The 2014 World Cup is in full swing, and futbol fans across the globe are sporting their favorite teams, but among these jerseys, caps and shoes are thousands of counterfeit products. Back in 2013, Customs even found over 500,000 counterfeit garments from a shipment from China and a majority of them displayed the 2014 Federation Internationale de Football Association (“FIFA”) World Cup Brazil Logo. FIFA has stressed to fans that their organization generates a majority of its income from sponsors and merchandise, reflecting the importance of preventing the sale of counterfeit goods.
Now host country Brazil is trying its best cracking down on merchants who are selling unofficial shirts and other merchandise that showcase the FIFA logo or something affiliated with FIFA in the vicinity of the games. This problem is raising some major trademark and copyright issues.
These merchants are engaging in “ambush marketing,” a strategy where advertisers falsely associate themselves with a particular event without paying any sponsorship fees. An example of this strategy is to use the official sponsor’s brand (name, logo or slogan) in relation to its own goods. In this case, these merchants are essentially passing-off as official sponsors, reaping the benefits of FIFA’s well-known status. This is clearly an infringement, so many companies have found other ways of creating this association without infringing, like using images of Brazil or soccer games without mentioning the World Cup or FIFA.
Under a special Brazilian World Cup Law, there is a 2-kilometer circular area around each venue hosting the games. Inside that area, only official World Cup sponsors’ products can be sold, distributed, or advertised. According to the General Law of the World Cup, anyone caught selling unofficial products could be held in prison for 3 months to a year, and may be fined.
These counterfeited goods are hard to spot, but FIFA has stated on their website a few ways to spot fake World Cup merchandise. First, the cost. A genuine FIFA jersey can cost between $90 – 150 dollars, while the “same” product from another merchant can cost as little as $25. Also according to FIFA, all official products have the World Cup hologram, official sewn-in labels, and there are restrictions on the amount of branding and sponsor logos on one product.
So, if you are like millions of people sporting your favorite futbol team, be careful of a transaction that may make you a victim of organized crime.
By Jose Landivar
Editor, Arther Law’s Industry Insider
Jay-Z’s Rocawear brand was sued on Monday by Hood Love, LLC a Jersey-based, for-profit company, which according to its website, is focused on the development of poverty stricken communities. The suit claims that Rocawear is selling merchandise that infringes on its “Hood Love” trademark and accuses Rocawear of misappropriating the Hood Love trademark to promote and sell apparel on its website. Read More…
Last year around October Kate Spade announced their plans for diffusion line, Kate Spade Saturday, a fun contemporary women’s lifestyle brand. Saturdays Surf NYC a men’s ready-to-wear and accessories line wasn’t too thrilled about the news and alleged the diffusion brand was too similar in terms of the name, branding, and marketing. Furthermore Saturdays Surf NYC is often called Saturdays and Kate Spade Saturday is often referred to as Saturday. This led to concerns of the likelihood of customer confusion as Saturdays Surf NYC expands into new markets. Needless to say, the two companies ended up in court after Kate Spade in response to a cease and desist letter from Saturday Surf NYC to stop the launch, chose to continue forward. Whether Kate Spade would be liable for trademark infringement was the big question.
Fast forward a little bit and we can report that the battle is over (for now). Kate Spade has come out on top and has won the legal dispute regarding the brand name and logo for the new Kate Spade Saturday line. In her ruling, Judge Miriam Goldman concluded “Saturdays Surf NYC has not shown a likelihood of confusion by a preponderance of the credible evidence. I am particularly persuaded by the relative weakness of the word that the two marks share, the significant distance between the men’s and women’s products, and the consistent inclusion of the famous house mark, Kate Spade, in its Kate Spade Saturday mark.”
Kate Spade believes that both brands can exist in the marketplace in harmony – the Kate Spade Saturday brand focuses strictly on womenswear and the main focus of Saturdays Surf NYC is on menswear. Although this decision certainly comes as a disappointment to Saturday’s Surf NYC, they have plans to consider other legal options and will continue to focus their efforts in designing and selling fashion forward clothing and expanding the brand.
So what is your take on these two brands? Would you get the two confused? Let us know your thoughts.
By: Anny Mok
Tiffany & Co. has filed a lawsuit against Costco accusing the wholesaler of counterfeiting and trademark infringement. Costco advertises and sells engagement rings described as “Tiffany setting” or “Tiffany style”. Tiffany is concerned that customers are likely to be confused into believing that they are purchasing a Tiffany & Co. ring, which costs a lot more than the rings being sold by Costco.
Costco argues that there is no infringement because the term “Tiffany setting” is a generic term. It is well understood by the jewelry business that “Tiffany setting” simply describes an engagement ring style featuring a solitaire diamond. Costco claims that it is unlikely for customers to think they are purchasing a ring from Tiffany & Co.
In trademark law, a generic mark cannot be protected because it inhibits competition in the marketplace. Even if a mark has been registered in the federal registration system, it may lose trademark protection if it has become generic. A company may try to prevent genericide through active policing of the mark. However, prevention is difficult because it all depends on how consumers view the mark. Some examples of marks that lost trademark protection due to genericide include: “aspirin”, “cellophane”, “thermos”, and “zipper”.
Lawyers are at a disagreement over whether “Tiffany-style” or “Tiffany setting” is generic. Some believe that most consumers, when they see “Tiffany setting” will believe that they are buying a ring with a setting from Tiffany & Co. Other lawyers, such as Charles Colman, of the Law of Fashion blog, say that confusion is unlikely because the packaging is different and people shopping for rings will have sufficient knowledge to understand that “Tiffany setting” is only used to describe the ring style. A federal judge has yet to rule on this matter.
By: Amelia Wong
On March 12, 2013, a New York federal judge held that the Court did not have jurisdiction over the foreign entity Bella International Ltd. (Bella), a Hong Kong-based retailer, to ban Bella from selling alleged counterfeit Juicy Couture Inc. (Juicy) items on its Hong Kong website. The Court’s rationale was that Bella did not have enough ties to the United States for the Court to have jurisdiction over Bella.
Juicy first filed the Hong Kong suit against Bella in 2008, alleging trademark infringement because Bella sold “Juicy Girl” clothing and accessories. Juicy brought the U.S. action in July 2012 alleging that Bella violated U.S. and New York law by selling $3000 worth of Juicy Girl to U.S. consumers, some of which were Juicy Couture’s investigators.
Juicy sought an injunction to enjoin Bella from counterfeiting and infringing the Juicy mark. While Juicy was successful in obtaining a preliminary injunction to enjoin Bella from selling the goods to U.S. customers, the Court declined to exercise extraterritorial judgment over Bella’s foreign activities. The Court found that infringement was likely to exist because of the public recognition and strength of the Juicy mark. Additionally, the Court declined to exercise extraterritorial judgment because Bella’s activities in the U.S. were not enough to give an American court jurisdiction. The website only sold $3000 worth of merchandise to U.S. customers and U.S. customers were not its biggest target.
Judge Ronnie Abrams stated, “The strength of the plaintiff’s marks, similarities of parties marks and competitive proximity…all strongly favor the plaintiff…However, the court concludes that the Lanham Act should not be applied extraterritorially…to any other websites hosted abroad.” Judge Abrams further stated that the Hong Kong action would determine whether the Juicy Girl mark was enforceable in Hong Kong.
Juicy’s representative was pleased that the court recognized Juicy’s trademark and believed it was a good direction. Juicy is currently taking action against defendants in Hong Kong and Canada, believing that the Court’s trademark recognition would play a strong role in future cases.
Judge Abram’s decision is significant because she refused to apply the Lanham Act to a foreign company and left it up to the Hong Kong courts to decide. This could be viewed as a weakness because “Juicy Girl” items are still available on .hk websites. If trademark infringing items are allowed to be sold on international websites, U.S. consumers can still access these websites and purchase the items through E-commerce. Due to the fast-paced nature of technology and E-commerce, Judge Abram’s decision could instead be seen as a setback to trademark protection.
By, Kevin Kehrli
On January 9th, 2013, the Supreme Court decided a trademark matter that may have implications that go far beyond the parties involved. Already v. Nike involved one of Nike’s most popular line of shoes, Air Force 1s, and its trademark. Nike sued Already L.L.C., alleging that two lines of the company’s shoes, “Soulja Boys” and “Sugars,” infringed and diluted the Air Force 1 trademark. Already denied the infringement, and counterclaimed that the Air Force 1 trademark is invalid. Four months after the counterclaim, likely worried about the prospect of losing its trademark in its Air Force 1 line, Nike’s attorneys issued a “Covenant Not to Sue,” stating that Already’s actions no longer “infringe or dilute the NIKE Mark at a level sufficient to warrant the substantial time and expense of continued litigation.” The covenant also contained provisions in which Nike promised that it “would not raise against Already or any affiliated entity any trademark or unfair competition claim based on any of Already’s existing footwear designs, or any future Already designs that constituted a ‘colorable imitation’ of Already’s current products.” SC Slip Op p. 2. Nike then moved to dismiss its own claims with prejudice and Already’s claims without prejudice, claiming that the covenant had extinguished the case or controversy.
Already sought to pursue the claim based on three arguments. First, Already offered evidence that it planned on introducing new versions of its shoe line into the market. Next, it presented affidavits showing that potential investors would not consider investment unless Nike’s trademark is invalidated. Finally, it claimed that “Nike had intimidated retailers into refusing to carry Already’s shoes.” SC Slip Op. 2. The District Court dismissed Already’s counterclaim, finding that the covenant was written broadly enough to protect the new versions as “colorable imitations” and that Already did not produce evidence to show that they planned to develop any shoes that would not be covered by the covenant. Therefore, it “held there was no longer ‘a substantial controversy . . . of sufficient immediacy and reality to warrant the issuance of a declaratory judgment’.” Slip op p. 3. (quoting Med-Immune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)). The Second Circuit affirmed, but added factors to guide courts in their assessment of whether or not a covenant “eliminates a justiciable case or controversy.” Slip op 3. While ultimately it is a “totality of the circumstances” determination, the Second Circuit stated that courts should look to “the language of the covenant, whether the covenant covers future, as well as past, activity and products, and evidence of intention . . . on the part of the party asserting jurisdiction to engage in conduct not covered by the covenant.”
In its opinion, the Supreme Court applied the “voluntary cessation doctrine,” which imposes a “formidable burden of showing that it is absolutely clear the alleged wrongful behavior could not be expected to recur.” Slip Op. 4 (quoting Friends of the Earth, Inc. v. Laidlaw Environment Services (TOC), Inc., 455 U.S. 283, 289 (1982)).
In finding that the covenant meets this formidable burden, the Supreme Court listed several factors as influential. First, it is “unconditional and irrevocable.” Next, it extends beyond legal protection and “prohibits Nike from making any claim or any demand.” It also grants protection to Already’s distributors and customers. And finally, it covers any colorable imitations, protecting previous, present, and future designs.
The first notable point from this case is the long-term risk involved when a party issues a covenant that meets this formidable burden. While Nike likely granted this covenant because it was worried about preserving the validity of the Air Force 1 trademark, the company is now at risk of serious trademark dilution. Because of the extreme breadth required for such a covenant to moot litigation, Already and its distributors essentially have free reign to develop products similar to Air Force 1s without the worry of Nike taking any action against them. Even worse for Nike, the covenant is irrevocable and indefinite. It remains to be seen whether Already will push the limits of this covenant, but if they do, it will be interesting to see how both Nike and the courts approach the situation.
This holding also represents a major victory for trademark holders. If the Supreme Court had held that such a covenant did not moot the counterclaim for trademark validity, trademark holders would have to take into account that when filing an infringement suit, they would face the risk of having the status of their trademark questioned with no means to dismiss it.
Further, the Court’s reasoning and Justice Kennedy’s concurrence will have strategic implications for parties defending against trademark infringement claims. Because the burden of showing that the covenant was broad enough fell upon Nike, as emphasized by Justice Kennedy, Already’s answer and counterclaim should have focused on showing that they were developing products that would fall in “the grey area” outside the scope of such a covenant, but within the scope of non-infringement. Obviously, Already did not expect Nike to make the strategic move of granting the covenant, but it is now essential for those who plan to defend an infringement claim with a counterclaim for invalidity to take this into account. More specifically, a party should attempt to show that they plan to develop products that would fall into a grey area of coverage if such a covenant is granted. Doing so could be beneficial in two ways. First, it would make the original claimant’s burden more difficult, thus increasing the likelihood that the court would find that a justiciable case or controversy remains. Alternatively, the original claimant who meets this burden would have to create an even broader covenant than it would have done if the answer and counterclaims did not include such information.
Finally, the Court’s broad language in its opinion leaves open the possibility that the logic applied here may extend beyond trademark litigation. Particularly, the Court stated that “allowing Nike to unilaterally moot the case “subverts” the important role federal courts play in the administration of federal patent and trademark law.” Slip op. p. 12. It follows, then, that if a patent holder files an infringement suit, which is countered by a challenge to the patent in question, a patent-holder looking to moot the case, should keep this substantial burden placed on Nike in mind if issuing a covenant not to sue.
Artists and their estates have been known to sue whenever they believe their work has been unlawfully used without permission. Considering how ambiguous the law is on the matter this should come as no surprise. Woody Allen’s highest grossing film to date, ‘Midnight in Paris’ has become the latest feature to face misappropriation allegations. Faulkner Literary Rights, the company that controls the rights of William Faulkner’s work has filed suit against Sony Pictures Classics on the grounds of copyright infringement, commercial appropriation and violation of the Lanham Act. They claim Allen, by paraphrasing a passage from Faulkner’s book ‘Requiem for a Nun’, has ‘deceived the film’s viewers as to a perceived affiliation, connection or association’ between the author and the movie.
The original passage reads, “The past is never dead. It’s not even past” whereas Owen Wilson’s character in the movie can be heard saying, “The past is not dead! Actually is not even past.” He then goes on to say, “You know who said that? Faulkner, and he was right. And I met him too, I ran into him at a dinner party.” It is to be noted, however, that acknowledging the source does not act as substitute for obtaining permission when one is indeed required.
Let’s begin by analyzing the copyright allegation. The Copyright Act of 1976 seeks to protect any ‘original work of authorship’ that is finalized in a fixed form of expression, the rationale behind it is to encourage artists and scientist to create by ensuring they are decently paid. Although one of the most valuable rights conferred by this protection is the right to reproduce or to authorize others to reproduce their work, an important limitation exists in section 107 called the doctrine of ‘fair use’. In accordance with this doctrine, you may use portions of a work (including quotes) without having to license or pay for it for purposes of commentary, criticism or parody, news reporting and scholarly reports. Given the many contexts on which fair use can be claimed, what it entails is judged on a case-by-case basis. Section 107 further provides four factors that act as guidelines when determining whether a particular use is permissible or not, namely: the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the portion taken, and the effect upon the potential market or value of the original work. The latter is often seen as the most important factor.
Despite the short length of the infringing quote, there is no established number of words that can be safely copied. Lee Caplin, who represents the estate, argues that despite being only 10 words long, the snippet summarizes the plot of the film and it is one of the most famous quotes in American literature.
Allen’s use, however, is likely within the boundaries of fair use. Faulkner is only one of countless characters that are referred to in the movie, such as F. Scott Fitzgerald, Ernest Hemingway, Pablo Picasso and Salvador Dali. Also, although a commercial enterprise, no reasonable person would buy the DVD of Midnight in Paris as a substitute for the book where the original quote can be found. Thus, despite claims to the contrary, it appears there is no actual harm to the value of the work from which to base a copyright infringement allegation.
The trademark count based on the Lanham Act, fails for similar reasons. A trademark is any work, name, slogan or symbol used in commerce that identifies a particular product. Signature phrases and saying have become increasingly important in brand-building and marketing. Movie lines such as ‘show me the money’ and ‘hasta la vista, baby’ are quickly associated in the public’s mind with Jerry Maguire and The Terminator, respectively. Much like copyrights, legal rights to trademarks arise automatically without the need of formalities, though registration carries with it many benefits and it is thus highly recommended. Hence, it is arguable that if the quote in question is so famous so as to be instantly associated with William Faulkner, it should be treated as a trademark even if it has not been registered yet. The main test used when evaluating trademark violations is a likelihood of confusion test. Yet, the values behind such protection are threefold: to protect the public from confusion, to protect the owners from others unfairly reaping into the goodwill of their brand, and to foster competition. It is thus evident that the problem is still the same for those representing the estate of Faulkner, no movie viewer can be said to have been confused by Allen’s use of the phrase; no competitor has been harmed, especially considering that the movie and the book are not competing against each other; and lastly, the goodwill of the quote has not been abused or affected by the movie.
Most artists readily admit to have been ‘inspired’ by the work of previous authors, singers and poets. Francis Coppola is reported to have based his film ‘Apocalypse Now’ on Joseph Conrad’s novella ‘Heart of Darkness’. William Faulkner himself named his book ‘The Sound and the Fury’ after a passage in Macbeth, and another of his books, ‘Absalom’, takes his name from the biblical book of Samuel. Furthermore, the passage used in Midnight in Paris has been used many times before. Ben Folds used it in his song ‘Smoke’ and the President of the United States in one his 2008 campaign speeches, to name a few. Let us hope that the courts dealing with this matter will take this occasion to remind the right holders that the reason behind intellectual property protection is to foster creativity, and not to create monopolies on the use of 10 famous words.