While the past year has seen developments take place across a number of areas in U.S. trademark case law, perhaps the hottest topic was the U.S. Court of Appeals for the Federal Circuit’s August 2009 decision in In re Bose Corporation. That case has changed the standard for proving fraud before the TTAB, bringing it more in line with the fraud measure in other areas of the law.
The Bose battle
In its opinion in Bose, the Federal Circuit said: “Unless the challenger can point to evidence to support an inference of deceptive intent, it has failed to satisfy the clear and convincing evidence standard required to establish a fraud claim.”
That reasoning broke from the Board’s 2003 contention in Medinol v Neuro Vasx that Medinol’s claim that it did not commit intentional fraud did “nothing to undercut the conclusion that respondent knew or should have known that its statement of use was materially incorrect.”
“This is probably the most significant trademark law opinion in some time,” said Ted Davis of Kilpatrick Stockton—who will be speaking at tomorrow’s session—at the time of the ruling. “It throws out a good deal of case law from the TTAB since 2003 that had greatly altered trademark practice.”
However, Davis added that the decision should not change prosecution strategy with respect to filing accurate descriptions of goods and services, since even an unsuccessful fraud claim can expose trademark owners to increased costs and distractions.
Nonetheless, said Davis, the Bose decision is the most significant decision of the last 12 months and “a reassuring one for owners of large trademark portfolios.”
Internet infringement
Outside of fraud, cases dealing with liability for infringement on the Internet have remained hot as well. In April this year, the U.S. Court of Appeals for the Second Circuit backed eBay by deciding the auction site did not engage in trademark infringement or dilution against Tiffany, even though counterfeit goods were being sold via its website. The trademark community had been awaiting the decision anxiously since oral arguments were held in July 2009.
During the arguments, the three-judge panel seemed sympathetic to Tiffany’s contention that eBay should be doing more to stop counterfeit items from being sold on its online auction site. Although eBay says it prohibits the sale of counterfeits, and established the Verified Rights Owners (VeRO) program to collaborate with rights owners to identify and remove counterfeit items, Tiffany and other brand owners have said that it falls short.
Tiffany filed a complaint against eBay in the U.S. District Court for the Southern District of New York in 2004 alleging that the company failed to sufficiently stop the sale of fake Tiffany products. The jewelry company specifically claimed that eBay did not take adequate measures to control the illegal activities of counterfeit sellers, despite having been notified that a problem existed, and that it was therefore guilty of contributory trademark infringement.
But in 2008, the district court ruled in favor of eBay, saying that “Tiffany must ultimately bear the burden of protecting its trademark” and that, until policymakers change the law, “it does not matter whether eBay or Tiffany could more efficiently bear the burden of policing the eBay website for Tiffany counterfeits.”
Tiffany appealed the decision and argued to the Second Circuit Court of Appeals that eBay should be doing more to tackle counterfeits. But the Court of Appeals ruled in favor of eBay, despite leaving some open questions. The court said that further proceedings were necessary to consider Tiffany’s claims of false advertising in more detail, suggesting uncertainty about whether eBay might be liable for false advertising when it advertises to consumers that they can buy Tiffany merchandise on eBay knowing an amount of the Tiffany products are counterfeits.
As the online auction cases play out worldwide with varying outcomes (see box on eBay in the EU), the trademark bar continues to wait for clarity.
TTAB meets 21st Century
In re Sones, 93 USPQ2d 1118 (Fed. Cir. 2009)
In a significant case for trademark owners arguing before the TTAB, the Federal Circuit ruled in In re Sones late last year that webpage specimens of use containing strictly textual descriptions are acceptable to satisfy the USPTO’s criteria for showing evidence of a mark’s use in commerce.
The USPTO and the TTAB denied registration of Michael Sones’ mark, ONE NATION UNDER GOD for charity bracelets on the ground that Sones’ specimen did not “show a picture of the goods in close proximity to the mark.” Since the Office has traditionally applied the rules governing catalog specimens of use—which require a photo of the goods—to electronic specimens, it claimed that Sones’ failure to include a picture with his application barred registration.
However, the Federal Circuit disagreed, ruling that the board had applied an improper legal standard to deny Sones’ application. “We see no reason why websites must necessarily have pictures to associate a trademark with the goods being sold,” said the court in its opinion. While the judges said that the absence of pictures might well “render website specimens ineffective in many cases,” it held that “a picture is not the only way to show an association between a mark and the goods, and we cannot approve of the rigid, bright-line rule that the PTO applied here.”
The case relaxes the standard for submitting web-based specimens of use, arguably making life easier for a great number of trademark owners.
eBay in the EU
• December 2009—Brand owners and Internet platforms in France sign a voluntary agreement to tackle online sales of counterfeits, but eBay and Amazon decline to take part in the negotiations leading to the deal.
• December 2009—A Paris court orders eBay to pay e1.7 million ($2.6 million) to Louis Vuitton owner LVMH for failing to enforce an injunction barring the sale of LVMH products on eBay in France.
• July 2009—The European Commission invites trading platforms and brand owners across Europe to Brussels to discuss ways to curb the sale of fakes online.
• June 2009—The UK courts ask the European Court of Justice to address the liability of online auction houses such as eBay for the sale of trademark-infringing goods after considering a case between eBay and L’Oréal.
• August 2008—The Brussels Commercial Court dismisses L’Oréal’s claim that eBay was responsible for counterfeits being sold on its site. The Belgian court’s reasoning was that eBay does not have “a general monitoring obligation” of what it offers on the website, since it is merely a host.