December 2015

News & Press

Federal Circuit: PAW DESIGN NOT CONFUSINGLY SIMILAR TO BRAND NAME PLUS DIFFERENT PAW DESIGN

Jack Wolfskin Ausrustung fur Draussen GmbH & Company KGaA v. New Millennium Sports, S.L.U., 797 F.3d 1363 (Fed. Cir. 2015)

On August 19, 2015, Jack Wolfskin Ausrustung Fur Draussen GmbH & Co. KGAA (“Jack Wolfskin”), represented by Fross Zelnick, won a reversal by the United States Court of Appeals for the Federal Circuit of a ruling by the Trademark Trial and Appeal Board (“TTAB”) in favor of New Millennium Sports, S.L.U. (“New Millennium”) on New Millennium’s opposition to an application filed by Jack Wolfskin.

The case involved Jack Wolfskin’s application to register this mark
logo

for various clothing items. New Millennium opposed based solely on its registered mark shown below for clothing items:
logo

In defense of the opposition, Jack Wolfskin argued that KELME, the dominant portion of New Millennium’s mark, was entirely absent from Jack Wolfskin’s mark, and that the paws in the two marks had many differences, such that consumer confusion was not likely. Jack Wolfskin also submitted many examples of third-party marks on the register and in use for clothing items that consisted of or contained paws, and argued that this dilution meant that consumers knew they needed to look for differences in clothing marks consisting of or containing paws. Under these circumstances, consumers would not be confused between the parties’ marks.

The TTAB had ruled for New Millennium for essentially two reasons: First, it stated that “[c]ompanies that use marks consisting of a word plus a logo often display their logos alone, unaccompanied by the literal portions of their trademarks.” It then stated that consumers could interpret Jack Wolfskin’s mark “as a display of [New Millennium]’s design apart from [New Millennium]’s word element.” Based on this reasoning, the TTAB found that there was a likelihood of confusion between the paws in the two marks. Second, the TTAB stated that many of the third-party paw marks submitted by Jack Wolfskin were associated with college sports teams, that they were therefore secondary indicators of source, and that therefore they were less likely to have the dilutive effect that third-party usage of similar marks is generally found to have.

In reversing, the Federal Circuit found neither of these two points to be valid. It stated that the TTAB had improperly ignored part of New Millennium’s mark, namely, the word KELME, in comparing the two marks for purposes of determining whether there was a likelihood of confusion, and that the marks should instead have been compared in their entireties. It found that the Board’s statement that consumers might be confused into thinking that Jack Wolfskin’s mark was a display of the paw in New Millennium’s mark by itself was not based on substantial evidence, which is the standard of review. It stated: “At bottom, neither the Board nor New Millennium has pointed to anything in the record that indicates that consumers recognize solely the paw print portion of New Millennium’s registered mark as being associated with New Millennium’s products. The Board’s finding lacked substantial evidence for minimizing the relevance of the word element of New Millennium’s registered trademark. Indeed, the Board’s conclusion is even more untenable in light of the numerous examples of paw prints as source identifiers” that Jack Wolfskin submitted.

In surprisingly candid words for a reviewing court, the Federal Circuit stated that if the TTAB wanted to put special emphasis on the design portion of a composite mark when comparing marks to determine whether there is a likelihood of confusion, “it must provide a rational reason for doing so,” but that the TTAB had “failed” to do so.

As to Jack Wolfskin’s evidence of third-party use of paw marks, the Federal Circuit called that evidence “voluminous.” It stated: “In this case, Jack Wolfskin’s evidence demonstrates the ubiquitous use of paw prints on clothing as source identifiers. Given the volume of evidence in the record, consumers are conditioned to look for differences between paw designs and additional indicia of origin to determine the source of a given product. Jack Wolfskin’s extensive evidence of third-party uses and registrations of paw prints indicates that consumers are not as likely confused by different, albeit similar looking, paw prints. The Board’s conclusion…is not supported by substantial evidence.”

The Court found that the paw design portion of New Millennium’s mark “is relatively weak” and concluded: “Balancing the factors, the Board’s determination that Jack Wolfskin’s mark would likely cause consumer confusion cannot be sustained.”

As a backstop for its defense of New Millennium’s opposition, Jack Wolfskin had also filed a counterclaim to cancel New Millennium’s registered mark shown above on the ground that New Millennium had abandoned that mark by replacing it with this mark:
logo

The Court affirmed the TTAB’s dismissal of Jack Wolfskin’s counterclaim on the ground that New Millennium’s new mark “creates the same continuing commercial impression” as its registered mark, and therefore the registered mark had not been abandoned. However, since Jack Wolfskin prevailed in defending its application against New Millennium’s opposition, the Court’s ruling on the counterclaim did not negate the essential outcome of the case: Jack Wolfskin had won.

- RAB

Sixth Circuit Court of Appeals: DESIGNS ON CHEERLEADING UNIFORMS ARE COPYRIGHTABLE SUBJECT MATTER

Varsity Brands, Inc. v. Star Athletica, LLC, 799 F.3d 468 (6th Cir. 2015)

The Court of Appeals for the Sixth Circuit recently addressed whether design patterns on cheerleading uniforms are copyrightable subject matter. The Sixth Circuit held that because the designs are separable from the cheerleading uniforms on which they appear, they are not “useful articles” and thus eligible for copyright protection.

Plaintiffs-Appellants Varsity Brands, Inc., Varsity Spirit Corporation, and Varsity Spirit Fashion & Supplies, Inc. (collectively, “Varsity”) design and manufacture cheerleading uniforms. See Varsity Brands, Inc. v. Star Athletica, LLC, 799 F.3d 468, 471 (6th Cir. 2015). Varsity’s designers create their designs without regard to the “functionality of the uniform or the ease of producing a full-sized uniform that looks like the sketch.” Id. Varsity owns several copyright registrations for the designs featured on its cheerleading uniforms, five of which were the subject of this litigation. Id. Defendant-Appellee Star Athletica, LLC (“Star”) markets and sells, among other things, cheerleading uniforms. Id. at 474. After noticing Star’s advertisements for cheerleading unfirms that looked similar to Varsity’s five registered designs, Varsity brought this lawsuit for copyright infringement and various claims under Tennessee state law. Id. at 474-75.

At the close of discovery, both parties moved for summary judgment. Star argued that Varsity did not have a valid copyright in the five designs because the designs were for useful articles, and therefore not copyrightable. Id. at 475. Varsity, on the other hand, argued that its designs were protectable and that Star had infringed those designs. Id. The district court granted Star’s motion for summary judgment, holding that Varsity’s designs were not copyrightable subject matter because they were not separable from the utilitarian function of a cheerleading uniform. Id. That is, Varsity’s designs, which consisted of colors, stripes, chevrons, and similar designs specifically associated with cheerleading, “[made] the garment recognizable as a cheerleading uniform,” and therefore the aesthetic features of the “cheerleading uniform merge[d] with the functional purpose of the uniform.” Id. (citation and internal quotation marks omitted).

Varsity appealed the district court’s decision to the Sixth Circuit, who vacated the district court’s decision and remanded for further proceedings.

Before turning to the parties’ functionality arguments, the Sixth Circuit addressed Varsity’s argument that the district court had not accorded appropriate deference to its copyright registrations. As the court noted, a certificate of registration “made before or within five years after the first publication of the work shall constitute prima facie evidence of the validity of the copyright.” 17 U.S.C. § 410(c). Three of Varsity’s five designs were registered within five years after first publication and thus were entitled to the statutory presumption of validity. Varsity Brands, 799 F.3d at 477. The question before the court, however, was how much deference to give the presumption of validity.

The Sixth Circuit distinguished between two types of deference that courts accord to agency decisions: Deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944). Chevron deference, the more deferential of the two, applies when Congress has expressly delegated to an agency “authority or responsibility to implement a particular provision or fill a particular gap,” or when “the agency’s generally conferred authority and other statutory circumstances [make apparent] that Congress would expect the agency to be able to speak with the force of law when it addresses ambiguity in the statute or fills a space in the enacted law.” Varsity Brands, 799 F.3d at 477 (quoting United States v. Mead Corp., 533 U.S. 218, 229 (2001)). In such circumstances, an agency’s regulation or interpretation is binding on courts unless it is “procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute.” Id. at 478 (quoting Mead, 533 U.S. at 227). Conversely, when Congress has not expressly or impliedly delegated authority to an agency to promulgate rules with the power of law, Skidmore deference applies. Id. Skidmore deference recognizes that “agency interpretations of a statute deserve ‘respect proportional to [the interpretations’] power to persuade’ . . . when the agency has ‘specialized experience and broader investigations and information available’ than those available to the judiciary.’” Id. (quoting Mead, 533 U.S. at 234-35). When applying Skidmore deference, factors to consider include “the thoroughness evident in the agency’s consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade.” Id. 480 (quoting Mead, 533 U.S. at 228).

The court concluded that certificates of copyright registration should be accorded Skidmore deference. Id. at 479. The court explained that the individual decisions concerning the copyrightability of works are not “rules carrying the force of law,” and thus did not deserve Chevron deference. Id. (quoting Mead, 533 U.S. at 226-27).

The court then turned to whether Star had overcome the presumption of validity afforded by Varsity’s copyright registrations. It explained that Section 102 of the Copyright Act protects “pictorial, graphic, and sculptural works.” 17 U.S.C. § 102. The definition of “pictorial, graphic, and sculptural works” in Section 101 of the Copyright Act provides that “the design of a useful article . . . shall be considered a pictorial, graphic, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” 17 U.S.C. § 101. Section 101 also defines a “useful article” as “an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.” Id.

Taken together, these provisions require a two-part inquiry as to whether an article is protectable: First, whether the design for which copyright protection is sought is a “design of a useful article,” and if so, second, whether the design of the useful article is separable from its utilitarian aspects. Varsity Brands, 799 F.3d at 481. This appeal involved the second inquiry.

As this was a question of first impression before the Sixth Circuit, the court discussed its approach to determining whether the pictorial, graphic, or sculptural features of the design of a useful article are separable from the utilitarian aspects. The court began by noting that there are two different ways to determine separability — physical separability and conceptual separability. Id. at 481. The physical separability test, which asks whether the pictorial, graphic, or sculptural features can be physically separated from the article “by ordinary means while leaving the utilitarian aspects of the article completely intact,” has limitations, especially for two-dimensional objects. Id. at 482. Thus, the Sixth Circuit held, like other Circuits had before it, that designs are still protectable even if they are not physically separable from the useful article, as long as they are conceptually separable. Id. at 483.

The court observed that courts and scholars have struggled over the years to formulate a test for conceptual separability, with numerous approaches set forth by the Copyright Office, courts, and commentators. See id. at 484-85 (providing descriptions of nine tests for conceptual separability). After reviewing several cases from other Circuits, the Sixth Circuit adopted a hybrid of several tests that poses five questions: (1) Is the design a pictorial, graphic, or sculptural work? (2) If so, then is it a design of a useful article—“an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information?” 17 U.S.C. § 101. (3) What are the utilitarian aspects of the useful article? (4) Can the viewer of the design identify pictorial, graphic, or sculptural features separately from the utilitarian aspects of the useful article? (5) Can the pictorial, graphic, or sculptural features of the design of the useful article exist independently of the utilitarian aspects of the useful article? See Varsity Brands, 799 F.3d at 487-88.

Asking these questions in reference to Varsity’s uniform designs, the court held that Varsity’s designs are conceptually separable from the uniform:

  • First, Varsity’s designs for which it owned copyright registrations are two-dimensional works of graphic art, and thus are “pictorial, graphic, or sculptural works.” Id. at 489.
  • Second, Varsity’s designs are designs of useful articles because they are designs of cheerleading uniforms, which have “an intrinsic utilitarian function that is not merely to portray the appearance of [clothing] or to convey information.” Id. at 489-90 (quoting 17 U.S.C. § 101).
  • Third, the utilitarian aspects of a cheerleading uniform are to “cover the body, wick away moisture, and withstand the rigors of athletic movements.” Id. at 490 (citation and internal quotation marks omitted). Star made two arguments on this point, both of which the court rejected. First, Star argued that the utilitarian aspects of a uniform are to identify the wearer as a cheerleader and as a member of a cheerleading team. Id. The court stated that this was an impermissible consideration under the Copyright Act’s definition of “useful article.” See 17 U.S.C. § 101 (providing that a “useful article” does not merely “convey information”). Second, Star argued that the design’s decorative function is one of the utilitarian aspects of the uniform. Varsity Brands, 799 F.3d at 490. The court explained that to the extent Star was arguing that the uniform’s decorative features were “inextricably intertwined with the utilitarian aspects of a cheerleading uniform because they serve a decorative function,” it rejected that argument. Id. According to the court, taking this argument to its logical limit would mean that all artwork was unprotectable because it also has a decorative function, i.e., decorating the room in which it hangs. Id. Thus, a work’s “decorative function” could not render it uncopyrightable.
  • Fourth, the graphic features of Varsity’s design—the arrangement of stripes, chevrons, zigzags, and color-blocking—could be identified separately from the utilitarian aspects identified in the previous step. Id. at 491. The district court had held that these graphics could not be separately identified from the uniform because a uniform without these graphics would not be recognizable as a cheerleading uniform. Id. The Sixth Circuit, disagreed. To start, the designs did not enhance the utilitarian aspects of the uniform. Id. That is, a “plain white cheerleading top and plain white skirt still cover the body and permit the wearer to cheer, jump, kick, and flip.” Id. Moreover, the record showed that not all cheerleading uniforms must look the same to be cheerleading uniforms. Id.
  • Fifth, the arrangement of stripes, chevrons, zigzags, and color-blocking could exist independently of the utilitarian aspects of the cheerleading uniform. Id. Indeed, they could be incorporated into other types of garments, or they could even be printed, framed, and hung on the wall as art. Id. at 491-92.

Because the designs could “be identified separately from, and [were] capable of existing independently of, the utilitarian aspects of [cheerleading uniforms],” the designs were copyrightable subject matter. Id. at 492 (quoting 17 U.S.C. § 101). The court concluded its opinion by stating that its holding was consistent with other decisions on the protectability of clothing; those decisions have allowed copyright protection for fabric designs but not dress designs, and here the designs at issue were more akin to fabric designs. Id. at 492-93.

The court thus entered summary judgment for Varsity on the issue of the protectability of its designs as pictorial, graphic, or sculptural works. Id. at 493. It remanded the case to the district court to address Star’s contention that the designs were ineligible for copyright protection because they lacked originality. Id.

The dissent generally agreed with the majority’s approach to conceptual separability, but would have defined the function of the uniforms—the third step in the majority’s five-step process—differently. Id. at 495. The majority had identified the function of the uniforms as covering the body, wicking away moisture, and withstanding the rigors of athletic movements, but the dissenting view was that this broad definition applied to all athletic gear. Id. Thus, it would instead define the utilitarian aspect of the uniform as identifying the wearer as a cheerleader. Id. Once the function was thus defined, it followed that the decorative elements were not separable from the function. Id.

The Sixth Circuit has granted Star’s motion to stay the court’s mandate so that Star can file a petition for writ of certiorari with the United States Supreme Court. It remains to be seen whether the Supreme Court will grant Star’s petition, but as the Sixth Circuit correctly observed, the lower courts have long struggled with the concept of separability, so the Supreme Court’s guidance in this area could be valuable.

- EW

Eighth Circuit Court of Appeals: ON REMAND FROM SUPREME COURT, CIRCUIT COURT GIVES PRECLUSIVE EFFECT TO TRADEMARK TRIAL AND APPEAL BOARD DECISION ON LIKELIHOOD OF CONFUSION

B&B Hardware, Inc. v. Hargis Industries, Inc., __ F.3d __, 2015 WL 5011460 (8th Cir. Aug. 25, 2015)

In March 2015, the U.S. Supreme Court held in B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct 1293 (2015), that a decision of the Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office (“TTAB”) on the issue of likelihood of confusion may preclude a federal court from reaching a contrary conclusion on the issue in a subsequent infringement action. The Supreme Court’s ruling is summarized in the following sentence from that opinion: “So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.” 135 S. Ct at 1310.

Given that the TTAB does not typically look to real-world usages of the marks made by the parties (particularly by the defendant) in assessing likelihood of confusion, while such real-world marketplace conditions are critical to the likelihood of confusion analysis of district courts in infringement actions, many practitioners wondered whether the standard adopted by the Supreme Court in B&B Hardware would ever be met such that a TTAB decision could ever be given preclusive effect in federal court. We now know the answer is “yes,” as the U.S. Court of Appeals for the Eighth Circuit, in its re-examination of the B&B Hardware case following a remand from the Supreme Court, recently gave preclusive effect to the TTAB decision on likelihood of confusion.

The Facts and Procedural History of the Case

The facts of the case as relevant here are relatively straightforward. The plaintiff, B&B Hardware (“B&B”), has since 1993 owned a federal registration for the mark SEALTIGHT for metal fasteners used in the aerospace industry. Meanwhile, the defendant, Hargis Industries (“Hargis”), uses the mark SEALTITE for metal fasteners in the construction industry, and in 2002 applied for federal registration of SEALTITE. B&B opposed registration of SEALTITE before the TTAB, arguing that it was confusingly similar to SEALTIGHT. After the parties engaged in discovery and trial, the TTAB concluded that SEALTITE was confusingly similar to SEALTIGHT and could not be registered. Hargis did not exercise its statutory right to appeal the TTAB’s decision to the U.S. Court of Appeals for the Federal Circuit or a federal district court.

B&B then sued Hargis for infringement in federal district court, claiming that Hargis’ use of SEALTITE infringed B&B’s rights in SEALTIGHT. In light of the TTAB’s finding of a likelihood of confusion, B&B argued to the district court that the TTAB’s decision precluded Hargis from arguing in the district court that there was no likelihood of confusion between the marks. The district court, however, refused to give preclusive effect to the TTAB’s determination. Ultimately, a jury sided with Hargis, finding no likelihood of confusion between the marks. B&B appealed to the U.S. Court of Appeals for the Eighth Circuit, arguing that the district court should have given preclusive effect to the TTAB’s likelihood of confusion decision. But the Eighth Circuit affirmed, holding that because the TTAB looks to different factors than do federal courts in making likelihood of confusion determinations, a federal court should never give preclusive effect to a TTAB decision on the likelihood of confusion issue.

The Supreme Court accepted review of the case and reversed the Eighth Circuit, adopting the rule that a TTAB decision on likelihood of confusion can have preclusive effect so long as “the usages adjudicated by the TTAB are materially the same as those before the district court.” 135 S. Ct. at 1310. It then remanded the case back to the Eighth Circuit to determine in the first instance whether the usages of SEALTIGHT and SEALTITE by the parties adjudicated by the TTAB were materially the same as those before the district court.

The Eighth Circuit’s Decision on Remand

In a short per curiam opinion, the Eighth Circuit on remand held that “the usages of the marks adjudicated before the TTAB were materially the same as the usages before the district court.” B&B Hardware, 2015 WL 5011460, at *1. Specifically, the Eighth Circuit explained that “the TTAB compared the marks in question in the marketplace context when it determined the likelihood of confusion issue for purposes of trademark registration.” Id. To support this statement, the Eighth Circuit cited to the dissenting opinion of one of the judges on the Eighth Circuit panel when the case was first before that Court, id., in which she stated that “[i]n reaching its decision on likelihood of confusion, the [TTAB] compared the marks in their entire marketplace context, discussing the companies’ goods in relation to the fastener industry, the companies’ channels of distribution, and the behaviors of consumers in the market for the companies’ products.” B&B Hardware, Inc. v. Hargis Industries, Inc., 716 F.3d 1020, 1029 (Colloton, J., dissenting).

Accordingly, the Eighth Circuit remanded the case to the district court with the instruction to “give preclusive effect to the TTAB on the decision of likelihood of confusion” and to hold further proceedings to determine “what remedies may be awarded for infringement.” B&B Hardware, 2015 WL 5011460 at *1.

The Future of TTAB Proceedings After B&B Hardware

The upshot of the Supreme Court and Eighth Circuit decisions in B&B Hardware is that parties in the TTAB and their counsel must carefully consider and determine what types of evidence to solicit and introduce in TTAB proceedings. Specifically, if the parties before the TTAB treat the proceeding like a federal court litigation, including asking for and introducing real-world evidence about the parties’ marks, products, consumers, and trade channels—like the parties did in B&B Hardware—then it becomes more likely that the TTAB will base its decision on such real-world evidence and that a federal court, in turn, will give the decision preclusive effect.

It would seem, however, that there are still categories of TTAB cases that generally should be ineligible for preclusive effect under B&B Hardware—namely, TTAB proceedings relating to intent-to-use applications or applications (or registrations) based on foreign registrations for marks that are not yet in use in the U.S., since neither of these types of applications involve any actual use by the defendant in the U.S. for the TTAB to examine.

But even in those cases, litigants who are unhappy with the TTAB’s decisions likely will now be more inclined to appeal the decisions to the U.S. Court of Appeals for the Federal Circuit or to a federal district court. Litigants would be reluctant to forego review of a TTAB decision by a federal court now given the risk later down the road that a federal court then will hold that the TTAB decision has preclusive effect.

- JDJ

Ninth Circuit Court of Appeals: THE BATMOBILE IS A CHARACTER UNDER COPYRIGHT LAW – NEW, THREE-PART TEST FOR DETERMINING CHARACTER PROTECTION.

DC Comics v. Mark Towle, 802 F.3d 1012 (9th Cir. 2015)

The U.S. Court of Appeals for the Ninth Circuit held that the Batmobile, Batman’s famous car, is subject to copyright protection as a character, independent of any specific work in which it has appeared and irrespective of whether it “lacks sentient attributes and does not speak.” Fross Zelnick represented winning appellee DC Comics in the appeal.

Mechanic Mark Towle’s business, which operated under the name “Gotham Garage,” offered and sold knock-offs—or, in Towle’s words, “replicas”—of DC Comics’ Batmobile. Customers could either provide a working automobile that Towle would alter for $90,000, or purchase a do-it-yourself kit. Towle offered “replicas” of both the Batmobile that appeared in the Adam West television program in 1966 and the modernized Batmobile used in the motion picture starring Michael Keaton in 1989. Towle’s finished products of both models substantially resembled the originals and incorporated many of the Bat logos and distinctive (albeit non-functional) gadgets. Towle’s advertisements contained explicit references to DC Comics’ trademarks and its Batman character.

The United States District Court for the Central District of California granted DC Comics’ motion for summary judgment on its copyright, trademark, and unfair competition claims and held that the Batmobile is protectable as a character, notwithstanding that the character is an inanimate object. The district court held that Towle infringed DC Comics’ rights under copyright in both: (i) the Batmobile as it appeared in the Batman comic books and (ii) the 1966 Batmobile and the 1989 Batmobile. As for the comics, Towle conceded that DC Comics owns all rights in the comic books, but argued that his replicas did not infringe the comic Batmobile because they were copied from later works. Towle argued strenuously that the many versions of the Batmobile over the decades, including the marked differences between the Batmobiles appearing in the earliest comic books and the 1966 and 1989 Batmobiles, undermined the similarity required to prove both an identifiable character and an infringement claim. As for the 1966 and 1989 Batmobiles, Towle conceded that his replicas were close copies and therefore infringing, but argued that DC Comics did not own rights in those works. After the district court ruled, the parties executed stipulations such that Towle could appeal. In Towle’s appellate brief, he largely conceded the trademark and unfair competition claims, focusing instead on the copyright claim.

The circuit court, which issued its judgment after hearing oral argument, began by acknowledging the fame of the Batman character and the Batmobile. And, while acknowledging the Batmobile’s varied appearances over the last 75 years, the court noted the sufficiently consistent nature of the vehicle’s iterations. Although visually distinct from prior versions, the court explained that both the 1966 Batmobile and the 1989 Batmobile maintained a “bat-like appearance” and were “equipped with state-of-the-art weaponry and technology.” DC Comics v. Towle, 802 F.3d 1012, 1016-17 (9th Cir. 2015). The court also noted that the agreements between DC Comics and the production companies responsible for making the TV show and film made clear that DC Comics had reserved all rights not specifically granted, including publication and merchandising rights.

The circuit court determined that “the Batmobile, as it appears in the comic books, television series, and motion picture, is entitled to copyright protection.” Id. at 1019. Looking to precedent in the Ninth and Second Circuits, the court established “a three-part test for determining whether a character in a comic book, television program, or motion picture is entitled to copyright protection,” as follows:

First, the character must generally have “physical as well as conceptual qualities.” Second, the character must be “sufficiently delineated” to be recognizable as the same character whenever it appears. Considering the character as it has appeared in different productions, it must display consistent, identifiable character traits and attributes, although the character need not have a consistent appearance. Third, the character must be “especially distinctive” and “contain some unique elements of expression.”

Id. at 1021 (citations omitted). “Even when a character lacks sentient attributes and does not speak (like a car), it can be a protectable character if it meets this standard.” Id.

The court found that these facts were sufficiently addressed by the lower court, such that no remand was required. Applying the first prong of the test, the court held that “the Batmobile has appeared graphically in comic books, and as a three-dimensional car in television series and motion pictures.” Id. For the second prong, the court provided, “the Batmobile has maintained distinct physical and conceptual qualities since its first appearance in the comic books in 1941,” namely, “a highly-interactive vehicle, equipped with high-tech gadgets and weaponry used to aid Batman in fighting crime,” and a “bat-like . . . appearance, with a bat-themed front end, bat wings extending from the top or back of the car, exaggerated fenders, a curved windshield, and bat emblems on the vehicle.” Id. In addition, the court noted the Batmobile’s “crime-fighting” nature with sleek and powerful characteristics that allow Batman to maneuver quickly while he fights villains.” Id. Next, the court pointed to many highly literary descriptions in the comic books of the vehicle, including that it waits “‘[l]ike an impatient steed straining at the reins . . . shiver[ing] as its super-charged motor throbs with energy’ before it ‘tears after the fleeing hoodlums’ an instant later.” Id. The vehicle’s “ability to maneuver” and the manner in which it is weaponized and equipped with the latest technology and features further helped to delineate the vehicle such that it is consistent and identifiable. Id. at 1022. For the third prong, the court relied on the vehicle’s “status as Batman’s loyal bat-themed sidekick,” together with both the many distinctive features that had satisfied the prior prongs and the Batmobile’s unique and highly recognizable name. These together rendered the Batmobile more than “a stock character,” as required under the test.

The court considered and rejected two of Towle’s arguments that the Batmobile was not subject to copyright protection as a character. First, Towle insisted that non-conforming appearances of the Batmobile, including one in which the Batmobile appeared as an armored tank, destroyed the notion that the Batmobile was a singular, consistent character. However, the court likened such inconsistencies to mere “costume changes,” which do not undermine a character’s identity. “In context, the depictions of the Batmobile as a tank or missile promote its character as Batman’s crime-fighting super car that can adapt to new situations as may be necessary to help Batman vanquish Gotham City’s most notorious evildoers.” Id.

In addition, Towle sought to have a jury, not the court, determine “whether the Batmobile displayed unique elements of expression and consistent, widely identifiable traits.” Id. However, because the facts were not in dispute, the court held that it was proper for the court to apply the facts to the law. With that, the court concluded that the Batmobile is a copyright-protectable character under the 1976 Copyright Act.

The court next rejected Towle’s assertion that DC Comics lacks rights under copyright in the 1966 and 1989 Batmobiles. Towle asserted that DC Comics’ rights in the underlying comics were not sufficient to bring suit because Towle had admittedly copied the derivative Batmobiles from the television show and film, not the vehicles portrayed in the comics. The court, however, made clear that a rights-holder can bring a claim against an infringer, even if the infringement is clearly of a derivative work, to the extent that the infringing work contains protectable elements of the original and to the extent that the original rights-holder retains ownership of the original work. Given that the court had just held that the 1966 and 1989 Batmobiles were different iterations of the same character that appeared in the comic books, the 1966 and 1989 Batmobiles clearly contained protectable material from the underlying work. And, since the replicas were slavish copies of the derivative works, and since DC Comics reserved all rights not conveyed in the agreements, the court held that DC Comics was able to assert copyright infringement against Towle. Furthermore, the court noted that DC Comics had retained separate merchandising rights under the relevant agreements, giving DC Comics an additional basis for a copyright infringement claim against replica automobiles based on the television and film properties.

Finally, the circuit court readily affirmed the lower court’s finding of infringement. It held that the district court had established that the Batmobile is protectable as a character under copyright law and that DC Comics possessed a copyright interest in the character as it is expressed in the 1966 and 1989 Batmobiles. The evidence, including Towle’s admissions that he had created replicas, permitted the district court to determine without further analysis that Towle had infringed DC Comics’ rights.

Owners of character-driven entertainment properties are likely to welcome this decision, which clarifies an expansive view of the protection accorded to characters – a position that underpins the latest notable decisions in this field. And, as such rights-holders review the ruling, they may also enjoy the circuit court’s light sprinkling of quips evocative of the original Batman television show, such as “To the Batmobile!” and “Holy copyright law, Batman!”

- LK

Ninth Circuit Court of Appeals: ONLINE RETAILER’S DISPLAY OF SIMILAR COMPETING GOODS IN SEARCH RESULTS NOT TRADEMARK INFRINGEMENT.

Multi Time Machine, Inc. v. Amazon.com, Inc., ___ F.3d ___, No.13-55575, 2015 WL 6161600 (9th Cir. Oct. 21, 2015)

The Court of Appeals for the Ninth Circuit recently upheld a decision on summary judgment that Amazon.com, Inc. (“Amazon”) did not violate high-end watch maker Multi Time Machine, Inc.’s (“MTM”) trademark rights by displaying similar products in search results for MTM watches without including an explicit notice that MTM’s watches are not sold on Amazon’s site. In so doing, the Ninth Circuit overturned its own prior ruling that the case should go to a jury trial.

Although MTM watches are not sold on Amazon’s website, if consumers search for MTM products on Amazon, they will receive a list of search results, including similar watches made by other manufacturers. The initial search term—for instance, “mtm special ops,” the name of a particular MTM watch—is displayed twice: once in the search query box and once directly beneath the search query box in quotation marks. It is also included in a field entitled “Related Searches,” which suggests alternative searches consumers might run if this search did not yield the results they were seeking. Nowhere on the page is there a notice stating that MTM watches are not available on Amazon.

MTM filed suit against Amazon for federal trademark infringement, arguing that consumers were likely to believe there was an association between MTM and the products displayed in the search results. Amazon moved for summary judgment, arguing that (1) it was not using MTM’s mark in commerce, and (2) there was no likelihood of consumer confusion. The district court did not decide the question of whether Amazon was using MTM’s marks in commerce, but found that there was no likelihood of confusion and so granted Amazon’s motion. MTM appealed.

The Ninth Circuit originally overturned the district court’s decision, finding that Amazon’s practice could create a likelihood of initial interest confusion, causing consumers to investigate the products of competitors due to a mistaken belief that there was an association or affiliation between MTM and the products of its competitors listed in the search results. Even if that belief were dispelled through subsequent research, those consumers might nevertheless purchase a competitor’s product, when they otherwise would have immediately proceeded to an authorized MTM retailer. The dissent vigorously argued that because Amazon’s search results clearly displayed the brand name of each product in the search results, no reasonably prudent consumer who was accustomed to shopping online would be confused as to the source or origin of the products.

In an unusual move, the Ninth Circuit reversed itself three months later, adopting the dissent’s reasoning and finding that Amazon’s search results did not create a likelihood of confusion. The majority relied heavily on Network Automation, Inc. v. Advanced Systems Concepts, Inc., a keyword advertising case in which the Ninth Circuit vacated a preliminary injunction prohibiting use of the plaintiff’s trademark as a keyword triggering display of the defendant’s website in Internet search results. In Network Automation, the Ninth Circuit stated that the Sleekcraft factors, employed by federal courts in that circuit to evaluate likelihood of confusion, are not exhaustive, and that depending on context, other factors may come into play. Network Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137, 1145 (9th Cir. 2011). The need to consider other factors, the MTM majority said, is particularly true in the Internet context. The court reasoned that in the MTM case, the Sleekcraft test was not particularly apt, as it was designed to analyze whether two competitors’ marks may cause consumer confusion, and instead found that “the case will turn on the answers to the following two questions: (1) Who is the relevant reasonable consumer?; and (2) What would he reasonably believe based on what he saw on the screen?” Multi Time Machine, Inc. v. Amazon.com, Inc., No. 13-55575, 2015 WL 6161600, at *4 (9th Cir. Oct. 21, 2015).

In answer to the first question, the court found that because MTM’s watches are expensive, costing several hundred dollars, the relevant consumer “is a reasonably prudent consumer accustomed to shopping online.” Id. at *5. Regarding the second question, the court found that “the labeling and appearance of the products for sale on Amazon’s web page is the most important factor in this case” because “clear labeling can eliminate the likelihood of initial interest confusion in cases involving Internet search terms.” Id. The court then concluded that, as a matter of law, Amazon labels its products sufficiently clearly that a reasonably prudent consumer accustomed to online shopping would not likely experience initial interest confusion. The court explained that “[t]he search results page makes clear to anyone who can read English that Amazon carries only the brands that are clearly and explicitly listed on the webpage.” Id. at *6. It found that summary judgment was appropriate in a case such as this, where the court could conclude “simply by reviewing the product listing/advertisement at issue” that “consumer confusion . . . is highly unlikely.” Id.

The revised majority opinion provoked a strong dissent from the author of the original opinion, who argued that the majority (1) sub silentio overruled the doctrine of initial interest confusion, and (2) improperly usurped the role of the jury, as likelihood of confusion is a question of fact that the court lacks the authority to determine.

This decision illustrates that in the context of Internet advertising and sales, courts are increasingly likely to assume that consumers are sophisticated, particularly where the goods at issue are costly. It also underscores that clear labeling of products is likely to significantly lessen, if not eliminate altogether, a likelihood of consumer confusion. Finally, it may indicate that going forward, courts in the Ninth Circuit will be more willing to dismiss trademark infringement cases on summary judgment, or even at the pleading stage, rather than requiring jury trials.

- FK

Trademark Scam Notices: BEWARE OF FRAUDULENT SOLICITATIONS TO PAY TRADEMARK FEES

Owners of U.S. trademark applications and registrations will often receive unsolicited requests, by mail or email, to pay fees. Some of these requests look quite official and refer to specific trademarks and trademark application or registration numbers. Such requests should be ignored. The U.S. Patent and Trademark Office includes, with every new registration certificate, a notice warning trademark owners to beware of such solicitations and ignore them. This notice includes a good summary, as follows:

These [solicitations or notices] may include offers: (1) for legal services [such as renewals]; (2) for trademark monitoring services; (3) to record trademarks with U.S. Customs and Border Protection; and (4) to “register” trademarks in a private registry.

These companies may use names that resemble the USPTO name, including, for example, one or more of the terms “United States,” “U.S.,” “Trademark,” “Patent,” “Registration,” “Office,” or “Agency.” Some companies attempt to make their solicitations mimic the look of official records. Many refer to other government agencies and sections of the U.S. Code. Most require “fees” to be paid. All official correspondence will be from the “United States Patent and Trademark Office” in Alexandria, VA, and if by e-mail, specifically from the domain “@uspto.gov.”

If you have any doubt as to whether a solicitation is a scam, we urge you to contact your Fross Zelnick attorney before making any payments. Please note also that we provide trademark renewal and maintenance services, we can recommend reputable trademark monitoring or watch services, and we provide the service of recording trademarks with U.S. Customs and Border Protection (in order to help that agency seize incoming infringements and counterfeits). Also, the service offered by some scammers to “register” or record trademarks in a private registry is completely useless.

- DE