U.S. Supreme Court to Rule on Rights of Trademark Licensees Upon Rejection of a Trademark License Under Section 365 of the Bankruptcy Code
On October 26, 2018, the U.S. Supreme Court granted a petition for certiorari in the case Mission Product Holdings Inc. v. Tempnology, LLC to decide whether a licensee may retain licensed trademark rights even after its license agreement has been rejected by the licensor pursuant to section 365 of the Bankruptcy Code, 35 U.S.C. 365(a).
The Court’s decision will resolve a split among the circuit courts as to whether rejection of a trademark license under section 365 of the Bankruptcy Code terminates the licensee’s rights in the subject trademark, or should merely be viewed as a breach by the debtor-licensor, entitling the licensee to continued trademark rights. The Petitioner, Mission Product Holdings, Inc., argued to the First Circuit Court of Appeals below that section 365(n) provides an exception to section 365(a)’s broad rejection authority by limiting the debtor’s ability to terminate intellectual property licenses it has granted to other parties; however, the appellate court rejected that argument, holding that Section 365(n) applies only to specifically enumerated intellectual property rights and excludes trademarks, which are not included within the definition of intellectual property rights in the bankruptcy code.
Federal Circuit Overturns ITC’s Ruling in Chuck Taylor Trademark Dispute
On October 30, 2018, the Federal Circuit overturned a 2016 decision by the International Trade Commission (“ITC”) that invalidated Converse, Inc.’s 2013 registration covering the design of its Chuck Taylor sneaker and declared that Converse lacked common law rights to the design for the period before the registration was issued. The decision, which revives Converse’s longstanding trademark suit accusing Sketchers USA Inc., New Balance Athletics, Inc. and others of knocking off the sneaker design, holds that the ITC “applied the wrong legal standard” and improperly analyzed whether aspects of the shoe’s design, known as its trade dress, had acquired secondary meaning for consumers. However, the appeals court also determined that Converse’s registration, even if valid, would not entitle Converse to a presumption of secondary meaning. As a result, the lawsuit will be heading back to the ITC for a ruling, and Converse will have another shot at proving that the Chuck Taylor’s design acquired secondary meaning before Sketchers and New Balance began selling similar shoes.
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Girl Scouts File Trademark Infringement Lawsuit Against Boy Scouts
On November 6, 2018, the Girl Scouts of the United States of America filed a trademark infringement lawsuit against the Boy Scouts of America in the Southern District of New York. This suit was prompted by the Boys Scouts’ announcement on October 11, 2017 that they will drop the word “boy” from “boy scouts” and start admitting girls into their program. In their complaint, the Girl Scouts allege that “only GSUSA has the right to use the Girl Scouts and Scouts trademarks with leadership development services for girls,” and that the move by the Boy Scouts will “erode its core brand identity.” The Girl Scouts seek monetary damages and a permanent injunction against the Boy Scouts for the alleged infringement and also seek a court order to block the Boys Scouts from using the words “Scout,” “Scouts,” “Scouting,” or “Scouts BSA” without having a distinguishing word appear immediately before it. While the Boy Scout’s decision to include girls in their program may come as surprise, the organization points out that it has had co-ed participation since 1971 through their Exploring and Venturing programs.
Girl Scouts of the United States of America v. Boy Scouts of America, U.S. District Court, Southern District of New York, No. 18-10287
Nintendo Wins $12 Million From Trademark And Copyright Infringement Lawsuit
Nintendo recently settled its trademark and copyright infringement lawsuit against the operators of two websites offering pirated copies of read-only memory (ROM) files collected from Nintendo cartridges without authorization in exchange for a permanent injunction and consent judgment in excess of $12 million. In the lawsuit, which was filed in an Arizona district court, Nintendo alleged that defendants regularly reproduced, distributed, publicly performed and displayed unauthorized copies of Nintendo’s video games (including its proprietary software, registered trademarks and logos, copyrighted music works and audio recordings) in violation of federal trademark and copyright laws, and sought injunctive relief, as well as an accounting of defendants’ profits and damages.
According to torrentfreak.com, the settlement was reached after defendants voluntarily shut both websites down in July 2018 and admitted to direct and indirect copyright and trademark infringement. An article discussing the settlement is also available on Nintendo’s website here.
RIAA Requests 9th Circ. To Undo ‘Stairway’ Ruling
The Recording Industry Association of America requested that the Ninth Circuit undo its ruling on the “Stairway to Heaven” holding. This past September, the Ninth Circuit vacated a lower court’s copyright holding that Led Zeppelin’s “Stairway to Heaven” did not infringe a 1967 instrumental ballad called “Taurus” by the band Spirit. The RIAA argues that the ruling threatens to “badly overprotect” copyrights.
Plaintiff Michael Skidmore, as trustee of the Randy Craig Wolfe Trust (Wolfe was a member of the band Spirit), initially filed a complaint in the District Court for the Central District of California against Led Zeppelin alleging that the iconic song “Stairway to Heaven” infringed Plaintiff’s copyright in “Taurus,” a song written by Wolfe. After trial, the jury returned a verdict in favor of Led Zeppelin, finding no infringement. On appeal, Skidmore argued that the district court committed reversible error by, among other things, not instructing the jury that the selection and arrangement of unprotectable musical elements may be protectable when arranged in a creative way, and by precluding the jury from hearing sound recordings of “Taurus” as played by Spirit. The Ninth Circuit agreed with appellant, vacated the lower court’s decision and ordered a new trial.
The Ninth Circuit ruling can be found here.
USPTO Proposes a Rule Requiring Foreign Trademark Applicants to Use U.S. Licensed Attorneys to File Applications
The U.S. Patent and Trademark Office (“USPTO”) is working on a rule that will require foreign trademark applicants to engage a U.S. attorney to file trademark documents with their office. According to the USPTO, this new requirement will ensure foreign applicants’ compliance with trademark regulatory requirements, will increase confidence that their registrations are not invalidated for improper signatures and use claims reasons, and will help the USPTO improve accuracy of the U.S. Trademark Register. A public comment period of proposed rulemaking will start in November and end in February 2019, and the rule will become effective in July 2019.