Trademarks, Copyrights and Patents: 
A Mid-Year Update

By: Emily Hart and David Marcus

Trademark Law

First They Came for Disparaging, Then They Came for Scandalous

In June 2017, the Supreme Court held in Matal v. Tam that the disparagement clause of the federal Lanham Act violates the Free Speech Clause of the First Amendment. As a result, marks such as THE SLANTS and WASHINGTON REDSKINS cannot be denied federal trademark registration on the grounds they are “offensive.” In January 2018, the Fourth Circuit finally vacated a lower court decision that canceled the Washington Redskins’ federal trademark registrations.

In the wake of Matal v. Tam, the Federal Circuit ruled that the Lanham Act’s ban on scandalous and immoral trademarks was unconstitutional, which reversed the United States Patent and Trademark Office’s decision to refuse registration for the trademark FUCT. In April 2018, the Federal Circuit denied reconsideration of its 2017 ruling.

Breakfast at Costco?

Several years ago, Tiffany & Co. discovered that Costco Wholesale Corp. was advertising and selling “Tiffany” engagement rings and slapped Costco with a trademark infringement lawsuit. Costco claimed it was using TIFFANY as a generic term to refer to a “Tiffany setting” style of ring. In 2015 a court found that Costco had willfully infringed ­Tiffany’s trademark rights, and a jury awarded Tiffany millions of dollars in profits and punitive damages. In August 2017, a judge reduced the jury’s award but awarded Tiffany treble damages for Costco’s willful infringement to the tune of $11.1 million in trebled profits and $8.25 million in punitive damages. Costco has appealed the $19 million damages award it owes Tiffany to the Second Circuit, and in 2018 we may see a ruling from the court reducing that award.

This case demonstrates the high cost of using another brand’s trademark to describe the same or similar goods or services. A purportedly “generic” use of the trademark could be willful infringement in the eyes of the trademark owner and a judge or jury. Even if the trademark has become common (e.g., Google, Kleenex), many trademark owners vigorously protect their trademarks from so-called “genericide.”

Driving a Wedge Between Kia and Allstate

In November 2017, a jury found that Kia’s DRIVE WiSE trademark infringed Allstate’s DRIVEWISE trademark. For more than seven years, Allstate had been using the mark DRIVEWISE in connection with a driver safety program. In 2017, Kia began using its DRIVE WiSE trademark in connection with driver safety features available in Kia vehicles. The jury found in favor of Allstate, but in early January 2018, a judge reversed the jury’s “advisory” verdict, finding no likelihood of confusion between the marks. Notably, the judge found that Allstate’s DRIVEWISE mark was weak, that the goods and services were not closely related, and that there was no evidence of actual consumer confusion. Allstate appealed. In February, the company filed an opposition proceeding before the Trademark Trial and Appeal Board against Kia’s application to register its DRIVE WiSE logo. The opposition proceeding was suspended pending final disposition in the civil case.

As this case shows, the test for trademark infringement – likelihood of consumer confusion – is extremely subjective and highly fact-specific. It is often difficult to predict whether a factfinder will believe confusion is likely and which factors will be most persuasive in making this determination.

Copyright Law

2018: A Rocky Start for Fair Use

In February of this year, the Second Circuit issued an opinion on the long-running fair-use battle between Fox News and TVEyes, a search engine for broadcasted content. TVEyes recorded television and radio broadcasts 24/7 and allowed users who want to study and monitor broadcast media to search its database for clips. In 2013, Fox News sued TVEyes for copyright infringement. In two separate rulings, a district court judge said the service is fair use, but that specific features of the service, such as the ability to download and email clips, are not fair use. The Second Circuit overruled the district court’s ruling, finding no fair use. Although the ­Second Circuit found TVEyes’ service “transformative” under the first fair-use factor, other factors, which considered the amount of content copied and Fox’s opportunity for licensing its content, weighed against a finding of fair use.

In March, the Federal Circuit ruled that Google’s use of Oracle’s Java application programming interface (API) in its Android operating system is not fair use. The court found that Google’s use of the APIs was “overwhelmingly commercial,” and not “transformative,” as Google copied and moved the APIs from platform to platform without changes. The court acknowledged that elements of the APIs were functional but gave this factor little weight. As to the amount and substantiality of the APIs used, the court found this factor neutral. In considering the potential market harm to Oracle, the court found that the APIs had been used in mobile devices prior to Android’s release, and that Google’s use thwarted Oracle's licensing opportunities and “prevented Oracle from participating in developing markets.”

The four fair-use factors are: (1) the purpose and character of the use (“transformative use”); (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used; and (4) the effect of the use upon the potential market or value of the copyrighted work. As these cases demonstrate, fair-use analyses are notoriously inconsistent and unpredictable. Generally, a fair-use defense should not be relied upon to excuse copyright infringement.