This month we discuss wine, sweets, ‘Tiffany’ rings … and theft of trademarks?
“Counterfeit” Tiffany & Co. Rings – DECISION REVERSED
On August 17, 2020, the United States Court of Appeals for the Second Circuit reversed the lower court’s finding that Costco had infringed upon Tiffany’s trademarks by labeling and selling diamond engagement rings as “Tiffany” rings, resulting in a $21 Million jury award.
You may recall that Tiffany had initially brought action in 2013 against the warehouse retailer, alleging trademark infringement and counterfeiting in violation of the Lanham Act, unfair competition in violation of New York law, and other claims, based on the retailer’s use of “Tiffany” on its point-of-sale signs for otherwise unbranded diamond engagement rings. Costco argued that “Tiffany” is not just a brand name, but also a widely recognized descriptive term for a particular style of pronged ring setting, and that Costco used the word on point-of-sale signs solely to identify engagement rings incorporating such settings. In light of this, and other evidence, Costco argued that a reasonable jury could conclude that its use of the word “Tiffany” was not likely to confuse its customers and that, even if some confusion was likely, Costco was entitled under the Lanham Act to use the term “in good faith only to describe” the style of its rings. The Second Circuit agreed with Costco, vacated the grant of summary judgment to Tiffany, and remanded the case for trial.
Bank Alleges Theft and Fraud via Revlon’s Transfer And License Back Of Valuable Trademarks Pledged As Collateral on Billion $ Loans
In what may be an object lesson on the commercial value of trademarks, brands and intangible assets, a bank has accused Revlon of theft of trademarks as pledged collateral. On August 12, 2020, Plaintiff UMB Bank, National Association (“UMB”) filed a complaint in the US District Court for the Southern District of New York against Revlon, Inc., (“Revlon”), its operating subsidiary, Revlon Consumer Products Corporation (“RCPC”), multiple subsidiary limited liability companies including BRANDCO Elizabeth Arden 2020 LLC, BRANDCO Almay 2020 LLC, and BRANDCO GIORGIO BEVERLY HILLS LLC, et al, Citibank, NA and various finance companies, as well as additional parties to be named. The complaint accuses Revlon and RCPC, aided by the other defendants, of stealing collateral – namely trademarks and additional intellectual property (“IP”). Specifically, UMB alleges that in 2016 Revlon pledged the trademarks, and other IP of Revlon’s most prominent brands as collateral for nearly $2 Billion in funds granted by a co-op of lenders which included UMB. The funding facilitated RCPC’s acquisition of beauty industry giant Elizabeth Arden.
UMB alleges it entered into multiple credit agreements with Revlon and RCPC for an initial $1.8 Billion term loan to Revlon and a $400 Million revolving credit facility to RCPC, relying on the strength of Revlon’s famous brand trademarks and IP, including those of the subject of the acquisition, Elizabeth Arden. According to UMB, all IP pledged as collateral for the 2016 loans was subject to first priority security liens. However, according to the complaint, starting in 2019 in a transaction involving trademarks and intellectual property relating to the AMERICAN CREW brand, Revlon and RCPC maneuvered to siphon off IP from the 2016 collateral package, and pledge the IP again to collateralize new financing.
The 117-page complaint outlines a stratagem by which RCPC allegedly formed new multilayered subsidiary entities, transferred the trademarks and other IP already subject to the 2016 credit agreement to entities in those subsidiary chains and then immediately licensed back rights to the same trademarks and IP. UMB asserts that these maneuvers were designed to and effectively did “steal” the 2016 collateral while providing licenses that allowed Revlon/RCPC to seamlessly continue use of the trademarks. UMB has asserted multiple claims including breach of contract, bad faith, conversion, unjust enrichment and fraud. UMB is demanding return of the transferred trademarks to RCPC to be held for the benefit of the 2016 lenders, voiding of the offending transfers and the security liens relating to the subsequent transfers of the intellectual property and monetary relief.
Post Script: Citibank Cases
In its August 12th complaint, UMB alleged that named defendant Citibank – agent for the 2016 co-op lenders – received a Notice of Default under the 2016 credit agreement shortly after the 2018 sale/license back transaction involving the AMERICAN CREW intellectual property came to light. According to UMB, Citibank breached its duties to UMB and the co-op lenders by, among other things, disregarding the Notice of Default. UMB alleges that Citibank and others aided and abetted in an unlawful sale-license back scheme including the 2020 transfers and financing, and that Citibank was grossly negligent at best or in fact committed intentional misconduct. Since August 17th, Citibank has commenced multiple litigations seeking the return of $900 Million it says it mistakenly paid on August 11th (i.e., the day before the UMB complaint was filed). The payments were made to co-op lenders on the 2016 $1.8 Billion Revlon loan. Citibank claims that, as administrative agent for Revlon on the 2016 loan, it intended to pass through “interest only” payments on the debt by Revlon, but mistakenly transferred hundreds of millions of “its own money.” Defendant recipients of the payments (creditors of Revlon) have refused to return the sums allegedly claiming the payments were made against principal on the 2016 Revlon loan. #watchthisspace
Brooklyn Artist Sues Hershey To Protect His “Kill Kat” and “Kisses of Death” Art Toys from Trademark Infringement Claims
On July 24, artist Andrew Bell filed a declaratory judgment action against The Hershey Co. in Brooklyn federal court to protect his artworks which are vinyl designer toys (or “art toys”) that he claims parody Hershey’s Kit Kat and Hershey’s Kisses. Bell asserts that his sculptures, which depict the candies as fanged monsters, are entitled to First Amendment protection as expressive artworks, and as parodies and social commentary. Bell claims that the packaging and marketing for the sculptures, make clear that his work is a spoof and is meant to comment on the “processed food industry’s impact on health.” (For example, his “Kisses of Death” work includes the description: “This sweet and sentient set of deadly droplets (non-edible, almost entirely evil) would like nothing more than to kill you slightly quicker than their purely sugar-based counterparts.”) Bell filed the lawsuit after he said Hershey claimed that his artwork infringed on its trademarks and trade dress, and constituted trademark dilution, and was a “danger to public safety,” and demanded that Bell cease all creation and distribution of these artworks. This case is pending in the United States District Court for the Eastern District of New York.
Château Lafite Rothschild Winery
A Chinese Intellectual Property Court ruled in Favor of Château Lafite Rothschild Winery against Chinese Real Estate Developer in Trademark Dispute. On August 7, 2020, the Beijing Intellectual Property Court ruled for Château Lafite Rothschild in a trademark infringement suit against a Chinese Real Estate company, Huailai Lishihongya Company. Huailai was developing a real estate complex and used the “Chateau Lafite” mark in Chinese signs on the building and on the marketing material.
Château Lafite Rothschild Winery is a French wine producer company, which sells its wine worldwide. Château Lafite has sold wine in China since the 1990s under the mark “LAFITE” registered in Latin alphabet as well as in Chinese alphabet (拉斐 pronounced “La Fei”).
The Court held that the LAFITE marks should be recognized as well-known marks in China and that Huailai infringed Château Lafite Rothschild’s exclusive right to use the marks. The Court imposed to damages and an obligation to make a public apology to Château Lafite Rothschild but did not make any injunction requiring ceasing infringement by removing the trademark from the complex.
Drake’s “Certified Lover Boy” TM Blocked, in part, Due to 80s Rock Band
Extremely popular Canadian actor-turned-rapper Drake announced that he has come up with a name for his new album: Certified Lover Boy. Unfortunately, when his lawyer tried to register the name as a trademark for, among other things, music and entertainment services, digital streaming devices, live events and clothing, the USPTO refused, citing a likelihood of confusion with the mark “Loverboy” held by another Canadian music group: an eponymous 80s rock band known for the hit song “Working For the Weekend.” The PTO also cited the mark “Lover’s Lane,” owned by a Michigan clothing company, as another potential source of confusion.
While Drake isn’t out of options yet in applying to trademark his album title, obtaining a registration for the mark at this point will involve some creative lawyering. In fact, his counsel has already filed a request to divide the application to separately address the Lover’s Lane mark, proposing an amendment that would limit the registration in class 25 to sneakers. Dealing with Loverboy may be more difficult. Despite reaching the height of popularity in the 80s, Loverboy is still a prolific band, releasing their most recent album in 2014 and it appears they are still well known to the public. If Drake cannot distinguish his proposed mark, he may have to seek the band’s consent for what is called a concurrent use registration; in other words, obtaining federal trademark protection over similar marks owned by unrelated owners. For now, it seems Drake has no plans to abandon his Certified Lover Boy mark in the PTO and it will be interesting to see how his attorney deals with the challenge to registration.
Brooklyn Brewery Can’t Block Local Rival’s Trademark
Earlier this month, the TTAB ruled that Brooklyn Brewery, one of the largest craft beer makers in the country, cannot stop its rival, Brooklyn Brew Shop (“Brew Shop”), from using a similar mark on craft brewing kits. In reaching its decision, the TTAB said that Brooklyn Brewery faced a higher standard of proof that consumers would be confused about the source of Brew Shop’s beer making kits and did not overcome its burden.
Brooklyn Brewery and Brew Shop were once business partners who sold co-branded products, including beer making kits. After that business relationship ended, Brooklyn Brewery petitioned to cancel Brew Shop’s registration for, among other things, craft beer kits. Importantly, the TTAB observed that Brooklyn Brewery acquiesced to the Brooklyn Brew Shop’s use of its Brew Shop mark on those co-branded products for more than four years. Consequently, the TTAB determined that Brooklyn Brewery simply waited too long to challenge its rival’s use of the Brooklyn Brew Shop marks once the parties ceased doing business together.
ReelzChannel Sues Instagram and Facebook for Trademark Infringement
On August 5, 2020, Instagram launched a new short-video feature called “Reels,” capitalizing on the demand for such services in the wake of a looming government ban of popular social media platform TikTok tied to privacy concerns.
One television network, however, is not happy about the launch. In August, ReelzChannel sued Instagram, and its parent company Facebook, in a Minnesota federal court, accusing Instagram of infringing on and diluting its Reelz trademark and trading on the goodwill and reputation built in the Reelz mark. The Complaint, which can be found here, seeks damages as well as injunctive relief against defendants.
Dunnington Bartholow & Miller Trademark Bulletin Committee: Olivera Medenica & Donna Frosco (Partners); Sixtine Bousquet, Betsy Dale & Kamanta Kettle (Associates).