Sputnik Blog

We maintain two blogs: one in English (Sputnik Blog) and another in Russian (Opora Blog or Блог Опора).

Sputnik Blog – A blog about developments in legal protection of technology innovation and brand names.

Opora Blog - Blog of Russian Expats in America. We discuss business, legal and cultural events that impact our lives.

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New US Law Establishes New Procedures for Removing Trademark Registrations Due to Non-Use, but These Procedures May Become Available Only Toward the Very End of 2021

It has been a little over a month since then President Trump signed the Trademark Modernization Act of 2020 (TMA) into a law. The TMA was signed into law on December 27, 2020, and will be implemented by December 27, 2021. The one-year period is to allow the USPTO to write regulations implementing the new procedures and rules. So, trademark owners and IP practitioners have time to get ready to take advantage of new procedures introduced by this law or be ready to defend against them.

Perhaps the most important new procedures introduced by the TMA are the procedures to challenge trademark registrations on the ground of non-use of the mark in U.S. commerce. Under U.S. law, a mark generally must be in use in U.S. commerce before it can be registered (“the commercial use requirement”). When the USPTO examines trademark applications, it pretty much takes the word of applicant that the mark is in use. Hence, opportunities for fraud abound.

Also, non-U.S. owners are exempted from the commercial use requirement if they base their applications in the U.S. on registrations in their home jurisdictions. In these cases, although foreign applicants don’t need to show use of the mark in the U.S., they must maintain a bona fide intention to use the mark in the U.S. within a reasonable time (if they do not use the mark at the time of filing). Needless to say that there are a lot of deadwood, fake or semi—fraudulent registrations on the U.S. Trademark Register. To remove such deadwood or blocking fraudulent registrations an interested party currently would be required to initiate expensive proceedings either before the Trademark Trial and Appeal Board (TTAB) or in federal court. Obviously, many are discouraged by the prospect of unpredictable and expensive litigation. By contrast, the two of the three new procedures are ex parte, i.e. do not involve an adverse party. Hence such proceedings should be less expensive and more predictable.

Expungement (Removal) - new Section 16A or 15 U.S.C. 1066A

Any interested party may request that the USPTO remove some or all of the goods or services in a registration because the registrant never used the trademark in commerce with those goods or services. This new procedure must be brought between three to ten years after the registration date.

Currently, an interested party can only use an inter partes cancellation proceeding in a TTAB based on an abandonment ground or lack of bona fide intent by applicant. (Fraud is another ground, but is tough to prove.) The test for cancelling such registrations is complicated because the abandonment ground has two elements. The challenging party must not only prove non-use for three years, but the registrant has the opportunity to defend its registration if it proves that it “lacked the intent not to resume use of the mark” in the U.S. Both elements are hard to establish.

Thus, this new procedure will provide an inexpensive tool for U.S. parties as well as foreign parties to remove registrations obtained by non-U.S. parties when they don’t have to prove use of the mark in the U.S. (for example, under the Madrid system). Similar procedures are available in many other countries. It’s strange that the U.S. only now adopts it. But later better than never.

Reexamination - new Section 16B or 15 U.S.C. 1066B

Any interested party may request that the USPTO remove some or all goods or services in a registration on the basis that the trademark was not in use in commerce with those goods or services on or before a particular relevant date.

This procedure is intended to help to combat registrations based on actual use of the mark in the U.S. obtained fraudulently (or semi-fraudulently) usually by U.S. domestic parties or by foreign parties who for some reason do not have a registration in their home jurisdictions or proceeded with a U.S. application like a domestic applicant.

For example, this proceeding would address the date the underlying use-based application was filed, the date an amendment to allege use for an underlying intent-to-use application was filed. This new procedure must be brought within the first five years after the trademark registers and is generally directed at registrations where a questionable specimen showing use in commerce of the trademark was submitted during examination of the underlying application.

The USPTO Director can initiate either of these proceedings without a third party petition if the Director discovers information that supports a prima facie case that the trademark has never been used in commerce or has not been used in commerce as of a particular relevant date with certain goods or services covered by the registration.

New ground for a TTAB cancellation proceeding

This new ground is substantively equivalent to the expungement claim that a registered trademark has never been used in commerce, as described above, but may be brought at any time following three years from registration.

Again, these procedures are not yet available awaiting the USPTO’s issuance of regulations later this year. USPTO has created a resource page for the Trademark Modernization Act.

There are other interesting new rules and modifications to the existing procedures, which this Blog will address in upcoming postings. Stay tuned.

Text © 2021 Maxim A. Voltchenko

* This piece is not intended to be a review of U.S. law or USPTO practice. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

USPTO Increases Patent Fees on October 2, 2020; It Is Unclear When the Increase of Trademark Fees Will Go Into Effect (But It Will)

Patent Fees. On August 3, 2020, the United States Patent and Trademark Office (Office or USPTO) issued a Final Rule to set or increase certain patent fees. The “fee adjustments” are needed to provide the Office with a sufficient amount of aggregate revenue to recover the aggregate cost of patent operations in future years and to allow the Office to continue progress toward achieving its strategic goals. As explained in the Federal Register Notice, the fee changes are designed to “provide the USPTO sufficient financial resources to facilitate the effective administration of the U.S. IP system,” including its efforts to improve patent quality and timeliness, support the work of the Patent Trial and Appeal Board (PTAB), and improve the “quality, efficiency, and productivity of patent operations” and the USPTO’s IT systems. The new patent fees are set to take effect October 2, 2020.

https://www.uspto.gov/about-us/performance-and-planning/fee-setting-and-adjusting#tmfee-info

Sputnik Blog® bottom line: Inventors and potential patent holders (“applicants”) who are in a position to file new patent applications or pay fees in pending applications, and patent holders eligible to pay maintenance fees on issued patents, should do so before October 2, 2020, to avoid paying higher fees.

Trademark Fees. On June 19, 2020, the USPTO issued a notice of proposed rulemaking to set or increase certain trademark fees. The proposed “fee adjustments” are needed to provide the Office with a sufficient amount of aggregate revenue to recover the aggregate cost of Trademark and Trademark Trial and Appeal Board (TTAB) operations in future years and to allow the Office to continue progress towards achieving strategic goals. It is unclear when the new trademark fees will go in effect, but they definitely will.

Under the proposal, the cost for filing a Trademark Electronic Application System (TEAS) “standard” application will rise from US $275 to US $350 per class. The cost for filing a Section 8 declaration of use to maintain the registration after the fifth anniversary from the registration or renew it every ten years (or Section 71 affidavit for Madrid registrations) through TEAS will change from US $125 to US $225 per class. The cost to file a petition for cancellation or notice of opposition will increase from US $400 to US $600 per class.

A full schedule of the proposed adjustments can be found on the USPTO website. see also attached file below.

The proposal also includes new fees for actions currently taken at no cost. For example, deletion of goods, services, and/or classes from a registration will generally cost US $250 when the deletion is requested after submission but prior to acceptance of a Section 8 or Section 71 affidavit. This includes paying this fee when trademark owners delete goods, services, and/or classes in response to a post-registration office action. (Since 2017 and introduction of post-registration audits, such post-registration office actions became more frequent.)

The proposal also includes a significant increase in the fee required to file a request for reconsideration (issued after a final office action). Under the proposal, there is no cost for filing a request for reconsideration within three months of issuance of a final office action. However, a request for reconsideration filed between three and six months after the issuance of a final office action will cost US $400.

Whether this proposal will be implemented (with or without modifications) and when, we will know in the Final Rule to be issued soon. It is certain that the trademark fees will be increased, just like the patent fees.

Sputnik Blog® bottom line: Trademark owners who consider the filing of new applications or those who are in the statutory period already to maintain or renew their existing registrations, they should act now to potentially save on official fees.

Text © 2020 Maxim A. Voltchenko
* This piece is not intended to be a review of U.S. law or USPTO practice. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

USPTO Now Extends Certain Patent and Trademark Deadlines, but Qualified Applicants Should Use Caution Before Relying on Extended Deadlines

US Patent and Trademark Office (USPTO) has joined a number of national IP offices across the world that have extended deadlines for certain patent and trademark filings due to the global pandemic. On March 31, the USPTO announced extensions to the time allowed to file certain patent and trademark-related documents and to pay certain required fees. These actions are an exercise of temporary authority provided to the USPTO by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed by President Trump on March 27. See the patent-related Notice and trademark-related Notice.

As I was finalizing this posting, the USPTO just released answers to frequently asked questions on the CARES Act relief.

The good news is the USPTO is functioning. USPTO examiners return your calls (voice messages). Your filings are being processed. The USPTO’s Trademark Trial and Appeal Board (TTAB) rules on motions.

It is encouraging that IP offices worldwide are supportive of businesses, inventors and brand owners. Earlier in March, the European Patent Office (EPO) has issued a general deadline extension to April 17 that applies to all EPO-specific deadlines expiring on or after March 15. The extension covers all deadlines of European patent applications pending before the EPO, including office action deadlines. The deadline could be extended further if “the dislocation extends beyond” April 17, the EPO said.

Unlike EPO’s extensions, USPTO’s extensions seemingly are not automatic. There is a specific list of instances (actions) when patent and trademark applicants may qualify for an extension and apply for it. In particular, the trademark-related deadlines that may be extended include deadlines for Office Action responses, statements of use and affidavits of use, renewal applications and notices of opposition.

You do not get an extension beforehand, at least in the context of a trademark prosecution or renewal of trademark registration. For example, the due date (that was due between March 27, 2020 and April 30, 2020) for a response to an Office action in a trademark application, including a notice of appeal from a final refusal may be extended by 30 days from the initial date it was due. If a trademark applicant has missed the deadline (and only after the fact), the applicant can submit its filing. The late filing must be accompanied by a statement that the applicant (or applicant’s attorney) or other person associated with the filing or fee was “personally affected” by the COVID-19 outbreak. This means that “the outbreak materially interfered with timely filing or payment.” However, the wording “other person associated with the filing or fee” is important as a catch-all and may come in handy.

Nevertheless, it is conceivable that someone who simply chooses to delay may not be able to claim that the outbreak “materially interfered” with the timely filing or payment. I personally have not been able to test the system under the CARES Act for any of my clients yet and therefore cannot say how easy (or difficult) it will be to obtain such relief; whether there is a risk that the USPTO might deny the filing or require further proof. The FAQs make it look like the USPTO would take your word for it, and getting a relief should not be a problem.

The USPTO’s FAQs may answer some of your questions. Here is an example.

Question 1: How do I take advantage of the 30-day extension of time for certain Trademark- and TTAB-related deadlines?

If an eligible document or fee was or is due between (and inclusive of) March 27, 2020, and April 30, 2020, the filing will be considered timely if made within 30 days of the original due date, provided that the filing is accompanied by a statement that the delay in filing or payment was due to the COVID-19 outbreak.

It used to be when you missed a deadline, a certain electronic form (in a system that is called TEAS for trademark applications or ESTTA for TTAB filings) becomes disabled. It appears the USPTO is making these forms active and you can use them and make a required statement and submit your late filing.

Notably, the trademark-related Notice states that “TTAB situations are not covered” by the Notice’s extensions. For all “other situations” where the COVID-19 outbreak has prevented or interfered with a filing before the Board, “a motion for an extension or reopening of time, as appropriate, can be made.” For example, it is unclear if a party in an opposition or cancellation proceeding before the TTAB can request an extension of time to file a reply brief in support of a motion. Generally the Board does not allow extensions of time to file reply briefs. In any event, for TTAB filings it would be prudent to seek an extension of a deadline (which can be missed because of the COVID-19 outbreak) beforehand.

Thus, patent and trademark applicants, owners and their representatives should carefully consider whether they qualify for the extended deadlines before relying on them, especially in a TTAB proceeding.

Text © 2020 Maxim A. Voltchenko
* This piece is not intended to be a review of U.S. law. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

US Supreme Court Resolves Circuit Split Ruling that a Copyright Owner Can’t Sue before the Copyright Register has Processed its Copyright Application

On March 4, the US Supreme Court rules that that a copyright owner can bring a copyright infringement lawsuit only after the Copyright Register has processed its application for copyright registration, that is, either issued a registration certificate or denied registration. The copyright owner cannot sue shortly after it just filed an application for copyright registration, while the application is still pending.

Fourth Estate Public Benefit Corp. v. Wall-Street.com, 586 U.S. ___ (2019), Docket No. 17-571 https://www.supremecourt.gov/opinions/18pdf/17-571_e29f.pdf

This decision is disappointing news to many copyright owners. By contrast, those who cheer various internet freedoms including the unhindered exchange of ideas (and content) and value the competition, or believe in strict interpretation of laws, might welcome this decision.

Here is the crux of the legal issue. The US Copyright Act, Title 17 U. S. C. §411(a) states that “no civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title.” Some have interpreted the wording “registration has been made” that a complete application has been submitted to the Copyright Office, together with the payment of an official fee. (Yours truly has taken this position in some cases advising clients that this position in any circuit is vulnerable to motion practice by defendant.) Indeed, many authoritative experts argued for that position. For example, professor Paul Goldstein wrote in his treatise that permitting an infringement lawsuit as soon as an application for registration was filed was “the better rule” because delays inherent in processing an application could prejudice the copyright holder, especially when seeking immediate injunctive relief.

This is how the case has developed. Fourth Estate Public Benefit Corporation, an online news and content publisher, licensed some of its articles to Wall-Street.com, a news website. (Not to confuse this obscure online publication with the Wall Street Journal.) The license agreement required Wall-Street.com to remove from its website all content produced by Fourth Estate before canceling the agreement. Wall-Street canceled but continued to display articles produced by Fourth Estate. Fourth Estate sued Wall-Street for copyright infringement. The complaint alleged that Fourth Estate had filed “applications to register [the] articles [licensed to Wall-Street] with the Register of Copyrights.” Because the Register had not yet acted on Fourth Estate’s applications, the District Court for the Southern District of Florida, on Wall-Street’s motion, dismissed the complaint, and the Eleventh Circuit affirmed. The Eleventh Circuit held that “registration . . . has [not] been made” under §411(a) until the Copyright Office registers a copyright.

Thereafter, the Register of Copyrights refused registration of the articles Wall-Street had allegedly infringed.

In October 2017, Fourth Estate filed a Petition for Writ of Certiorari with the Supreme Court of the United States. Cert was granted and the Court heard oral arguments on January 8, 2019.

On March 4, the Court, in an 9–0 decision, written by Justice Ginsburg, has ruled that a copyright owner cannot file an infringement lawsuit until the Copyright Office has registered the work at issue, a process that can take many months. Wall-Street won.

It is amazing that in our polarized country the Supreme Court has found an issue on which it ruled unanimously!

The Court relied primarily on legislative history and textual analysis to hold that “[Section 411(a)] focus[es] not on the claimant’s act of applying for registration, but on action by the Copyright Office — namely, its registration or refusal to register a copyright claim.”

The Court paid lip service to the principle that copyright exists from the moment a work is created and fixed in tangible form. That means that copyright protection for US works should be automatic. However, many clients and non-US lawyers wonder what good this principle does if you cannot protect your copyright in court timely and cost-effectively!

The Court recognized that delays in the registration process raise serious concerns. Yet, the Court noted that an expedited registration, for a hefty fee, is available. The Court also pointed out several exceptions to the registration requirement.

What are the implications for businesses? IP attorneys have always advised clients about the importance of timely copyright registration. This Supreme Court’s decision just reinforces this advice.

Copyright law and litigation attorneys and analysts differ on the practical significance of this decision focusing on different aspects.

Here is what Jessica Litman wrote in popular SCOTUSblog:

The opinion resolves a longstanding circuit split, but the practical implications may be modest. The decision may encourage some copyright owners to register their claims promptly, may reduce forum shopping, may delay some infringement suits for several months and may deter plaintiffs from including peripheral copyright infringement claims in suits over other disputes in order to brandish the threat of large copyright damage awards.

https://www.scotusblog.com/2019/03/opinion-analysis-a-copyright-owner-cant-sue-for-infringement-before-the-register-has-processed-its-copyright-registration-application/

James Hough of large West-coast based international law firm Morrison & Foerster LLP wrote in Law360:

Should your business change its copyright registration practices in reaction to the Fourth Estate decision? That depends on the type of copyrighted works your business creates and your expectations regarding litigation to enforce your rights.

If your company owns works that are entitled to pre-registration — motion picture studios, record labels and music publishers, book publishers, online game developers, and many commercial photographers fall into this category — you should consider pre-registering your works in order to ensure your ability to quickly enjoin infringers that appear after first publication.

If you have no reason to fear that an infringement is imminent (for example, if you are an artist whose work has never been infringed in the past), there is probably no need to rush to register your work despite the Fourth Estate decision so long as you are willing to pay the special handling fee for expedited consideration of your application for registration if the need for an infringement lawsuit — and immediate injunctive relief — arises.

I tend to agree that this decision is not a game changer, and is not necessarily that bad to copyright owners, as it may seem. Although I do not personally agree with the approach the Court has taken, having certainty is a good thing. In this sense, it is a good development that now we can counsel copyright owners with more clarity. After all, what businesses value the most is the predictability of the legal system. This decision certainly brings more predictability.

Text © 2019 Maxim A. Voltchenko

* This piece is not intended to be a review of U.S. law. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

“Clothing Is Not Optional” U.S. Trademark Office’s Appeals Board Reminds Us…

…When it comes to submitting a consent letter from the owner of the cited mark. However, the amount of clothes you need to put on still remains surprisingly thin, especially when it comes down to service marks for exotic vacation services. In early October, the Board reversed an Examiner’s likelihood of confusion refusal of the AMERICAN CONSTELLATION mark with the registered mark CONSTELLATION, both marks are for cruise ship services. In re American Cruise Lines, Inc., Serial No. 87040022 (October 3, 2018) [precedential] (Opinion by Judge Bergsman).

Generally, consent agreements can be an efficient path to registration in situations where the parties agree that confusion between their respective marks is unlikely. This comes into play when the U.S. Patent and Trademark Office (USPTO) refuses your trademark application citing a prior pending or registered mark. The applicant has an option to seek and obtain consent from the owner of the cited mark to registration of applicant’s mark. (Why the owner of the cited mark would consent depends on each case. In most cases the owner would not think there is a problem.)

Usually the USPTO gives considerable weight to such consents. The USPTO’s rules of practice caution that an examiner should not “substitute [his or her] judgment concerning likelihood of confusion for the judgment of the parties in interest without good reason.” Usually, in nine cases out of ten, a USPTO examiner would accept a signed consent from the owner of the cited mark and withdraw the refusal. In about 10% cases, when examiners reject the consent, they usually argue that consent is “naked.” “Naked” consent agreements are agreements that contain little more than a prior registrant’s consent to registration of an applied-for mark and possibly a mere statement that confusion is believed to be unlikely. The USPTO may find a short and conclusory consent agreement “naked” and therefore insufficient to overcome the likelihood of confusion refusal.

In this case, the examiner has argued that consent given by Registrant Celebrity Cruises Inc. to Applicant American Cruise Lines, Inc. (see below) was “naked” because the consent “does not describe the arrangements undertaken by Applicant and Registrant to avoid confusion and because the parties have not agreed to make efforts to prevent confusion or to cooperate and take steps to avoid any confusion that may arise in the future.” Celebrity Cruises Inc. was not a party to the appeal. What motivated Celebrity Cruises Inc. to give consent is unknown and is the subject for another blog posting.

The Board sided with Applicant and reversed the refusal. The Board noted that the parties’ undertaking to cooperate to avoid confusion, though would be helpful, is not required. The Board gave great weight to Applicant’s declarations from its COO and Vice President of Marketing that purchasing of cruise services is not an impulse purchase. Because selecting a cruise is “based on careful research and investigation in light of the purchaser’s travel goals and travel budget,” customers would be able to differentiate between AMERICAN CONSTELLATION, on the one hand, and CONSTELLATION, on the other hand. The Board concluded these declarations sufficiently collaborate the consent signed by the owner of the cited CONSTELLATION mark and reversed the refusal.





As always, I wondered if there was anything else in the record (but not in the Board’s decision) that caused the Examiner to refuse the consent and for this case to go to the appeal stage in the first place. After all, any appeal costs thousands of dollars. Was there any other way to avoid the fight with the examiner?

Of course, perhaps an easy way to fix the consent was to include the mutual undertaking of the parties as argued by the Examiner and discussed by the Board. It is a mystery to me why Applicant and its attorney did not include the wording the Examiner was looking for. Whether that alone would have sufficed is unclear. After all, that mutual undertaking provision did not help in the TIME TRAVELLER beer case. In 2016, this Blog wrote about the Board’s affirming the refusal despite the seemingly detailed consent agreement signed by two parties including the mutual undertaking provision.
http://maxvoltchenko.com/en/blog/Sputnik/not-all-consent-agreements-created-equalthe-uspto-bounces-a-consent-ag/ In all fairness, the marks were substantially identical in that case (TIME TRAVELER, with applicant adding a generic term “Blonde” to its mark). Here, the marks are sufficiently different (AMERICAN CONSTELLATION v. CONSTELLATION).

Perhaps another “easy fix” for the consent was for Applicant to make the consent in a form of an agreement, as opposed to a letter. Here, Applicant in fact executed the consent in a form of a consent letter.
Consent.png

Normally, form should not prevail over the substance. It should not matter how the document is called, “letter” or “agreement.” Nevertheless, in my experience and, anecdotally, based on my conversations with some examiners, having a consent in a form of a letter is invitation for an examiner to refuse it on the ground of its “nakedness.”

But, overall this precedential TTAB case is a welcome development. This decision reaffirms the principle that the USPTO should not substitute its judgment concerning likelihood of confusion for the judgment of the real parties in interest without good reason. Here, the USPTO Examiner really did not have a good reason to step in. Protecting folks buying luxury cruises from trademark confusion (in the examiner’s interpretation) probably is not a good enough reason, at least in the Board’s view. I agree. What do you think?

Text © 2018 Maxim A. Voltchenko
* This piece is not intended to be a review of USPTO’s TTAB cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

Two Philadelphia Personal Injury Law Firms’ Lanham Act Dispute: Remember This Case

This case Larry Pitt & Assocs. v. Lundy Law LLP got everything. At one point or the other it had virtually every possible legal issue: from a Sherman Act antitrust claim to abuse of process and tortious interference claims (in violation of Pennsylvania’s Dragonetti Act). At least two tribunals have been involved: a federal district court and Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office (TTAB). Would you be surprised to learn that one of the two firms already sued its lawyer for legal malpractice? Incidentally, please read a legal disclaimer at the bottom of this post.

This blog only will address a Lanham Act claim of false advertising. The federal Lanham Act prohibits the “false or misleading description of fact, or false or misleading representation of fact, which … in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities…” 15 U.S.C. §1125(a)(1).

The facts are relatively straightforward. One prominent and successful personal injury firm sued its crosstown competitor. It all started in 2013 when Lundy Law LLP accused Larry Pitt & Associates (“Pitt”) of trademark infringement. Pitt was using an advertising slogan “Remember this Number.” Lundy Law alleged that the slogan was too close (and confusingly similar) to its heavily advertised in a tri-state area slogan “Remember this Name.”





Lundy Law dropped its trademark infringement against Pitt relatively quickly. However, Pitt thought the timing of such voluntary dismissal was too suspicious. Lundy Law withdrew its lawsuit the next day it learned that Pitt’s insurance would cover its defense. In turn, Pitt filed a lawsuit accusing Lundy Law of malicious prosecution, and false and misleading advertisements in violation of the Lanham Act, among other things.

The lawsuit has been very contentious and involved significant motion practice. After two motions to dismiss and two amended complaints, only a handful of claims survived.

On February 15, 2018, U.S. District Judge Cynthia M. Rufe dismissed the remaining claims of Pitt’s lawsuit, specifically its Lanham Act’s false advertising claims. 2018 BL 52844, E.D. Pa., No. 13-2398, 2/15/18.

In Pennsylvania an attorney or a law firm is permitted to refer a case to another attorney or law firm and earn a portion of the clients’ fees without performing any work on the case, so long as the arrangement is disclosed to the client and the fee is not excessive. However, a law firm may not actively advertise in its own name for certain categories of cases for the purpose of referring those cases to other law firm

Pitt’s false advertising claim under the Lanham Act and deceptive marketing claim under Pennsylvania unfair competition law are both based on Lundy Law’s extensive advertisements for workers’ compensation and social security cases, which Lundy Law agreed to refer to certain other law firms in exchange for referral fees.

The facts differed somewhat as to workers’ compensation cases and social security cases.

Initially, Lundy Law indeed did not handle workers compensation cases itself. However, around in 2009 Lundy Law added an attorney (Leonard Cohen) the sole proprietor of one of these firms (the Law Offices of Lenard A. Cohen, P.C. or “LOLAC”) as “of counsel.” Lundy maintained that LOLAC’s sole proprietor, Lenard Cohen, had been “of counsel” to Lundy since 2009, and Lundy could therefore truthfully advertise Mr. Cohen’s legal services as those of an attorney at Lundy Law.

Lundy’s position relied on the following facts, which Pitt has not disputed:

⦁ In 2009, Mr. Cohen was added to Lundy Law’s professional liability insurance as “Of Counsel” to the firm.

⦁ Mr. Cohen currently carries Lundy Law business cards, maintains a Lundy Law email address, appears on Lundy Law’s website, and sometimes attends Lundy Law attorney meetings and marketing meetings.

⦁ Since September 2012, LOLAC has been located within the office space rented by Lundy Law.

Pitt nonetheless contested Mr. Cohen’s status as “Of Counsel” to Lundy. Specifically, Pitt has cited to evidence that LOLAC remains an independent law firm in terms of ownership and control, that LOLAC maintains separate fax and telephone numbers from Lundy Law and pays rent to Lundy Law, that neither Mr. Cohen, LOLAC’s associate, nor LOLAC’s staff are W-2 employees of Lundy Law, and that Mr. Cohen does not identify himself as “of counsel” to Lundy Law on LOLAC’s website, on the Pennsylvania Bar Association’s listing of Workers’ Compensation Lawyers, on social media, or in entering his appearances.

Pitt’s arguments did not convince the Court. The Court noted that there was no indication that Lundy and Mr. Cohen adopted the “of counsel” title solely for this litigation because both the title and the relationship had existed since 2009. Under these circumstances, Pitt has not met its burden of raising a genuine question of fact as to whether Mr. Cohen is an attorney at Lundy Law, or even if he is not, whether the particular differences between Lundy Law’s relationship with Lenard Cohen and a law firm’s relationship with its own attorneys would be material to potential clients. Accordingly, Pitt has not provided sufficient evidence to support its Lanham Act claim based on Lundy’s workers’ compensation advertisements.

Pitt’s allegations concerning the falsity of Lundy Law’s social security advertisements were somewhat stronger. The parties stipulated that between November 8, 2008 and October 31, 2013, Lundy Law referred all of its potential social security cases directly to other law firms. In 2013, Lundy Law engaged a social security attorney to handle social security cases at Lundy. Because Pitt demanded damages for allegedly false advertisements in 2008-2013, the Court wanted to see a causal link between Pitt’s alleged injury and Lundy’s alleged misrepresentations by showing that Lundy’s statements actually deceived and influenced consumers. Pitt failed to establish such a causal link. In particular, the Court noted, Pitt has provided no surveys or consumer testimony that show clients would have responded differently to Lundy Law’s advertisements if they omitted references to its social security practice or expressly disclosed that Lundy Law would refer rather than handle social security cases.

The Court granted Lundy Law’s motion for summary judgment with respect to Pitt’s Lanham Act claim in its entirety.

While Lundy Law seemingly may be tempted to celebrate its legal victory, this victory may be somewhat premature. First, there is still a pending TTAB case. Larry Pitt & Associates, P.C. v. Lundy Law, LLP, File No: 91210158. The TTAB case focuses on a completely different aspect: whether the slogan REMEMBER THIS NAME can function as a service mark. Second, Judge Rufe ended her opinion with a not-so-subtle suggestion to Pitt: consider filing an ethical claim with the state attorney disciplinary board:

The Court is aware that its decision today denies a plaintiff relief despite evidence of years of wrong-doing by the defendants. There is every indication here that a prominent personal injury law firm in Philadelphia essentially rented out its name in exchange for referral fees and that its managing partner lied on television that his firm handled social security disability claims when it did not. But when a plaintiff fails to meet its burden of establishing causation of harm or likelihood of future violations, the Lanham Act and Pennsylvania law do not permit a court to grant relief based solely on a defendant’s past misrepresentations. Nonetheless, courts are not the only institutions to review deceptive attorney advertising; nor are they typically the most appropriate or efficient forum. In many instances, a complaint to the state attorney disciplinary boards may be the most effective means for quickly ending and sanctioning plainly unethical conduct. Thus, the Court’s decision should not be read to condone or excuse Defendants’ alleged actions, but should instead serve as a reminder of the burden that plaintiffs bear when they choose to seek relief against their competitors in court.

Somehow it is doubtful that Pitt will remain content with the recent decision and not take further action hinted at by the federal judge. Therefore, stay tuned for further developments.

Text © 2018 Maxim A. Voltchenko

* This piece is not intended to be a review of U.S. case law. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

US Supreme Court Affirms Federal Circuit Decision Striking the Ban on Offensive and Derogatory Trademarks at USPTO

On June 19, the U.S. Supreme Court rendered a long-anticipated opinion striking the ban on “disparaging” trademarks as unconstitutional. The U.S. Trademark Act prohibits the registration of a trademark “which may disparage persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute” (“disparagement clause”). §1052(a) of the U.S. Trademark Act. The Court, in an 8–0 decision, has found this provision violating the First Amendment’s Free Speech Clause. Matal v. Tam, 582 U.S. ___ (2017) (previously known as Lee v. Tam). As a result, Mr. Simon Tam, the lead singer of an otherwise obscure band “The Slants,” scored a victory. However, the real victors apparently are the owners of an American football team The Redskins, whose registered mark previously was cancelled on that provision. This Blog wrote about the Redskins case.

As many cases before the Supreme Court, this case has had a long history. This case concerned a dance-rock band’s application for federal trademark registration of the band’s name, “The Slants.” “Slants” is a derogatory term for persons of Asian descent, and members of the band are Asian-Americans. (Slants or epicanthic fold or epicanthal fold or epicanthus is a skin fold of the upper eyelid, covering the inner corner of the eye.) But the band members believe that by taking that slur as the name of their group, they will help to “reclaim” the term and drain its denigrating force.


Mr. Tam applied to register the name of the band as a trademark at the Patent and Trademark Office (PTO), but the PTO denied registration. Mr. Tam contested the denial of registration before the PTO’s Trademark Trial and Appeal Board (TTAB) but to no avail. Eventually, he took the case to federal court, where the Federal Circuit ultimately found the disparagement clause facially unconstitutional under the First Amendment’s Free Speech Clause.

Because the disparagement clause applies to marks that disparage the members of a racial or ethnic group, the Supreme Court concluded that it had to decide whether the clause violated the Free Speech Clause of the First Amendment of the U.S. Constitution. The Court has found the Statute’s restriction on registration of disparaging marks violates the free speech provision of the First Amendment.

Justice Alito, who wrote the opinion, noted that trademarks constitute private speech. “Companies spend huge amounts to create and publicize trademarks that convey a message. It is true that the necessary brevity of trademarks limits what they can say. But powerful messages can sometimes be conveyed in just a few words.”

The Court essentially validated the Federal Circuit’s majority decision that the clause engages in viewpoint-based discrimination, that the clause regulates the expressive component of trademarks and consequently cannot be treated as commercial speech, and that the clause is subject to and cannot satisfy strict scrutiny. (Strict scrutiny is the most stringent standard of judicial review used by United States courts. To pass strict scrutiny, the legislature must have passed the law to further a "compelling governmental interest," and must have narrowly tailored the law to achieve that interest.) The Supreme Court, just as the Federal Circuit, also rejected the Government’s argument that registered trademarks constitute government speech.

Despite all the publicity of this case, the significance of the case for trademark practitioners is arguably overrated. Most trademark owners do not select offensive or derogatory names for their products or services. Nike, Coca-Cola and MacDonald may be “offensive” to anti-globalist protesters, but they are not derogatory.

True, there will be some changes. The PTO will begin allowing registration of disparaging marks, and will not cancel registered marks because they are disparaging. This decision will impact the Redskins case, discussed by this blog. Other observers also suggest that disparaging marks will likely be somewhat more difficult to enforce based upon the greater expressive content of the speech.

Curiously, the opinion in Matal v. Tam does not mention how the ruling may affect registrations of marks that are considered immoral or scandalous (which are also prohibited by the same provision of the Trademark Act), but do not disparage a particular group; that issue was not before the Court. Nevertheless, most commentators agree that the provision on immoral and scandalous marks (for example, FUCT clothing) currently under review in the Federal Circuit, probably will not survive either.

Many business owners do not select immoral and scandalous marks either, except for some industries such as craft beer or apparel. In such industries, owners feel like they need to pick a brand that will help them stand out from the crowd. Consider the following beer label as an example.



In conclusion, while Matal v. Tam certainly is a delight to constitutional law professors in American law schools, most trademark law practitioners are unlikely to utilize that case in their day-to-day practice.

Text © 2017 Maxim A. Voltchenko
* This piece is not intended to be a review of U.S. law. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

Make America Great Again… and then Keep America Great!

No matter how you feel about President Trump’s campaign promises and now his administration's actual policies, few disagree that Mr. Trump is business savvy in many things he does. Mr. Trump's branding illustrates that point the best. He gets it. Days before swearing in as the nation’s 45th president, he already came up with a slogan for his re-election campaign in 2020, “Keep America Great.” What’s more he instructs his trademark lawyer to apply to register the slogan with the U.S. Trademark Office the same day.

The story goes that, on January 18, 2017, during an interview with a news reporter, the reporter asked President (then President-elect) about his slogan, “Make America Great Again.” Donald Trump suddenly paused the interview and called out to his staff, “Get me my lawyer.”

Donald Trump understands the urgency. If you don’t act fast enough, somebody else will. And you would get in a situation, when you must claw back the name or slogan that you made famous, whereas somebody else is trying to taking advantage of and ride on your coattails.

If you search the U.S. Trademark Office’s (USPTO) register, you will find almost a half dozen of pending applications for MAKE AMERICA GREAT AGAIN for various items owned by somebody other than Donald Trump. Of course, Donald Trump himself owns two registered marks and two pending applications for the slogan. Mr. Trump first applied to register his slogan in November 2012 (more than two years before he formally announced his candidacy!) and got his registration in July 2015. Here is a sample of use of the mark that Mr. Trump submitted to the USPTO as a specimen for one of the two registrations.

Even if you are smart as Donald Trump, there is almost always someone out there who might outsmart you. Case on point, someone from Washington DC, named Andreas Mueller, filed an application for the trademark KEEP AMERICA GREAT on July 6, 2016. This is more than four months before the historical elections of November 8, 2016 and more than six months before Mr. Trump himself came up with this slogan! Amazing anticipation.

Mr. Mueller is trying to register the mark for sunglasses, t-shirts, tank tops and hats. So far, the Trademark Office is resisting Mr. Mueller’s application, but not because Mr. Mueller obviously was inspired by Mr. Trump’s campaign slogan. The slogan clearly is playing on Mr. Trump’s famous slogan. But seemingly on a technicality. According to the USPTO examiner, the slogan as displayed on a sample of use fails to function as a trademark. Put differently, consumers will not perceive the phrase as a brand, but would perceive it as something else (for example, as a political statement).


What does it mean for Mr. Trump’s newly-filed applications? Assuming Mr. Mueller’s application remains active with the USPTO, it will almost certainly block Mr. Trump’s application. What Mr. Trump is going to do about that we don’t know. He does have some legal options, which we will not go into now…

The moral of this story is that once you conceive or pick your trademark or marketing slogan or logo for your business or other activity, you do want to rush to the Trademark Office and reserve it. What you want to do is to file a so-called "intent-to-use" application. The date of your filing will function as your “priority date.” This is like a number ticket you get in a deli of a supermarket. The filing will start the Trademark Office’s examination process in about three months after the filing date. The only major prerequisite for filing such an application is that you are doing it in good faith and do plan to use the mark eventually. When/if the application makes it through the examination successfully, the USPTO wouldn’t register the mark until you present sufficient evidence that you are using the mark in the marketplace.

Of course, like with anything, a good name or slogan may help you sell the product, but whether or not your product will succeed on the market will depend on the quality of your product. So far, President Trump is keeping his campaign promises and does exactly what he promised the American people he would do. Whether Mr. Trump’s presidency will be successful, we will know soon enough.

Text © Maxim A. Voltchenko 2017

* This piece is not intended to be a review of U.S. law or politics. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

U.S. Federal Circuit Court Provides Valuable Guidance on What Constitutes Use of a Trademark in Interstate Commerce

On November 14, 2016, the Federal Circuit handed a small but important victory to a small Illinois church in its trademark saga dispute with adidas AG, a sport apparel giant, reversing the Trademark Trial and Appeal Board’s (TTAB) decision in adidas AG v. Christian Faith Fellowship Church, Cancellation No. 92053314 (September 14, 2015) [not precedential].

In the underlying TTAB proceeding, adidas sought to cancel the Church’s ADD A ZERO trademark registrations on three grounds and prevailed on one of them. The Church was selling hats and t-shirts out of its bookstore located in the basement. The Board held that the Church’s documented sale of two marked hats to an out-of-state resident were de minimis and therefore did not constitute use of the marks in commerce under the Lanham Act. “Use in commerce” is a prerequisite for U.S. federal registration of a trademark for a domestic applicant. The Church is located only several miles from the Illinois-Wisconsin border, the Church’s parishioners include both Illinois and Wisconsin residents. The Board cancelled the Church’s registrations. The Church appealed.
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The Court of Appeals of the Federal Circuit (CAFC or Court) reversed that decision, because “the Lanham Act defines ‘commerce’ as all activity regulable by Congress, and because the Church’s sale to an out-of-state resident fell within Congress’s power to regulate under the Commerce Clause.” “The de minimis character of individual instances arising under that statute is of no consequence," the Court noted and remand the cases to the Board for further proceedings.Christian Faith Fellowship Church v. adidas AG, Appeal No. 2016-1296 (Fed. Cir. November 14, 2016) [precedential].

It’s interesting what triggered this case. Adidas was seeking to register its trademark ADIZERO (Serial Number 77822018) for footwear, shirts, singlets, jackets, shorts, tights, bottoms. But the US Patent and Trademark Office (USPTO) refused adidas’s application claiming that it conflicted with the Church’s ADD A ZERO registrations. Indeed, the parties’ marks sound similar, if not the same, when pronounced. Similarity in one element—here, a phonetic similarity—sometimes is sufficient, even though the marks might look different and mean different things, as they obviously do in this case.

The USPTO examining attorney also apparently did not give much weight to differences in the parties’ respective targeted customer bases. The Church used the slogan for its fund-raising efforts by selling hats and t-shirts. Adidas uses its ADIZERO brand for a super lightweight line of performance sneakers.

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The USPTO examiner only looked at the descriptions of the parties’ respective products on paper and found them related, if not overlapping. Adidas tried hard to convince the Examiner but to no avail. So, adidas decided to remove the obstacle in its way, that it to cancel the cited registrations in a formal proceeding before the TTAB. It is unclear from the CAFC’s decision whether or not adidas reached out to the Church to obtain its written consent to its registration. This is normally what you do. If it did, the Church probably asked for too many zeros to get compensated for a hassle. The TTAB Cancellation proceedings ensued.

At the TTAB’s level, while there were some evidentiary issues whether the Church could prove that the sale of two hats was made to an out-of-state purchaser, the issue was whether such sporadic sale in fact is sufficient to constitute sale in the “ordinary course of business” as the Law defines “use in commerce.” Adidas argued that the sale was de minimis and thus was not sufficient to trigger the Commerce Clause of the U.S. Constitution. Going down the constitutional path turned out to be unfortunate for adidas. The CAFC ruled that the Church’s sale of two hats was sufficient to satisfy the U.S. Constitution requirement for interstate commerce.

This whole dispute raises several questions. First, why would adidas go to the Board to resolve this dispute? There were surely ways to get this resolved outside formal proceedings. Adidas’s decision to litigate this case certainly added many zeros to its legal budget. Of course, the question also remains how the Church found resources to fight this assault by a sports apparel giant, not just at the USPTO’s TTAB level, but also at the appeals level. It is possible the attorneys representing the Church could have taken on this case on a pro bono basis.

Second, the Federal Circuit’s decision has many consequences for registration practice in general for all us, trademark practitioners and brand owners. The TTABLOG’s author John L. Welch has noted:

After this decision, is there any "use" of a trademark or services mark that does not satisfy the "use in commerce" requirement? Is the old "interstate/intrastate" dichotomy dead, as far as "use" goes?

This Blog tends to agree with this comment. The Court’s decision certainly lowered the threshold for the amount of use necessary to satisfy the “use in commerce” condition for registration of the mark. Also, doesn’t it look like the Court is all but potentially did away with the rule against token use of the mark? The Law generally prohibits the practice of “token use,” or use made solely to reserve rights in a mark.

Notably, the Court has not addressed other issues raised in adidas’s petition cancellation, namely two other grounds for cancellation (abandonment and failure-to-function), because the Board itself has not addressed them. It is possible adidas could prevail on at least one of these grounds unless, of course, the parties settle. We will continue to monitor this very curious case.

Text © Maxim A. Voltchenko 2016
* This piece is not intended to be a review of U.S. law. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

Communist Party of the Russian Federation Learns a Tough Lesson of Capitalism: Dog Eat Dog and that You Need to Protect Your Intellectual Property

My generation (generation X) who grew up in the Soviet Union in late 1970s-early 1980s all remember the first thing we were taught in school about capitalism: При капитализме человек человеку волк or in capitalist’s West “man is to man a wolf” or what they say here: “Dog eat Dog.” Russia’s Communist Party officially named as “Communist Party of the Russian Federation” learned that principle hard way from what should be their ideological allies: another communist party, namely the party Communists of Russia.

In a nutshell, two far left political parties in Russia found themselves in a legal dog fight regarding their names. Ask someone who is not familiar with Russia’s political landscape: Is the name “Communists of Russia” confusingly similar to the name “Communist Party of the Russian Federation” (“CPRF”)? The answer would most likely be Yes. Yet CPRF could not find pravda in court. In Russian, the term “pravda” is not only the name of communist’s newspaper, but it also means truth and justice.

CPRF (cprf.ru) led by political heavyweight and veteran Gennady Zyuganov is often viewed as the immediate successor of the Communist Party of the Soviet Union, which was banned in 1991 by then-President Boris Yeltsin. It is the second largest political party in the Russian Federation, after ruling party United Russia.

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The party “Communists of Russia” is a group that has broken with the CPRF relatively recently. Its website komros.info states that the party was formed in April 2012. The Ministry of Justice registered that party in June 2012. The leader of the party of Communists of Russia is Maxim Suraykin (party nickname is “Comrade Maxim,” just like a main character from a popular Soviet movie of 1930s).

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Political observers generally agree that CPRF is the only opposition party that can compete with the governing party United Russia in the upcoming parliamentary elections on September 18, 2016. Many critics of the Kremlin and what is considered its political party United Russia have long argued that the Kremlin has employed all strategies and tactics to consolidate the party of power United Russia and split and weaken the opposition parties, namely CPRF. Some suggest the party of Vladimir Zhirinovsky, the Liberal Democratic Party of Russia (LDPR) and party of Sergey Mironov (Справедливая Россия or Just Russia) were created solely to take away votes from CPRF. Personally, I do not believe those conspiracy theories. However, the creation of a political party with a confusing name—Communists of Russia—indeed plays into the popular belief that such a party was created solely with the purpose of syphoning the votes away from CPRF.

According to CPRF’s legal counsel, CPRF may lose 1.5-2% of votes because of the similarity in the names. In my view, this calculation is very conservative and real loss of votes could be much larger, given than a significant part of CPRF’s electorate constitutes senior citizens who may not necessarily follow all the nuances of Russia’s political life and terminology.

Form a trademark law perspective, there is little doubt that CPRF should be able to stop the party Communists of Russia from using a confusingly similar name. Generally, under any legal system (whether in Russia or any country with developed legal rules), there are several factors that courts consider when determine when the junior user’s name or trademark is confusingly similar to the senior user’s mark. The main two factors are the similarity or dissimilarity of the marks and the similarity/dissimilarity of the goods or services identified by the respective marks.

Here, both factors arguably support CPRF’s case. First, the marks (the parties’ names) are highly similar in all three aspects: appearance, sound and especially in meaning. Generally, to cause a confusion the marks need not be identical. The similarity in one of the three elements may suffice. For example, a vacuum cleaner under the brand name STORM would be confusingly similar to a vacuum cleaner under the brand name HURRICANE. In our case, the respective parties’ marks are virtually identical in meaning.
There is no question that many people in Russia know and may even refer to CPRF as “Communists of Russia.” Moreover, under the Constitution of the Russian Federation, the terms “Russia” and “Russian Federation” are considered legal equivalents. Thus, the parties’ names which function as their service marks are highly similar.

I am curious if somebody created a political party and named it Партия Единороссов (The Party of United Russians) или Россия Единая (Russia United), how would United Russia feel about such parties-copycats?

There are many other similarities. Both parties use hammer and sickle as their emblem or logo. Both parties use a branded color. Guess what color is that? You are right: it’s red. Both parties use a slogan: "Workers of the world, unite!" Both parties use the political program that consists of 10 steps if they win the elections… The list can continue.

Second, the activities identified by the respective parties’ names (marks) are identical. Indeed, CPRF and the Communists of Russia appeal to the same voters and indeed directly compete with one another. Both parties wish to reinstate some form of socialism. This factor also supports strongly the position of CPRF.

Another factor looks at the junior user’s motivation for adoption of the mark, that is whether or not it adopted with the purpose to benefit from the public’s familiarity with the senior user’s mark. Russian courts lately have taken a more active role in policing against unfair competition when junior players, in bad faith, adopt marks that are similar or identical to the well-known marks. We don’t know what the real motivation is of the founders and leaders of the Communists of Russia, namely Comrade Maxim’s ulterior motives, if any. Even if we give them the benefit of doubt, you still would think CPRF should easily win this trademark dispute, but not so fast…

Here is what happened. CPRF filed a lawsuit with the Moscow Arbitrazh Court demanding that the party Communists of Russia change its confusing name. After the consideration of the case has been dragged on for months, on July 11, 2016 the Court bounced CPRF’s lawsuit on technical grounds. The Court did not even consider the dispute on the merits. It has found that this dispute does not belong to the types of disputes that Arbitrazh courts adjudicate, but should be adjudicated by another type of courts, apparently Courts of general jurisdiction.

Similar to, say, United States’ court system, Russia has more than one category of courts. In fact, the judiciary in Russia is split into several branches: the “regular” court system (Courts of general jurisdiction) and the Arbitrazh courts with the Highest Court at the top of these two branches, and the Constitutional Court as a single body with no courts under it. In July 2013, a new, specialized court, the Intellectual Property Rights Court (“IPR Court”), was also introduced into the Russian judicial system.
The term “Arbitrazh” may be confusing to westerners. It has nothing to do with arbitration as alternative dispute resolution. Russia also has what we consider “arbitration courts”: they are called treteyskie sudy.

Generally, whenever there is a dispute between legal entities or when a party is a sole entrepreneur, the case is taken for trial by Arbitrazh courts, which in essence are business or economic courts. But if a party to a civil case is a private citizen, not involved in business activities, the dispute must be handled by a Court of general jurisdiction.

Arbitrazh courts have traditionally adjudicated disputes involving trademarks and unfair competition. Courts of general jurisdiction, like state courts in U.S., usually adjudicate small claims disputes, family law disputes and criminal cases. They rarely adjudicate trademark disputes.

In refusing to take on the case by CPRF, the main argument of the Moscow Arbitrazh Court is that the parties to this dispute are political parties, and not business entities. This argument seems very suspect. The procedure rules under which such a court operates state that Arbitrazh courts adjudicate “economic disputes and other cases in connection with business and other economic activity.” Article 27 of the Arbitrazh Procedure Code.

Curiously, on December 2, 2014, another political party Just Russia won a trademark case. Just Russia defended its trademark registration for "Родина" (MOTHERLAND), its initial name, against a challenge by another political party with the name RODINA in the IPR Court. Thus, Russian courts recognize trademark rights of political parties. The IPR Court did not refuse to adjudicate a trademark dispute between two political parties on a formal ground that such organizations are not engaged in any business or economic activity.

In its defense, it is not uncommon for the Moscow Arbitrazh Court to take the position it has taken. It is very possible that its decision was not motivated by any political consideration. Several years ago, this Court has taken a somewhat similar position involving the musical band MIRAGE, a popular band of late 1980s-early 1990s.

The consistency of the Moscow Arbitrazh Court does not help CPRF. CPRF seems to have given up on the idea of stopping a rival communist party with a confusingly similar name before the elections on September 18. Apparently, CPRF has not appealed the dismissal of this complaint and has not taken its case to a different court, whether the Court of general jurisdiction or IPR Court.

It is unclear whether CPRF owns trademark registration in the name “Communist Party of the Russian Federation” and its logo. It appears CPRF only relied on a provision in the Russian Civil Code that relates to “trade names.” Article 1473 of the Civil Code. Perhaps the result would have been different, had CPRF asserted a trademark infringement as opposed to just a violation of its trade name. It also would have been interesting to learn whether or not it could have obtained trademark registration for the term “Communist Party.” The full name of the party Communists of Russia is “communist party ‘Communists of Russia.”

There are several lessons to be learned from this case. First, any nonprofit (called “non-commercial organization” in Russia) should consider registering its name as a service mark (trademark) with Russia’s Patent and Trademark Office called Rospatent. CPRF has learned its lesson—it needs not only to study the works of Vladimir Lenin and Karl Marx, but also the laws and court practice of modern Russia. Communists should play by the rules of a capitalist economy. The should master one of the most important legal instruments of a market economy such as use of intellectual property rights. Obviously, communists’ political opponents use IPRs masterfully.

This also concerns foreign nonprofits and NGOs operating in Russia. You want to register your name as a service mark to protect the goodwill that you are building and which you may need to use against potential unfair competition. After all, isn’t Russia now governed by the same principles as capitalist’s West: Dog eat Dog?

Text © Maxim A. Voltchenko 2016

* This piece is not intended to be a review of Russia’s intellectual property laws and court practice. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest. This Blog is not connected or affiliated with Russia's state online news and radio service Sputnik International

U.S. Enacts Law to Strengthen Trade Secrets Protection

On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act of 2016 (“the DTSA”). Trade secrets can include confidential business information such as business and marketing plans; financial information; customer lists; technical, scientific and engineering data, research and designs. The DTSA became effective immediately.
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US domestic businesses and foreign businesses operating in US should know at least three things about the DTSA.

First, the DTSA provides a federal civil cause of action for misappropriation of trade secrets. Prior to the DTSA, you generally could only bring a trade secrets misappropriation lawsuit in a state court, under state law. Because trade secrets protection laws would vary from state to state, your case would face a great deal of uncertainty. Now, under the DTSA, you should be able to litigate in a federal court before a bench with deeper experience in complex, inter-jurisdictional disputes. Ultimately, federal cases will be governed by a uniform body of federal trade secret law subject to US Supreme Court review, just like patent and copyright laws.

However, unlike patent and copyright laws, the DTSA does not eliminate or preempt state trade secrets rights and causes of action. Just like in trademark lawsuits, you can assert a violation of state trade secrets rights in addition to your federal claim.

Second, the DTSA provides additional powerful (“enhanced”) remedies for trade secrets misappropriation. In addition to traditional injunctive relief and damages, the DTSA gives the court the power to award “exemplary damages in amount not more than 2 times the amount of the [actual] damages” and reasonable attorney’s fees to the prevailing party.

The award of attorney’s fees can be a significant remedy, as the attorney’s fees in US generally are paid by each party irrespective of the outcome of litigation. The DTSA provides that if “trade secret was willfully and maliciously misappropriated,” among other instances, the court may award reasonable attorney’s fees to the prevailing party.

The DTSA also introduces a new remedy: a so-called ex parte seizure that allows plaintiffs to ask courts to order law enforcement officials to seize any property "necessary to prevent the propagation or dissemination of the trade secret" without a hearing or answer from the accused party, pending a full hearing. The ex parte seizure is somewhat similar to a temporary restraining order (TRO) and is available under “extraordinary circumstances,” where typical injunctive relief would be insufficient or ineffective.

Third, the DTSA requires employers to notify their employees of the so-called “whistleblower” immunities, that is immunities from liability for disclosure of trade secrets of individuals who disclose trade secrets in certain situations: to government officials or the individuals’ lawyers. Employers who often become victims of trade secrets misappropriation by current or former employees should be aware that they may lose enhanced remedies if they fail to notify their employees of the “whistleblower” immunities.
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Thus, employers should review their policies and employment agreements and make sure they add some new provisions and disclosures.

Overall, the enactment of the DTSA is a positive development for protection of businesses’ intellectual property. To be able to fully utilize the DTSA’s new features, businesses and their counsel should undoubtedly familiarize themselves with this new law without delay.

Text © Maxim A. Voltchenko 2016

* This piece is not intended to be a review of U.S. intellectual property laws. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

The Fight Over STOLI Vodka Brand Continues and Likely Heads to U.S. Highest Court

The U.S. legal system is currently adjudicating at least two high profile cases that, I dear to say, have geopolitical implications. One case is in a D.C. federal court where former Yukos Oil shareholders are asking the court to enforce a $50 billion award against Russia issued by a Permanent Court of Arbitration tribunal in 2014. (The award is worth around one-quarter of Russia’s total government budget.) The Arbitration tribunal found that Russia engaged in an illegal campaign to disband Yukos and transfer its assets to the state-owned oil company Rosneft. Russia urges the D.C. federal court to dismiss this lawsuit saying it never agreed to arbitrate the claims. The case is Hulley Enterprises Ltd. et al. v. Russian Federation, case number 1:14-cv-01996, in the U.S. District Court for the District of Columbia.

The second case is the one involving the ownership of the iconic STOLICHANYA vodka brand (or STOLI) in United States and the right to sell this popular vodka brand in U.S. The Sputnik Blog® discusses some of the salient points of this litigation saga and latest developments.

The STOLI case has a long history, several court decisions and a complicated set of facts. In a nutshell, in the U.S. the dispute started when the Russian government filed a lawsuit in 2004, through its agency, a government-owned entity, to reclaim the ownership of the mark in U.S. from SPI Group. The brand STOLICHNAYA used to belong to the Soviet government. "Stolichnaya" is Russian for "from the capital." The Soviets created a legal entity, which had marketed vodka under that brand both domestically and abroad, since 1944 and prior to the collapse of the Soviet Union. The state-owned entity, The All-Union Association Sojuzplodoimport ("V/O-SPI";), registered a trademark for "STOLICHNAYA" with the United States Patent and Trademark Office in February 1969 (Registration No. 865,462), as the primary STOLI brand (the STOLI Marks”).

In early 1990s, the Soviet government began reforms to change its centralized planned economy into a market economy, and state-owned enterprises were privatized. As the privatization legislation was only being drafted, V/O-SPI was purportedly privatized by its directors and mangers under the new name “VAO-SPI.” VAO-SPI later became controlled by SPI, the defendant entity.

In 2000s, the Russian government under President Putin began to scrutinize many of the murky privatization deals of the 1990s, and courts found the privatization of V/O-SPI illegal. The court held that ownership of the STOLI Marks had remained with Russia. The Russian government created a legal entity, the Federal Treasury Enterprise Sojuzplodoimport ("FTE";), that the Russian government authorized to own and enforce its rights to the STOLI brand. The legal battles over the popular brand outside Russia ensued.
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Sputnik Blog® already wrote about one of the STOLI decisions in U.S. (though from a different angle). In 2013, in a prior suit, a New York judge dismissed the complaint of the Russian government on formal grounds, without even reviewing the merits of the case. On August 28, 2013, the Court of Appeals affirmed the district court’s decision that FTE lacked standing to bring a lawsuit in a U.S. court.

In 2013, this Blog questioned the rationale of the LGBT activists who boycotted the STOLI brand over Russia’s alleged mistreatment of gays. The posting Is Stoli Really a Russian Vodka? discussed the case Federal Treasury Enterprise Sojuzplodoimport, et al. v. SPI Spirits Ltd., et al., case number 11-4109, 726 F.3d 62, 85 (2d Cir. 2013). This Blog noted that the Russian government did not suffer from the LGBT boycott at all, because Russia did not (and still does not) control the STOLI brand in United States, where all the boycott effectively occurred.

Recently, there have been developments in the STOLI case. On January 5, 2016, the U.S. Court of Appeals for the Second Circuit (that includes New York) reversed the district court ruling that FTE lacked standing to assert trademark infringement claims.

The Appeals Court reversed the prior district court’s decision in part, specifically the part in which the district court ruled that the assignment through which the Russian government transferred “entire right, title, and interest in and to the [STOLI Marks]” was invalid. The Appeals Court applied two legal doctrines one of which is international comity. Under international comity, courts should refuse to review actions of foreign governments, unless those actions would be contrary to the policies of the United States. The Appeals Court found no countervailing policy interest to justify the district court’s decision, and sent the STOLI case back to the district court.

What the Appeals Court essentially said is as follows. "Listen, Ms. Judge, you cannot tell the Russian government that it violated its own law. The Russian government probably knows better whether or not its decree is legal, and whether the assignment is valid. It’s none of our business to evaluate the Russian government’s acts. We must presume that they are valid under Russia’s own law." Makes sense, doesn’t it?

Victory to the Russkies? Not so fast. First, the Appeals Court said no word on the merits of the case. It did not even hint which side has superior rights to the STOLI Marks: the Russian government/FTE or SPI. It only held that Russia’s agency FTE had the standing. In fact, the Court stressed that “whether those rights, if validly assigned, prevail against alleged infringers is very much an issue confided to the United States courts; the distinct question whether the government of a foreign sovereign has effectively and legally allocated its rights and powers among its agencies and instrumentalities under the foreign sovereign‘s law, is not.” (Emphasis added.) So, even though Russia’s FTE is probably going to have its “day in court,” it does not necessarily mean it will prevail.

Second, the defendants, SPI Group et al., on April 4, 2016, requested a stay of the entire STOLI litigation pending a “planned petition for a writ of certiorari” from a Second Circuit ruling in January. So, the defendants are asking that the U.S. Supreme Court take on the issue whether Russia’s FTE has standing to sue. FTE surely will oppose this move. It would undoubtedly be very interesting to see how the U.S. Supreme Court would rule on this issue. However, there is no certainty that the case would even get to the Supreme Court. What is certain is that this move by the defendants means more delay before an ultimate resolution. And, for the time being, the defendants continue to exploit the STOLI brand in U.S.

Thus, Russia appears to have won the battle, but it is not necessarily winning the war. The STOLI legal battle increasingly is becoming to look more like a frozen conflict, the state of affairs that certainly benefits the defendants, not Russia.

Legal theories aside, how do you think the U.S. courts should decide? Shall the U.S. rule that the STOLI brand should be returned to the Russians? Is there a risk that the U.S.-Russia confrontation may intensify if the Russians do not get their vodka brand back, and on top of that the U.S. rules that Russia must pay $50 billion to the former Yukos shareholders?

Text © Maxim A. Voltchenko 2016

* This piece is not intended to be a review of U.S. law. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

Not All Consent Agreements Created Equal—The USPTO Bounces A Consent Agreement Finding It Unhelpful to Overcome A Confusion Refusal Over a Prior Virtually Identical Mark for Substantially the Same Product

The US Patent and Trademark Office’s (USPTO) Board of Appeals affirmed a refusal of an application for the trademark TIME TRAVELER BLONDE for beer over the prior mark TIME TRAVELER for “beer, ale and lager” despite the consent by the owner of the cited mark. In re Bay State Brewing Company, Inc., Serial No. 85826258 (February 25, 2016) [precedential].

Generally, consent agreements can be an efficient path to registration in situations where the parties agree that confusion between their respective marks is unlikely. Usually the USPTO gives considerable weight to such consents. The USPTO's rules of practice caution that an examiner should not "substitute [his or her] judgment concerning likelihood of confusion for the judgment of the parties in interest without good reason."

The parties to such agreements are an applicant (here, Bay State Brewing Company, Inc.) and registrant (The Traveler Beer Co.). Technically, Registrant was not party of the process. However, Applicant somehow got Registrant involved by reaching out.

In this case, the USPTO and the Board found that the consent is “outweighed by the other relevant likelihood of confusion factors, namely that the marks are virtually identical, and the goods, trade channels and purchasers are identical.” Why? What happened? When you have a consent agreement, it is usually 90% of success.

Trademark practitioners know that applicant must have messed something up for the USPTO to reject the consent. Was the consent “naked”? "Naked" consent agreements are agreements that contain little more than a prior registrant’s consent to registration of an applied-for mark and possibly a mere statement that source confusion is believed to be unlikely. The USPTO may find a short and conclusory consent agreement “naked” and therefore insufficient to overcome the likelihood of confusion refusal.

Curiously, the consent agreement that Applicant submitted to the USPTO was not “naked.” At the least the Board did not expressly categorize it that way. However, the Board sided with the USPTO examiner who pooh-poohed virtually every important term of the consent: geographic restrictions, commitment to use house marks and obligation not to use the other party’s trade dress.

Geographic restrictions. Applicant is located in Massachusetts; Registrant is located in Vermont. The “Geographical Limitation” provision in the agreement provides that Applicant will not use its applied-for mark “outside of New England and the State of New York,” while Registrant’s use is not geographically limited. The Board found that in this regard the agreement created a situation when the two virtually identical marks may be used in an overlapping territory.

Commitment to use house marks. The provision captioned “Restrictions on Use” provides that Applicant and Registrant must use their respective house marks in connection with the marks at issue: “Bay State Brewing” and “The Traveler Beer Co.,” respectively. In general, use of a house mark does not obviate confusion. However, use of house marks often does help to minimize confusion in practice. Importantly, the presence of this term is evidence of “clothed” consent. The Board found, however, that the addition of house marks to these virtually identical marks used on identical goods does not necessarily mean that purchasers are not likely to be confused. This Board apparently was not impressed by the small font of the house mark shown on the sample labels.

Under the “Trade Dress” provision, Applicant and Registrant agree to refrain from using trade dress (packaging, labeling, and/or marketing) that is confusingly similar. Applicant submitted the following samples of trade dress (and better quality images found via Google):

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The Board noted that the terms of the agreement only require each party to not use the trade dress of the other but do not require the use of particular trade dress by either party. “Thus, if each used minimal trade dress and smaller font displays of the house marks, then the essence of the agreement would be met, but would not aid in the avoidance of confusion” the Board noted perceptively.
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Another problem with Applicant’s argument and generally with Applicant’s coexistence position was that Applicant’s application was based on the intention to use the mark, not actual use. The Board looked at the application literally on paper—it has not yet coexisted with Registrant’s mark in an actual marketplace. Moreover, the application for the mark TIME TRAVELER BLONDE was in standard characters and not limited to any particular design or trade dress. Because the application was in standard characters Applicant would be entitled to use its mark in any design.

Bottom line: the Board has found that the agreement “does not comprise the type of agreement that is properly designed to avoid confusion and does not fully contemplate all reasonable circumstances in which the marks may be used by consumers calling for the goods.” Hence, the appeal is refused, the refusal is afformed.

The Board not only criticized the consent agreement, but it also provided some guidance for future submissions by applicants in similar circumstances:

The agreement also is sorely lacking in business information as to why Applicant and Registrant believe that confusion between their marks is not likely to occur under the particular circumstances of their contemporaneous use. For example, consent agreements often refer to differences between the goods, trade channels and classes of purchasers; the sophistication of purchasers; and dissimilar methods of advertising and promotion. The agreement is silent on all of these points.

Perhaps, if Applicant and Registrant had added more terms explaining the differences between their respective products, the USPTO could have looked more favorably. The beers of the Time Traveler Beer Co. are “sophisticated blends of carefully crafted American wheat ale with fresh and refreshing ingredients.” What ingredients? Lemonades (shandy), grapefruit, strawberry, pineapple, etc. By contrast, Bay State’s product is more traditional and is described as follows: “A New World Classic, Bay State's Mai Bock is a big bright golden malty lager. Easy drinking and warming with substantial body and mouth feel and just a hint of sweetness. Made from generous amounts of Pilsner and Vienna malts, Bohemian hops and Bavarian lager yeast.” Thus, Applicant and Registrant clearly could have differentiated their respective products and probably channels of trade.

There are other things Applicant could have done differently with its application and consent agreement. Still, the Board’s decision stands out for the level of scrutiny the Board and the PTO Examiner both gave to the agreement, in the name of protecting public from consumer confusion. The agreement contains a provision which usually works wonders: the parties “wish to avoid any conflict with one another and consent to co-exist” and further agree “to cooperate in good faith to resolve such actual confusion and to develop measures sufficient to avoid a likelihood of confusion.”

Do you agree with the Board’s decision or is this yet another example of the government’s “micro managing” business and in fact “substituting its judgment for the judgment of the parties in interest without good reason"?

Text © Maxim A. Voltchenko 2016
* This piece is not intended to be a review of USPTO’s TTAB cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

Almost Two Years Later, Will US Courts Use Octane Fitness Standard For Attorney Fee-Shifting More Consistently In Trademark Cases?

In the previous Blog posting I discussed most significant trademark cases of 2015. This installment deals with a particular issue, which perhaps did not get enough coverage in the media: fee-shifting remedy imposed on trademark bullies and gross intentional trademark infringers.

In 2014, this Blog was one of the first sources that recognized that the U.S. Supreme Court's Octane Fitness ruling on fee-shifting in patent cases should be extended to trademark and unfair competition cases under the Lanham Act. Under Octane Fitness, it should be much riskier to bring questionable trademark claims and counter claims or behave badly during litigation. The Third Circuit (Pennsylvania) was the first Circuit to make such an extension and patent-trademark analogy official.

Why is this issue important? European lawyers and many clients barely understand the so-called American Rule. Under the American Rule, each litigant pays his own attorneys’ fees, win or lose. In most other countries, the prevailing party generally gets to recover the costs of litigation including its attorneys’ fees from the losing party. This would be the system even in England from which our legal system originated, let alone Continental Europe and the rest of the world.

2015 saw more cases and more courts follow Third Circuit. In April 2015, the Sixth Circuit (MI, OH, KY, TN) noted that the fee provisions in patent and trademark law are identical and that such matching provisions “should generally be interpreted consistently.” Sending a trademark case back to the lower court, the panel ordered it to “assess the applicability of Octane Fitness before determining whether it is necessary to reassess if this case qualifies as extraordinary under [the Lanham Act].”

However, some district courts continue to apply the old standard, notably in the Second (New York, Connecticut) and Ninth Circuits (West Coast states). In August 2014, a Connecticut federal judge refused to use the new standard and denied a Lanham fee award against Fossil Inc. based on a tougher, existing legal standard in the Second Circuit. The justices in Octane Fitness were “interpreting only the Patent Act and not the Lanham Act,” the judge wrote, meaning "the Second Circuit cases interpreting the fee provision of the Lanham Act remain good law and represent binding precedent on this court.”
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So, 2016 should be interesting as to whether or not courts will apply the fee-shifting provision to trademark cases under Octane Fitness, an important weapon against trademark bullies and trademark trolls as well as repeat trademark infringers. It remains to be seen whether Octane will take hold in trademark law.

Text © Maxim A. Voltchenko 2016

* This piece is not intended to be a review of U.S. court cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.