04/24/14

IN THIS ISSUE
Court Awards Attorney's Fees to Copyright Defendant
Court Rules TTAB Erred in Finding INTELLIGENT QUARTZ Descriptive
TTAB Finds Brand Name "The Slants" Disparaging

Court Awards Attorney’s Fees to Copyright Defendant

Timothy J. Lockhart

The U.S. District Court for the Eastern District of Virginia recently granted a defendant’s motion that the plaintiff pay the attorney’s fees incurred by the defendant in connection with a claim under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1202(b).  Charles W. Ross Builder, Inc. v. Olsen Fine Home Bldg., LLC, Civil No. 4:10cv129, 2014 U.S. Dist. LEXIS 36268 (E.D. Va. Mar. 18, 2014).  However, the court denied the defendant’s similar motion under the Copyright Act itself, 17 U.S.C. § 101 et seq.

In a case reported in the Winter 2012 Tech Law Letter (Court Rules Williamsburg House Does Not Infringe Architectural Copyright), Charles Ross Builder, Inc. (Ross) sued, among others, Boathouse Creek Graphics, Inc. (Boathouse) for allegedly infringing the copyright in Ross’s “Bainbridge” design for houses to be built in the Ford’s Colony subdivisions of Williamsburg, Virginia.  Ross claimed that Boathouse had access to the Bainbridge design through public building records or through a promotional mailer from Ross, and Boathouse used the design to create a competing design that infringed Ross’s copyright.

Although the court presumed there was sufficient access to support a copyright claim, the court found that the Boathouse design was not substantially similar to the Ross design under the “more discerning observer” standard.  As copyright expert William Patry notes, “The more discerning observer test is employed where there is present in both parties (but especially plaintiff’s) a considerable amount of public domain material” that would skewer the infringement test of substantial similarity “unless the public domain elements are disregarded.”  Accordingly, the court granted Boathouse’s motion for summary judgment regarding Ross’s claims under both the DMCA and the Copyright Act.

The U.S. Court of Appeals for the Fourth Circuit vacated the grant of summary judgment, ruling that the district court should have applied a different test to determine substantial similarity.  The appellate court said the proper test was the two-part review described in Universal Furniture International, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417 (4th Cir. 2010):  “The plaintiff must show that the two works are (1) ‘extrinsically similar because they contain substantially similar ideas that are subject to copyright protection,’ and (2) ‘intrinsically similar in the sense that they express those ideas in a substantially similar manner from the perspective of the intended audience of the work.’”  Id. at 435 (quoting Lyons P’ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 801 (4th Cir. 2001)).

On remand, the district court again granted summary judgment to Boathouse.  This time the court held that Ross had “fail[ed] to raise a genuine issue of material fact concerning [Boathouse’s] access to the Bainbridge design.”  There was, in fact, no evidence of direct access by Boathouse, and Ross did not meet the standard for “intermediary access” with respect to the promotional mailer.

Although the “American Rule” generally requires each party to bear its own litigation expenses, the Copyright Act contains an unusual provision that a court may award attorneys’ fees “to the prevailing party,” i.e., to a successful defendant as well as to a successful plaintiff.  17 U.S.C. § 505.  The Fourth Circuit has laid out four factors that courts should consider in determining whether to award attorneys’ fees to a successful copyright litigant:  (1) the motivation of the parties; (2) the objective reasonableness of the legal and factual positions advanced; (3) the need in particular circumstances to advance considerations of compensation and deterrence; and (4) any other relevant factor presented.  Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 234 (4th Cir. 1993).

The district court held that with respect to the Copyright Act claim, Ross had not acted in bad faith and its legal and factual positions were not objectively unreasonable.  The court also held that because Ross’s suit “provided a vehicle for the Fourth Circuit to clarify what test to use in deciding whether architectural works are ‘substantially similar’ for copyright infringement purposes,” the “interests of compensation and deterrence do not favor an award of attorney’s fees in this case.”

The court held that because Ross “was the party that chose to risk litigation despite the thin protection granted by its copyright of a Georgian-style home design” and because the litigation might deter others from building such homes in Ford’s Colony, the fourth factor slightly favored Boathouse.  The court pointedly asserted that “Congress has foisted on the nation a system of copyrights for architectural works largely devoid of guiding principles as to what constitutes infringement, leaving to this Court the job of fleshing out what is and is not ‘substantially similar.’”  The court said it declined to award Boathouse its attorney’s fees “when the dispute found its source in a broad yet vague statutory regime rather than in bad faith.”

However, based on the Rosciszewski factors the district court held that Boathouse was entitled to recover the fees it incurred defending Ross’s DMCA claim.  The court reiterated its earlier finding that Ross had recited no facts to support its allegations that, in violation of the DMCA, Boathouse removed copyright information from Ross’s plans in an attempt to pass off the plans as those of Boathouse.  Ross’s DMCA claim, the court said, “was frivolous and lacking any basis in law or fact.”  Thus, the court granted Boathouse’s motion for attorney’s fees as a successful defendant of the DMCA claim.

Court Rules TTAB Erred in Finding INTELLIGENT QUARTZ Descriptive

Timothy J. Lockhart

As appeared in April 1, 2014, INTA Bulletin

The U.S. District Court for the Eastern District of Virginia ruled that the Trademark Trial and Appeal Board (TTAB) erred in finding that the trademark INTELLIGENT QUARTZ is descriptive of watches and therefore not registerable.  Timex Group USA, Inc. v. Focarino, Case No. l:12-cv-1080 (E.D. Va. December 17, 2013).  Frankly characterizing the “lynchpin of the TTAB’s descriptiveness finding” as the “erroneous factual finding that ‘the watch contains a quartz component controlled by a computer chip,’” the court said there actually was “no support in the administrative record” for that alleged fact.

The Examining Attorney issued a descriptiveness refusal for INTELLIGENT QUARTZ, applicant Timex Group USA, Inc. (Timex) appealed, and the TTAB affirmed the refusal.  In re Timex Group USA, Inc., Serial No. 85164601 (July 26, 2012) [not precedential].  Timex then filed an action under 15 U.S. C. § 1071(b)(1), which allows a trademark applicant dissatisfied with a TTAB decision either to appeal to the U.S. Court of Appeals for the Federal Circuit or to file an action in a federal district court.  As the Eastern District court noted, when the applicant pursues the latter option, the district court “‘sits in a dual capacity,’ serving on one hand as the finder of fact with respect to new evidence presented by the parties, and on the other as an appellate reviewer of facts found by the TTAB” (citation omitted).  Under § 1071(b)(1) the district courts “have the power to modify the TTAB decision and declare that the plaintiff’s mark is entitled to registration” (footnote omitted).

The court briefly discussed the well-known “imagination test” for descriptiveness, the three essential factors for which are:  “(i) the length and breadth of the required mental leap [to arrive at the characteristics of the relevant goods or services], (ii) the directness of the association between the mark to some characteristic of the product, and (iii) whether or not the link between the mark and the nature of the product is immediate” (citation omitted).  Next the court discussed the “less frequently-used test, known as the ‘competitors’ need test,’” which “asks whether ‘the message conveyed by the mark about the goods or services is so direct and clear that competing sellers would be likely to need to use the term in describing their goods in advertising and promotion’” (citation omitted).

The court noted that “[a]s is the case with INTELLIGENT QUARTZ, two or more words may be combined to form what is referred to as a composite mark” and that “two or more words which are themselves descriptive may be combined to form a composite that is, as a whole, considered suggestive” (citation omitted).  Because Timex disclaimed QUARTZ in its application, the court focused solely on whether INTELLIGENT was descriptive when used in INTELLIGENT QUARTZ as a mark for watches.

The TTAB found that in the field of electronics INTELLIGENT has a particular meaning:  “equipped with a microprocessor or computer.”  Because INTELLIGENT modifies QUARTZ, the TTAB said, INTELLIGENT is descriptive, not suggestive and notwithstanding that it is part of a composite mark, when applied to a watch that “contains a quartz component controlled by a computer chip.”  To buttress its position, the TTAB relied partly on three Timex advertisements, claiming that they corroborated the TTAB’s factual finding that INTELLIGENT QUARTZ watches contain such components.

But the court found a significant flaw in the TTAB’s logic.  The “three referenced advertisements contain no such representation,” the court said, “[n]or is this surprising, given that it is not the case that a computer chip controls the quartz crystal.”  The court continued, “[I]ndeed, there is no evidence in the administrative record that the quartz component in a Timex INTELLIGENT QUARTZ watch functions any differently from the quartz component in any other timekeeping device; viz., that the quartz crystal oscillates to provide a time base for the device.”  In fact, the court said, there is “no evidence, much less substantial evidence, in the administrative record to support the proposition that the quartz components in Timex INTELLIGENT QUARTZ watches are controlled by computer chips” (emphasis in original).

After finding that the administrative record had not supported the TTAB’s decision, the court considered de novo the additional evidence that the parties had submitted, evaluating it under both the imagination test and the competitors’ needs test.  The court held that under either test the additional evidence did not compel the conclusion that INTELLIGENCE QUARTZ is descriptive rather than suggestive.  Accordingly, the court granted Timex’s motion for summary judgment that its mark is registerable.

TTAB Finds Brand Name “The Slants” Disparaging

Timothy J. Lockhart

As appeared in December 1, 2013, INTA Bulletin

Finding the mark THE SLANTS to be disparaging under Section 2(a) of the Trademark Act, the Trademark Trial and Appeal Board (TTAB or Board) affirmed the refusal to register the mark for “entertainment in the nature of live performances by a musical band.” In re Simon Shiao Tam, Serial No. 85472044 (T.T.A.B. Sept. 26, 2013) (precedential). The TTAB based its decision largely on evidence that the applicant intended for the mark THE SLANTS to be associated with its derogatory slang meaning of persons of Asian descent.

The Board applied the two-part test for disparagement laid out in In re Lebanese Arak Corp., 94 U.S.P.Q.2d 1215, 1217 (T.T.A.B. 2010), and other cases:

1. What is the likely meaning of the matter in question, taking into account not only dictionary definitions but also the relationship of the matter to the other elements in the mark, the nature of the goods or services, and the manner in which the mark is used in the marketplace in connection with the goods or services; and

2. If that meaning is found to refer to identifiable persons, institutions, beliefs or national symbols, whether that meaning may be disparaging to a substantial composite of the referenced group.

The TTAB noted the considerable evidence provided by the examining attorney to show that “slants” is derogatory slang for persons with “slanted” eyes, that is, eyes featuring the epicanthic fold of the eyelids common to persons of East Asian descent. The Board also noted that evidence of record, including the illustration below from the applicant’s web page https://myspace.com/theslants, made clear the association between the applied-for mark and persons of Asian descent.

The applicant, himself an Asian-American, argued that he and his band members “want to take on these stereotypes that people have about us, like the slanted eyes, and own them. We’re very proud of being Asian—we’re not going to hide that fact. The reaction from the Asian community has been positive.” The applicant also argued that the examining attorney had refused the application because of the applicant’s race and his past use of the mark.

The TTAB acknowledged the applicant’s desire to “wrest ‘ownership’ of the term from those who might use it with the intent to disparage” but said that fact did not mean that all Asians would share the applicant’s view. Noting that Section 2(a) focuses on the nature of the mark, not of the applicant, the Board disagreed with the applicant’s claim that because of his race the examiner had focused on the asserted injury to the applicant, not to Asians as a group. The TTAB also disagreed with the applicant’s contention that his past use of THE SLANTS was “not within the four corners of the application,” ruling that “all evidence from [the mark’s date of first use] until the present”—the foregoing illustration, for example—was relevant to the disparagement issue.

Having determined the likely meaning of the term THE SLANTS in the context of the applicant’s use of his mark, the TTAB considered whether the mark was disparaging to a substantial composite of the referenced group. It found that, despite the applicant’s “good intentions,” his mark would be objectionable to many Asians and therefore was barred from registration under Section 2(a). The TTAB noted that its affirmation of the refusal to register did not raise a First Amendment issue; the applicant was still free to use the mark on an unregistered basis.

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