Source: http://www.vegastrademarkattorney.com/2009/03/
Timestamp: 2019-04-21 14:25:23+00:00

Document:
Michael Atkins’ Seattle Trademark Lawyer blog posted today (link here) about a trademark infringement victory for Las Vegas’ favorite personal injury lawyer, Glen Lerner.
The Ninth Circuit Court of Appeals affirmed a Nevada District Court decision awarding Lerner $124,375 in attorney’s fees for the willful infringement of Lerner’s “ONE CALL. THAT’S ALL” slogan as well as infringement of Lerner’s copyrights. See Invision Production & Media Services, Inc. v. Glen J. Lerner Legal Services, No. 07-15778 (9th Cir. March 24, 2009) (unpublished).
While the Ninth Circuit previously affirmed the fees under copyright law, the Ninth Circuit remanded the case back to the district court for additional explanation by the court of the fees awarded under trademark law as well as a breakdown of what fees were for copyright infringement and what were for trademark infringement. The district court, on remand, was much more specific about its conclusion that the case was “exceptional” for purposes of award attorneys fees under the Lanham Act (15 U.S.C. 1117(a)). The district court also allocated 60 percent of the fees to the trademark issues and 40 percent to the copyright issue.
Those attorneys fees should come in handy in Lerner’s other trademark battle over his other well-known slogan “HEAVY HITTER” (previously blogged here). One interesting parallel between Lerner’s battle with Invision over “ONE CALL. THAT’S ALL” and his battle with Richard Sackett and LawCo USA, PLLC over “HEAVY HITTER” is the “naked license” argument. Invision had tried to argue that Lerner’s use of the “ONE CALL-THAT’S ALL” mark pursuant to a license agreement with the prior owner of the mark (before it was assigned to Invision) inured to Invision’s benefit – an argument that Invision lost because Invision could not show that it exerted any control over the quality of services provided under the mark – a prerequisite for a licensee’s use of a mark to inure to the licensor’s benefit. See Bancamerica Int’l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589, 595 (9th Cir. 2002). In Lerner’s lawsuit against Sackett and LawCo, Lerner also argued that the license agreement he had with the owner of the “Heavy Hitters” mark was a naked license because the licensor failed to exercise any control over the quality of Lerner’s legal services.
The Ninth Circuit has denied a defendant the defense of laches against a plaintiff despite the fact that the plaintiff waited seven years to assert its trademark rights – all because the defendant had (in the majority’s view) not spent that enough money developing the alleged infringing mark as its own (and thus was not prejudiced by the delay). See Internet Specialties West, Inc. v. Milon-Digiorgio Enterprises, Inc., Nos. 07-55199, 07-55087 (9th Cir. March 17, 2009).
Internet Specialties West, Inc. (“ISW”) and Milon-Digiorgio Enterprises, Inc. (“MDE”) are both internet service providers. ISW registered the domain name ISWest.com in May 1996. In July 1998, MDE registered the domain name ISPWest.com. ISW discovered MDE’s website in late 1998, but took no action at the time supposedly because while ISW offered dial-up, DSL and T-1 internet access nationwide, MDE only offered dial-up access in Southern California.
MDE expanded it business nationwide in 2002 and began offering DSL in 2004. In 2005, ISW sent a cease and desist letter to MDE and later brought a trademark infringement lawsuit against MDE’s use of the name ISPWest. See Internet Specialties West, Inc. v. Milon-Digiorgio Enterprises, Inc., Case No. 05-cv-03296, 05-cv-03296 (C.D. Cal.). A jury found that while MDE had infringed ISW’s mark, there was no damages from the infringement. Nonetheless, with such finding, the district court imposed an injunction against any further use of the mark by MDE. Moreover, the district court also determined that ISW’s claims were not barred by laches.
MDE appealed the district court’s decision to the Ninth Circuit Court of Appeal. A divided Ninth Circuit panel affirmed the jury’s verdict on infringement and also upheld the district court’s decisions on laches and the injunction imposed on MDE.
The defense of laches is often categorized as embodying the principle that a plaintiff cannot sit on the knowledge that another company is using its trademark, and then later come forward and seek to enforce its rights. See Grupo Gigante S.A. de C.V. v. Dallo & Co., 391 F.3d 1088, 1102-03 (9th Cir. 2004). The two part test for the defense of laches is 1) was the plaintiff’s delay in bringing suit was unreasonable and 2) was the defendant prejudiced by the delay. See Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 838 (9th Cir. 2002); Tillamook Country Smoker, Inc. v. Tillamook County Creamery Association, 465 F.3d 1102, 1108 (9th Cir. 2006). The six factors analyzed by courts in deciding whether laches precludes a claim are: “1) the strength and value of trademark rights asserted; 2) plaintiff’s diligence in enforcing mark; 3) harm to senior user if relief denied; 4) good faith ignorance by junior users; 5) competition between senior and junior users; and 6) extent of harm suffered by junior user because of senior user’s delay.” E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983).
The Ninth Circuit found that the district court had wrongfully decided the first issue and that indeed ISW’s delay in bringing suit was unreasonable. The district court found that the relevant period of time started running in 2004; however, the court found that the earlier 1998 date was when ISW knew or should have known about its cause of action based on ISW’s actual notice of MDE’s use of the mark in connection with internet services. Based on this earlier date of 1998, ISW’s filing of an action outside of the applicable four-year statute-of-limitations period created a presumption that laches applied.
However, in analyzing the second factor (prejudice resulting from the unreasonable delay in bringing suit), the Court found that MDE was not prejudiced by the 7 year delay by ISW in enforcing its trademark rights. It is this particular point where the Ninth Circuit panel split. The dissent found obvious prejudice from MDE’s expansion of its business from 2,000 customers to 13,000 customers along with the accompanying sales and expenses.
The majority noted that the district court had found that MDE did not demonstrate prejudice from ISW’s delay in bringing suit because MDE had not expend any time or resources during the interim developing brand recognition of its mark. The district court focused on the fact that most of MDE’s advertising was in the form of “pay-per-click” advertisements (which typically did not include the ISPWest mark) – efforts that the court stated “creates little to no brand awareness.” “It is a simple premise that MDE cannot create 'public association' between ISPWest and the company if it does not even use the ISPWest mark in its most prevalent form of advertising.” The district court also found that MDE would not have to undertake significant advertising expenditures to change its name at this juncture. Finally, the majority did not feel that its view of what constitutes prejudice was in defiance of the court’s prior decision in Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 838 (9th Cir. 2002) and Grupo Gigante S.A. de C.V. v. Dallo & Co., 391 F.3d 1088, 1102-03 (9th Cir. 2004).
As such, the majority found no error or abuse of discretion in the district court’s finding that MDE was not prejudiced, and thus laches would not bar ISW’s lawsuit. The majority also found the scope of the district court’s injunction requiring MDE to cease all use of the ISPWest.com mark reasonable in order to prevent consumer confusion.
Kleinfeld noted that the key to the majority’s rationale was its holding that “[i]f this prejudice could consist merely of expenditures in promoting the infringed name, then relief would have to be denied in practically every case of delay.” The dissent further notes that this language came from a Seventh Circuit decision where the delay was less than under a year and the infringement was deliberate as opposed to the instant case where the delay was far in excess of the applicable statute of limitations and the infringement was arguably not deliberate.
As the majority concedes, Jarrow Formulas, Inc. v. Nutrition Now, Inc., establishes that laches is presumed to bar a claim made outside of the analogous limitations period, 4 years here. 304 F.3d 829, 835-36 (9th Cir. 2002).The district court did not apply this presumption because, as the majority holds, it failed to determine the proper period for laches. Majority Op. at 3410-11. In fact, the district court applied a presumption against laches. Accordingly, the district court necessarily committed an abuse of discretion on this issue, and we cannot properly defer to its discretion. The majority’s deferential review is erroneous.
Kleinfeld further notes that the Ninth Circuit based its decision to apply laches in E-Systems v. Monitek, Inc., where the defendant “incurred substantial advertising expenditures and rapidly expanded its business” despite the fact that the plaintiff sued the same year that it discovered the infringement but barred because of a 6-year delay from the time when it should have known about the infringement.
Kleinfeld argues that where the presumption of prejudice applies (and there is no question that it does in this case), the prejudice exists where an infringer is “forced to abandon its long-term investment in its presentation of [its product] to the public.” (citing Jarrow Formulas, 304 F.3d at 840).
The majority’s evisceration of laches means that a big company can lurk in the tall grass while its little prey gradually fattens itself by dint of great effort and expense. Then, when the small competitor has succeeded, the big company can shake it down for a cut of its hard-won success, or destroy the name under which it innocently did business for years. That is trademark law as protection racket, rather than trademark law as prevention of consumer confusion.
If it’s not apparent from the tone of the above write-up, I find the majority’s decision quite troubling – for all of the reasons articulated by Judge Kleinfeld's eloquent dissent. This decision is screaming for en banc review and I certainly expect MDE to petition for such review.
There was another court decision in the long running battle between the founders of the restaurant Japonais and a New York man who was first to file a trademark registration application for the JAPONAIS mark with the U.S. Patent and Trademark Office (“USPTO”). See Geisha LLC. v. Tuccillo, 2009 U.S. Dist. LEXIS 20300, Case No. 05-cv-05529 (N.D. Ill. March 13, 2009). The decision was a setback for the Japonais restaurant founders and underscores the importance of businesses taking the steps to seek trademark registrations early for their intended their trademarks and service marks in order to protect their subsequent ability to expand the use of such marks nationwide.
On June 25, 2004 – nine months after the restaurant opened (and two weeks after an article about the restaurant appeared in Time magazine) – a man named Roy Tuccillo, owner of Anchor Frozen Foods, a New York-based frozen seafood supply company, filed an intent-to-use application with the USPTO for the mark JAPONAIS (coincidentally with the same style as the logo created by Geisha having an inverted V in place of the A) in connection with restaurant and lounge services. Tuccillo testified in deposition that he had used his JAPONAIS mark as far back as 2000 when he put it on a store front window where he sold his frozen seafood (Tuccillo offered an undated photo of a unidentified store front window as evidence).
Geisha did not discover Tuccillo’s intent-to-use application until September 2005 – long after the period for Geisha to file an opposition to registration had expired. The PTO issued a Notice of Allowance on August 23, 2005. Geisha’s counsel notified Tucillo’s attorney about Geisha’s rights to the JAPONAIS mark to which Tucillo apparently replied that he intended to use the name in connection with a future restaurant and lounge. Geisha then filed the instant action against Tucillo on September 26, 2005, claiming, among its ten causes of action, false designation of origin under 15 U.S.C. § 1125(a). While the case was proceeding, Geisha opened two additional Japonais restaurants – one in New York City and the other in Las Vegas – using its JAPONAIS design mark.
Geisha’s complaint had also sought declaratory relief that Geisha possessed superior rights in the mark and that Tuccillo’s intended use of the mark would constitute infringement – relief that was preliminarily denied because Tuccillo had not yet used the mark and was not immediately threatening to do so.
On May 2, 2008, however, Tuccillo filed a Statement of Use declaring that he was using the mark in commerce in connection with restaurant and lounge services. Tuccillo’s specimen of use was a menu showing the JAPONAIS mark as well as a photo of the mark etched onto a window. Geisha subsequently moved for summary judgment on its false designation of origin claim arguing that Tuccillo’s conduct in registering and using the mark constituted false designation of origin.
The court denied Geisha’s motion for summary judgment based on genuine disputed issues of material fact, particularly on the issue of whether the geographic reputation of Geisha’s restaurant and the JAPONAIS mark had penetrated the New York area such that Geisha could claim prior common law trademark rights.
The court first analyzed Geisha’s rights in the JAPONAIS mark at the time Tuccillo filed his application. Because Geisha did not apply to register the mark with the USPTO, Geisha was not entitled to the presumption of constructive notice nationwide, and thus must show evidence that its rights extended beyond the Chicago area. While the general rule is that a junior user who is unaware of the senior user’s use may adopt a mark in a geographically distinct area provided that the mark has not been registered, one exception to this rule is where the senior user’s reputation extends beyond the immediate geographic area where the mark is employed.
In analyzing Geisha’s reputation, the court noted that by June 2004, most of Japonais’s publicity had been in the Chicago media and in trade publications and the particular stylized JAPONAIS mark appeared in only three advertisements in Chicago-based publications before Tuccillo filed his application. In the end, the court found that it could not conclude, as a matter of law, based on the evidence in the record that the JAPONAIS mark had obtained such widespread notoriety by June 2004 that Geisha possessed common law rights in the mark in New York at the time Tuccillo filed his application.
The court further noted that Geisha’s expansion to New York and Las Vegas does not create enforceable trademark rights in New York that Tuccillo violated by opening his restaurant because Tuccillo had filed an intent-to-use application giving him an effective date of first use of June 2004 with respect to the JAPONAIS mark despite not actually using it until May 2008 – the wonderful benefit of the intent-to-use trademark laws. Indeed, any party that begins using the mark after an intent-to-use application is filed will be treated as a junior user with respect to such intent-to-use trademark applicant.
Constructive notice, obtained when a mark is actually registered on the principal registry, prevents further use of the mark by others. Even senior users may be restricted to the areas they operated in at the time of registration. Constructive use, by contrast, prevents a third party from acquiring any rights in the trademark as of the date the intent-to-use application was filed. Under this doctrine, Tuccillo will have a constructive use date of June 25, 2004, the date he filed the ITU application. Constructive use is subject to two important limitations that are relevant here: first, constructive use is contingent upon actual registration of the mark, and second, constructive use does not bar use of the mark by senior users.
At the time of the court’s decision, Tuccillo’s mark had not yet registered, which left the question of Tuccillo’s constructive use priority in question. Well, there is no longer any doubt because Tuccillo’s mark was registered yesterday, March 17, 2008 (U.S. Registration No. 3,591,621). [Geisha has promised to initiate a cancellation proceeding with the Trademark Trial and Appeal Board -- meanwhile, Geisha's own trademark registration applications (here and here) are suspended].
Nonetheless, there was sufficient uncertainty that the court was able to conclude that Geisha was not entitled to judgment as a matter of law on its false designation of origin claim. The court held that Tuccillo could not have violated Geisha’s rights in the mark in New York unless Geisha possessed common law rights in New York prior to the constructive use date of June 25, 2004 – and that the extent of Geisha’s common law rights is a contested issue of material fact that precludes summary judgment.
In the end, the court was unable to conclude, as a matter of law, that Tuccillo had no rights to the JAPONAIS mark or that Tuccillo infringed Geisha’s trademark rights when he opened his restaurant, and therefore, denied Geisha’s motion for summary judgment.
Those of us in the small world of trademark blogs already know Michael E. Hall for his comments and insights on trademark law which he often posts on other trademark blogs.
Well Michael has finally decided to take the plunge into the legal blogosphere by starting his own trademark law blog – Registration Ruminations (admittedly a better blog name than Las Vegas Trademark Attorney).
Michael, who is now hanging his own shingle, brings his experience as an examining attorney at the U.S. Patent and Trademark Office as well as a lawyer in private practice at the intellectual property law firm Knobbe Martens Olson & Bear.
I would like to welcome Michael to the party and look forward to reading his regular ruminations on the world of trademark prosecution before the U.S. Patent and Trademark Office. (Check out his recent post explaining the details on how PTO Examining Attorneys are evaluated for purposes of bonuses – a valuable insight for all trademark practitioners). Anybody else out there who regularly follows trademark blogs should certainly add his blog to your blogroll. Good luck Michael.
This lawsuit is a little stale in the blogging world (filed about a month ago), but since it doesn’t seem to have gotten much press anywhere and it involves three of my favorite things (Nevada, business formation, and trademark law), I could not help but give it a passing mention.
On February 10, 2009, Incorp Services, Inc., (“Incorp”) a company that helps parties form corporations and other business entities throughout the United States and which also offers registered agent services for business entities nationwide, filed a lawsuit against Legalzoom.com, Inc. (“Legalzoom”), the “document preparation” company that also helps interested parties form corporations and other business entities, in the U.S. District Court for the District of Nevada. See Incorp Services, Inc., v. Legalzoom.com, Inc., Case No. 09-cv-00273 (D. Nev.). A copy of the complaint can be downloaded here.
Incorp alleges that since at least 2008, customers who have formed business entities through Legalzoom and who wanted to use Incorp as their registered agent have been told by LegalZoom’s telephone representatives that Incorp “is not in good standing” with several states, that Incorp “cannot be used” as a registered agent; that InCorp is “not licensed to do business in” certain states: that Incorp “cannot legally do business in” certain states; that InCorp is “not legal” in certain states; and other similar statements – all of which Incorp asserts are false given its good standing status in all fifty states and the District of Columbia.
Incorp’s causes of action are for “trade libel” under 15 U.S.C. 1125(a)(1)(B) (i.e., misrepresenting the qualities of Incorp’s services and commercial activities), defamation, and deceptive trade practices under Nevada law (N.R.S. § 598.0915). Incorp seeks injunctive relief along with a retraction from Legalzoom as well as compensatory and punitive damages, costs, and attorneys fees.
Query: I don’t suppose Legalzoom’s “document preparation” services covers preparing an Answer to this complaint.
Yesterday's post was about cookies . . . today's is about cupcakes (sort of).
John M. Earle is the owner of the federally registered Cupcake and Crossbones trademark (pictured above) for ornamental pins, duffle bags, wallets, shirts, polo shirts, sweatshirts, hats, shorts, pants, scarves, and jackets.
Johnny Cupcakes, Inc. (“Johnny Cupcakes”) is the company which sells merchandise emblazoned with Earle’s Cupcake and Crossbones mark. Johnny Cupcakes has two stores in Massachusetts (Boston and Hull) and one store in Los Angeles, California, along with its online store found at the website http://www.johnnycupcakes.com/.
On March 3, 2009, Johnny Cupcakes and Earle filed a trademark infringement lawsuit against two Ontario, California residents, Clark Perez and Jo-Ann Perez, for supposedly selling “counterfeit” acrylic necklaces on eBay that display the Cupcake and Crossbones mark (the authentic necklace is pictured above) and which are apparently being mailed from a particular U-Store-It Trust location in California (and thus the reason the U-Store-It self-storage chain is named as a party). See Johnny Cupcakes, Inc. et al. v. U-Store-It Trust et al., Case No. __________ (D. Mass.). A copy of the complaint can be viewed here.
The causes of action are counterfeiting under 15 U.S.C. § 1114, federal trademark infringement and unfair competition under 15 U.S.C. § 1125(a), federal trademark dilution under 15 U.S.C. § 1125(c) [ed - famous?. . . really?], and common law trademark infringement and unfair competition.
A quick search of eBay did not reveal any current listings of any Cupcake and Crossbones necklaces (counterfeit or otherwise).
I previously blogged (link here) about the trademark infringement lawsuit brought by Eat N' Park Hospitality Group (“Eat 'N Park”) against The Clever Cookie Corp. over the latter company’s sale of cookies that Eat 'N Park claimed were “confusingly similar” to its federally registered smiley face design for cookies (pictured above). This lawsuit – filed in 2007 and technically dismissed for want of prosecution only to be refiled by Eat 'N Park again on June 26, 2008 (see Eat ‘N Park Hospitality Group, Inc. et al. v The Clever Cookie Corp., Case No.08-cv-00886 (W.D. Penn)) – remains pending.
Well, Eat 'N Park is at it again. On February 26, 2009, the company filed a similar trademark infringement lawsuit against a New Jersey-based online company named Forget-Me-Knot Gifts (“FMK”) over its sale of “Smiley Face” cookies. See Eat ‘N Park Hospitality Group, Inc. et al. v Forget-Me-Knot Gifts, Case No. 09-cv-00255 (W.D. Penn.). A copy of the complaint can be found here.
Based on what could be found on their website, FMK appears to sell smiley face cookies as part of their business of selling gift baskets and cookie bouquets.
And while it’s sad that a company like Eat ‘N Park can stop a small business like FMK from using a universally recognized design like the smiley face on a cookie (and the company isn’t even Franklin Loufrani of SmileyWorld fame), who can blame them for not wanting to spend hundreds of thousands of dollars just to defend its right to use the design – with very little chance of recovering any attorney’s fees even if FMK were to prevail.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 1125
 v. 
 § 598
 v. 
 § 1114
 § 1125
 § 1125