08/20/14

IN THIS ISSUE
Trademark Board Cancels "Redskins" Registrations
U.S. Customs voluntary disclosure is no sham

United States:  TTAB Easily Finds Acquired Distinctiveness for EZ
 

Trademark Board Cancels "Redskins" Registrations

Timothy J. Lockhart

In the latest battle in a long-running war involving trademarks used by the Washington Redskins football team, the U.S. Trademark Trial and Appeal Board (TTAB) canceled six registrations for the team’s REDSKINS marks.  Amanda Blackhorse, Marcus Briggs-Cloud, Philip Gover, Jillian Pappan, & Courtney Tsotigh v. Pro-Football, Inc., 2014 WL 2757516, 111 U.S.P.Q.2d 1080 (T.T.A.B. 2014) [precedential].  In its 2-1 decision the TTAB found that the REDSKINS marks are disparaging to Native Americans under Section 2(a) of the Trademark Act, 15 U.SC. § 1052(a).

This decision resulted from the second petition to cancel the registrations.  In 1992 Suzan Harjo and six other Native Americans filed the first petition for cancellation.  After years of litigation the TTAB ruled that the REDSKINS marks were disparaging and ordered the registrations canceled.  On appeal the U.S. District Court for the District of Columbia reversed the TTAB’s decision, holding that the finding of disparagement was not supported by substantial evidence and that the doctrine of laches, or unreasonable delay, precluded consideration of the case.

On further appeal the U.S. Court of Appeals for the D.C. Circuit, affirming the lower court’s ruling, stated that the Native Americans argued “only that the District Court improperly assessed evidence of prejudice in applying laches to the facts at issue” and limited its decision “to that question.”  Pro-Football, Inc. v. Harjo, 565 F.3d 880, 882 (D.C. Cir. 2009).  Thus, the D.C. Circuit resolved the case solely on the issue of laches, not addressing the TTAB’s finding of disparagement on the merits.

While the Harjo litigation was pending, six new plaintiffs filed a second petition to cancel the same REDSKINS registrations.  In March 2011 the parties to the new litigation stipulated that essentially the entire Harjo record could be entered into evidence through a Notice of Reliance.

In its recent decision the TTAB reiterated that the test for disparagement is a two-step inquiry:  first, what is the meaning of REDSKINS as it appears in the marks and are those marks used in connection with the goods and services identified in the registrations; and second, is the meaning of the marks one that may disparage Native Americans?  The TTAB said that both questions were to be answered as of the various registration dates and that with respect to the second question, the TTAB looked not to the American public as a whole but rather to the views of Native Americans.

The TTAB held that REDSKINS clearly refers to Native Americans.  Noting the Native American imagery in two of the marks, on the team’s uniforms, and in its press materials, the TTAB also held that REDSKINS makes that reference to Native Americans as used with the goods and services listed in the registrations.

In finding REDSKINS to be derogatory the TTAB relied on factual evidence consisting of linguistic experts’ reports, dictionary definitions, and the use of the word in various media such as movies, novels, histories, and news reports.  The TTAB also relied on a resolution passed by the Executive Council of the National Congress of American Indians (NCAI) that claimed “the term REDSKINS . . . has always been and continues to be a pejorative, derogatory, denigrating, offensive, scandalous, contemptuous, disreputable, disparaging and racist designation” for Native Americans.  Although Pro-Football objected to the resolution as irrelevant because it was not passed until 1993, the TTAB overruled the objection, saying the resolution nevertheless represented the views of Native Americans when the REDSKINS marks were registered.

In addition, the TTAB relied on depositions of officials of the NCAI and the Indian Legal Information Development Service and on over 20 letters of protest from individual Native Americans or Native American organizations.  (The TTAB did not rely on the over 150 letters of protest received from non-Native Americans.)

Pro-Football submitted evidence that REDSKINS is not derogatory, including statements by Native Americans and evidence that some Native Americans have used “redskins” in connection with their own sports teams.  The TTAB considered this evidence, but the TTAB’s discussion of it is much shorter than its lengthy analysis of the opposing evidence.

The TTAB then reached 39 findings of fact, including that “[b]eginning in 1966 and continuing to 1990, usage labels in dictionaries indicating the term REDSKIN to be offensive, disparaging, contemptuous or not preferred, first appear and then grow in number.”  The TTAB also found that “[f]rom the mid-1960’s to 1996, the word ‘redskin(s)’ has dropped out of written and most spoken language as a reference to Native Americans” and that “the use of the word redskin(s) disappears because it is increasingly recognized that the term is offensive and disparaging during the relevant time period as Native Americans raise awareness about the offensive nature of the term redskin(s).”  Accordingly, the TTAB held that because “a substantial composite of Native Americans found the term REDSKINS to be disparaging in connection with [Pro-Football’s] services during the relevant time frame of 1967-1990,” the six registrations at issue should be canceled.

The TTAB also held that Pro-Football’s laches defense was not applicable.  The TTAB said that “laches does not apply to a disparagement claim where the disparagement pertains to a group of which the individual plaintiff or plaintiffs simply comprise one or more members.”  Because “plaintiffs are created every day as individual members of the referenced group mature to age 18,” the TTAB said, “the laches defense will never yield the registrant of a racial slur the repose it seeks.”  The TTAB added that five of the petitioners had turned 18 while the Harjo litigation was still pending and brought the instant cancellation proceeding soon enough thereafter that their delay was “minimal” and not “sufficient to support laches.”

The dissenting TTAB judge said he disagreed with the decision “because the dictionary evidence relied upon by the majority is inconclusive and there is no reliable evidence to corroborate the membership of National Council of American Indians.”  He stressed that the case was not about whether REDSKINS is disparaging to Native Americans today but rather, based on the evidence of record, whether “the term ‘redskins’ was disparaging to a substantial composite of Native Americans at the time each of the challenged registrations issued.”

The judge noted that the petitioners had “made the decision to simply re-use the trial record from the previous Harjo litigation, without substantial augmentation,” and that the district court had previously found that evidence insufficient for cancellation.  Accordingly, he said that “the evidence before the Board in this case remains insufficient as well.”

His dissent, the judge said, was not meant to suggest “that the term ‘redskins’ was not disparaging in 1967, 1974, 1978, and 1990 (the registration dates at issue).”  Rather, he said, his conclusion was that “the evidence petitioners put forth fails to show that it was.”

Since the TTAB issued its decision a group of Redskins supporters has posted on the Internet a “Redskins Facts” site that takes issue with the TTAB’s factual findings and includes supporting statements from Native Americans.  (The Washington Post has questioned some of the purported facts on the site.)  Pro-Football has stressed that the TTAB decision does not prevent the team from using the REDSKINS marks and has announced plans to appeal the decision.

U.S. Customs Voluntary Disclosure is No Sham

Leonard L. Fleisig

As appeared in July 7, 2014, issue of Inside Business

On April 1, the company that imports "Sham Wow" cloths filed a complaint against its U.S. Customs law firm alleging malpractice with regard to the advice it received on at least 64 import shipments.

Specifically, the importer claims that despite apparent concern about potential Customs violations, it did not receive any advice on the benefits of filing a voluntary prior disclosure with Customs.

Consequently, it alleges that it was hit with fines and penalties in excess of $700,000 and had to spend at least another $100,000 with another Customs law firm to reduce the penalty.

The claim alleges that if the company had been advised to make a voluntary disclosure it would have saved it a long and painful investigation. As of this writing the defendants have not filed their answer responding to the allegations.

No matter the merits of the case itself, the lawsuit provides a valuable object lesson for the entire import community: When in doubt about possible violations of Customs regulations, a voluntary prior disclosure is an extremely valuable tool that every importer and Customs broker should have on the top of its Customs compliance tool-kit. Customs brokers, Customs attorneys and importers should pay heed. Here's why.

Importing goods through Customs can be an exceedingly complex process. Issues with regard to the proper classification, valuation and country of origin of goods entering the United States plague even the most sophisticated large-volume importer.

Even those with full-time compliance personnel and complex compliance manuals make mistakes in navigating the treacherous shoals of Customs regulations. The $700,000 penalty here is but one example of the exposure a company can face in the event of Customs violations.

A properly crafted voluntary disclosure can dramatically reduce a company's financial exposure to Customs penalties. Customs regulations are very clear. In the event a broker or importer uncovers a mistake or violation, a valid disclosure will reduce dramatically the level of fines that might flow from an enforcement proceeding initiated by Customs and might even result in no penalty action altogether.

The regulations, found at 19 CFR 162.74, provide clear and concise guidelines for filing voluntary prior disclosures.

The benefits are apparent.

First, a valid disclosure will dramatically reduce a company's exposure to fines and penalties. Customs can seek penalties in an amount up to eight times the claimed duty loss (e.g., a $100,000 shortfall in duty can result in a fine of $800,000).

The financial benefits are obvious.

Second, being proactive in dealings with Customs allows the importer to frame the tone of everything that follows.

In the event of an enforcement proceeding, an importer starts out on the defensive trying to establish that it was not negligent. In a disclosure proceeding, the importer is presumed to be acting with reasonable care and due diligence. That's a much better playing field to be on.

It is always better to negotiate up from zero than down from $800,000. Further, Customs requires that importers exercise reasonable care in dealings with Customs.

Not surprisingly, disclosures are considered evidence of reasonable care.

A disclosure must meet three criteria to be valid.

1. It has to be filed before the commencement of a Customs investigation or before the importer was aware of an investigation.

A "late" disclosure in response to a penalty notice will be disregarded.

2. Before making the disclosure companies should ensure they are disclosing every possible violation.

The disclosure will not provide any benefit for an undisclosed violation that is uncovered subsequent to the initial disclosure.

3. The disclosure should state with specificity what remedial measure the company plans to take subsequent to uncovering the violation.

If for example, a company does not already have a Customs compliance plan in place, a disclosure is a very good time to advise Customs that one will be implemented immediately.

A properly framed voluntary prior disclosure can save a company thousands of dollars.

It also shows Customs that the company takes compliance seriously and should help facilitate the importer's ongoing relationship with Customs.

Getting the benefit of the doubt when dealing with Customs is a goal for every importer.


United States:  TTAB Easily Finds Acquired Distinctiveness for EZ

Timothy J. Lockhart

As appeared in August 15, 2014, issue of the INTA Bulletin

The Trademark Trial and Appeal Board (TTAB or Board) found that the presence of the term EZ in two prior registrations entitled the marks’ owner to a claim, under Section 2(f) of the Trademark Act, 15 U.S.C. § 1052(f), that EZ had acquired distinctiveness in a different mark. In re DEQ Systèmes Corp., Serial No. 85315739 (T.T.A.B. June 4, 2014) (not precedential).



DEQ Systèmes Corp. (DEQ) applied to register the mark NO COMMISSION EZ PAI GOW & Design, for “Card games; Card games for use in casinos; Card game accessories, namely, tables specially adapted for casino games; Gaming tables; Gaming table felt layouts for betting and instructions for playing card games, sold as a unit” in Class 28. DEQ disclaimed the exclusive right to use NO COMMISSION and PAI GOW apart from the mark as a whole; however, after it declined to comply with the examining attorney’s requirement to disclaim EZ, the examining attorney refused registration. DEQ appealed.

The TTAB first considered whether DEQ’s claim of acquired distinctiveness with respect to EZ was appropriate. The Board cited the Trademark Manual of Examining Procedure (TMEP) for the proposition that “the element that is the subject of the §2(f) claim must present a separate and distinct commercial impression apart from the other elements of the mark.” TMEP § 1212.02(f)(ii) (April 2014). It found that “the rendition of the term ‘EZ’ in Anglicized Chinese style characters, prominently displayed in the center of [the] [a]pplicant’s composite mark, presents a ‘separate and distinct commercial impression’ apart from the remaining literal and design elements.”

Next, the TTAB considered whether DEQ could rely on its registrations for EZ BACCARAT EZ & Design and EZ BACCARAT in standard character format, which cover goods similar to those in the application, to claim that EZ had acquired distinctiveness. The Board again cited the TMEP: “When an applicant is claiming §2(f) in part as to only a portion of its mark, the mark in the claimed prior registration must be the same as or the legal equivalent of the portion of the mark for which the applicant is claiming acquired distinctiveness.” TMEP § 1212.02(f)(ii)(B). One mark is the legal equivalent of another if “it creates the same…commercial impression such that…consumer[s] would consider them the same mark” (quoting In re Dial-A-Mattress Operating Corp., 240 F.3d 1341, 1347, 57 U.S.P.Q.2d 1807, 1812 (Fed. Cir. 2001)).

The TTAB noted that in obtaining its two cited registrations DEQ had neither claimed acquired distinctiveness nor disclaimed EZ (i.e., EZ was inherently distinctive in both registrations). The Board found that the standard character EZ in the prior registrations of DEQ was the legal equivalent of the stylized EZ in the application and conveyed the same commercial impression.

Thus, the TTAB concluded that “the distinctiveness of the term ‘EZ’ in [the] [a]pplicant’s previously registered marks for [the] same or similar goods transfers to the ‘EZ’ portion of the mark at issue in the instant application.” Accordingly, the Board reversed the refusal to register the mark.

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