributing the original material object containing the sound recording but rather an unauthorized reproduction that was created on the ReDigi servers. As such the first sale doctrine did not apply to that reproduction because it was not “lawfully made.”

This ruling certainly makes it very difficult for owners of digital content to sell their content online because it will necessarily require the making of a separate and distinct copy of that digital content on the purchaser’s computer or device. Under the court’s ruling in the ReDigi case, the first sale doctrine will not apply to permit the sale of that digital content, even if the original copy of that content is removed from the seller’s computer. Even though content owners and resellers, like ReDigi, believe this is not good public policy, Congressional intervention may be required in order to modify the first sale doctrine to permit the sale of lawfully acquired used digital files.

Some takeaways and common mistakes of practitioners presented during this program are as follows:

1. The USPTO’s main objective in examining trademark applications is to promote resolution of issues and as such, it evaluates its Examining Attorney’s work/ production based on their resolution skills and grants a credit for their work only when their actions lead to a resolution of issues.  For example, the Examining Attorney receives a credit for their first action and their last disposition (or resolution), but not for their second or final refusals because these actions do not resolve any issues.  The absence of credit for follow up actions explains the USPTO’s initiatives to encourage Examining Attorneys to call an applicant for simple issues, such as amending identifications, because a phone call is a quick and easy way to resolve these issues.

2. The USPTO is working on limiting the number of petitions to revive.  Therefore, practitioners should remind their clients about this development and stay on top of maintaining deadlines to avoid unintentional abandonment of their applications.

3. The USPTO uploaded many new information/guidelines on their website, such as Trademark Examination Guides (which included updates relating to webpage specimens as displays associated with goods).  This type of resources may be helpful to clients who are new to or unfamiliar with trademark law.

4.  In ex parte appeals, the TTAB does not handle requests for amendments to the identification of goods and services.  If an Appellant has these issues, it is best to file a Request for Remand, which will be sent back to the Examining Attorney for consideration.   

5. In a Final Office Action, if one of the grounds for refusal is likelihood of confusion with a registered mark, the TTAB highly recommends, before the Appellant file their Brief, that the applicant check the USPTO records to confirm whether the cited registration has been cancelled or has expired before filing their brief in the ex parte appeal.  If the cited registration is no longer valid, it will save clients significant time and money.

6. If the applicant desires an oral hearing in connection with the ex parte appeal, the request should be made in a separate document and not included in the brief, reply brief, or any other documents filed with the TTAB.  The reason behind is that the person reviewing such documents may easily miss the Request for Oral Hearing if the request is made within those documents. As such, such request should be made by a separate notice filed no later than ten (10) days after the due date for a reply brief.

7. Some practitioners believe that an oral hearing is mandatory in an ex parte appeal to the TTAB.  However, an oral hearing is not a mandatory procedure.  Further, the TTAB noted that an oral hearing is only helpful if the goods or services at issue are technical or unfamiliar, or where an issue on appeal is not clearly defined.  By avoiding an unnecessary oral hearing, practitioners can be more cost-sensitive in TTAB proceedings.

For more information about DLA Piper’s Trademark law practice, contact Ann Ford or Eunice Chung.

Below we have republished our firm’s blog entry discussing the recent Second Circuit decision, which the broadcasters are now challenging in their petition. 

Repost from Sports, Media and Entertainment Online blog

Authored by Andrew L. Deutsch, Melissa A. Reinckens and Marc E. Miller.

Court of Appeals rejects shutdown of retransmission service Aereo

The United States Court of Appeals for the Second Circuit has rejected an attempt by broadcasters to shut down Aereo, a service that receives broadcast television signals and retransmits them to individual subscribers over the Internet – but, unlike cable providers, pays no retransmission fees to the copyright holders. 

In WNET et al. v. Aereo Inc., the Second Circuit found that it was bound by an earlier holding, Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (Cablevision), which held that transmission of broadcast channels to Cablevision’s Remote Service Digital Video Recorder system (RS-DVR) was not an infringement of the copyright holders’ public performance right.

While the Aereo ruling is undoubtedly a setback to the plaintiffs, it concludes just one phase of what will likely be an ongoing litigation between the parties.

Aereo transmits to its subscribers broadcast television programs over the Internet for a fee. Aereo functions much like a television with an RS-DVR – the subscriber can tune in to a live broadcast or record a broadcast program for later viewing. The back end is unique: Aereo uses thousands of tiny antennas, each assigned to a single subscriber, to receive over-the-air broadcasts, and a remote server that creates individual copies of broadcast programs that its subscribers wish to watch live or at a later time. Aereo does not have any license from copyright holders to record or transmit their programs and pays no retransmission fees to broadcasters, unlike cable channels which pay such fees.

Two groups that own copyright in network television programming filed separate copyright infringement actions against Aereo. They alleged that the Aereo service infringed their exclusive right to publicly perform copyrighted programs, and sought a preliminary injunction that would have halted the service. The district court, however, refused to enjoin the service. It found that Aereo’s individual antenna system was not materially distinguishable from Cablevision’s RS-DVR system and that Aereo’s transmissions of broadcast programs to individual subscribers were not “public performances.”

The Second Circuit, in a 2-1 decision, affirmed the denial, finding that the Aereo service was not distinguishable from the RS-DVR system involved in Cablevision. Section 106(4) of the Copyright Act grants the copyright owner the exclusive right “to perform the copyrighted work publicly.” Under the statute, to “publicly perform” a television program means either (1) to show the program at a place open to the public or where a substantial gathering of persons other than family and acquaintances is gathered, or (2) to transmit the program to the public, whether the members of the public capable of receiving the performance receive it in the same place at the same time or in separate places at different times.

In Cablevision, individual customers sent signals through the RS-DVR system to servers at Cablevision, which made a unique recording of a broadcast program for that customer; that recording was then transmitted to the customer only and could be played back or paused, as with a standard DVR. Any other customer seeking to access the same program had to direct the making of a different copy. The Second Circuit held that the RS-DVR’s transmission to the customer was not a public performance because each transmission of a program was made to a single customer using a single unique copy produced at the direction of that customer. Thus, under Cablevision, a service that creates unique copies of each work and transmits that unique copy to a particular customer, and to no other customer, will not infringe the copyright owner’s public performance right.

The Second Circuit likewise determined that Aereo’s system does not infringe the broadcasters’ public performance rights. The majority opinion reasoned that Aereo’s system has two essential features also present in Cablevision’s RS-DVR system: (1) Aereo’s system assigns each subscriber an individual antenna and a dedicated portion of Aereo’s server, at which a unique copy of each program is created; and (2) Aereo transmits that unique copy to the subscriber that requested it, and to no other subscriber. The court found that this system is not a “public performance” because the potential audience of each transmission is the single user who requested it, and that subscriber only.

The court rejected the plaintiffs’ attempts to distinguish Aereo’s system from the RS-DVR system in Cablevision. “It is beyond dispute that the transmission of a broadcast TV program received by an individual’s rooftop antenna to the TV in his living room is private,” it noted, adding, “Plaintiffs have presented no reason why the result should be any different when that rooftop antenna is rented from Aereo and its signals transmitted over the Internet.” The Second Circuit concluded that under Cablevision, Aereo’s transmissions of unique copies of broadcast television programs created at its users’ requests and transmitted to users while the programs are still airing on broadcast television are not “public performances” of those works.

In a dissenting opinion, Circuit Judge Denny Chin concluded that the Aereo system infringed the owners’ public performance rights. He described Aereo’s technical architecture as “a sham,” and “a Rube Goldberg-like contrivance” designed to take advantage of a perceived loophole in the law. Judge Chin discerned two “critical differences” between Cablevision and this case: (1) Cablevision involved a cable company that paid statutory licensing and retransmission consent fees to broadcasters, while Aereo paid no fees; and (2) the subscribers in Cablevision already had the ability to view broadcast programs in real-time through their authorized cable subscriptions, and the RS-DVR was merely adding a time-shifting service similar to a standard DVR, while no part of Aereo’s system is authorized. Judge Chin concluded that the majority’s decision “does not merely deny the broadcasters a licensing fee for Aereo’s activity; it provides a blueprint for others to avoid the Copyright Act’s licensing regime altogether.”

Although the Second Circuit affirmed the denial of preliminary relief, the dispute is not yet over. Several of the plaintiffs’ claims – infringement of plaintiffs’ right of reproduction and contributory infringement – have yet to be litigated. The broadcasters may seek further review of the public performance issue by requesting a rehearing en banc or by seeking review from the United States Supreme Court.

Nonetheless, in the short term, the decision in Aereo is likely to have a significant impact in the real-world economics of television and cable. Aereo has announced that it is expanding into new geographical markets. Among the decision’s potential effects is the incentive it gives to television users who do not want to pay for cable TV channel bundles and who may now be able to receive an unbundled service at a lower price. The decision also incentivizes cable channel operators which may seek to lower the retransmission fees they, but not Aereo, pay to broadcasters.