In a decision surprising absolutely nobody, on Monday the Supreme Court ruled that the U.S. Patent and Trademark Office (USPTO) could not refuse to register trademarks even if they are  “immoral or scandalous.”  The trademark at issue involved the use of the mark “FUCT [F-U-C-T]” for clothing and merchandise.

The Court held that the First Amendment right to free speech trumps Section 1052(a) of Lanham Act (Section 2(a)), which prohibits the use of “immoral, deceptive, or scandalous matter; or matter which may disparage….”

The Slants, the Washington Redskins and Free Speech vs. Disparaging Trademarks

The Court’s recent decision was merely the final domino to topple in the domino chain reaction that started back in 2010 when Simon Shiao Tam, the lead singer for an Asian rock band attempted to register “The Slants” as the name of the band.  The USPTO rejected The Slants’ application, finding it was disparaging to people of Asian descent.  Tam appealed, and the Federal Circuit Court ultimately held that the USPTO’s refusal to register the trademark violated Tam’s First Amendment right to free speech. The Supreme Court affirmed the Federal Circuit Court’s decision, holding that the disparagement clause of  Section 2(a) “violates the Free Speech Clause of the First Amendment.”

The Supreme Court’s Tam decision effectively rescued the Washington Redskins’ trademarks, which the USPTO was in the process of cancelling as disparaging to Native Americans.

The FUCT Trademark, and the Final Domino

The Slants and Washington Redskins’ trademarks addressed Section 2(a)’s prohibition of disparaging trademarks, but the FUCT trademark attacked Section 2(a)’s prohibition of “immoral or scandalous matter….”  When Erik Brunetti sought to register the mark FUCT for his clothing brand, the USPTO refused to register the mark, finding that “‘FUCT’ is the past tense of the verb ‘fuck,’ a vulgar word, and is therefore scandalous.”  Brunetti appealed, the Federal Circuit agreed that the mark FUCT is vulgar, but followed the Supreme Court’s Slants decision, holding that “the bar in Section 2(a) against immoral or scandalous marks is unconstitutional because it violates the First Amendment.”

Justice Kagan, writing for a 6-3 majority, held that “the Lanham Act’s prohibition of ‘immoral [ ] or scandalous’ trademarks violates the First Amendment.”  The Court noted that historically the USPTO would refuse to register a mark if the mark was “shocking to the sense of truth, decency, or propriety” or “giving offense to the conscience or moral feeling.”  The Court noted and did not disagree with the USPTO’s conclusion that the FUCT mark “flunked the test” and was “a total vulgar.”  However,  Brunetti brought a facial challenge, basically conceding that his mark was vulgar but arguing that the “immoral or scandalous” prohibition violated his First Amendment right to free speech.  The Supreme Court agreed that Section 2(a)’s prohibition of immoral and scandalous marks is unconstitutional.

As I wrote last year, the Court’s decision is likely to spur a race to the bottom, with certain businesses seeking to gain attention and market share via shocking, vulgar and/or scandalous trademarks from the USPTO.

On August 15, 2018, plaintiffs filed a putative class action on behalf of advertisers who get less than they pay for when Facebook allegedly overstates its user numbers.

Facebook provides its advertisers with an approximate “Potential Reach,” an “estimation of how many people are in an ad set’s target audience.”  The lawsuit alleges that Facebook fudges the numbers.

The complaint alleges that the “purported Potential Reach among the key 18-34 year-old demographic in every state exceeds the actual population of 18-34 year olds.”  The lawsuit further alleges that Facebook also vastly overstates the number of total users.  For example, the lawsuit alleges that “Facebook asserted its Potential Reach was approximately 4 times (400%) higher than the number of real 18-34 year-olds with Facebook accounts in Chicago.”

Plaintiff Danielle Singer owns an online business that sells aromatherapy fashionwear and accessories, including scarfs, jewelry and essential oils.  She spent more than $14,000 on Facebook ads.  Her suit asserts claims on behalf of any person or entity who advertised on Facebook.com from January 1, 2013 to the present.

The complaint quotes three former Facebook employees (Confidential Witnesses 1-3) who allege that Facebook “did not give a sh—“ about the accuracy of its actual numbers, that it is only concerned that “advertising revenue not be negatively affected,” and that it had no interest in “stopping duplicate or fake accounts in calculating Potential Reach.”

The lawsuit admits Facebook’s “Potential Reach” includes a disclaimer that:

Estimates are based on the placements and targeted criteria you select and include factors like Facebook user behaviors, user demographics and location data.  They’re designed to estimate how many people in a given area could see an ad a business might run.  They’re not designed to match population or census estimates.  Numbers may vary due to performance reasons. (Emphasis in Pleading).

Citing data from the Pew Research Center, the plaintiff alleges that even this disclaimer is false, since Facebook claims to be estimating how many people “could see an ad,” but there simply aren’t that many people, much less that many Facebook users.

The lawsuit, filed in Federal Court in the Northern District of California, alleges Facebook violated California’s Unfair Competition Law and quasi contract claims, seeking restitution or disgorgement of profit.

It will be interesting to see what happens next;  whether: (a) this lawsuit quietly vanishes, with Facebook and Plaintiff/Plaintiff’s counsel reaching quick confidential resolution; (b) Facebook changes its posting regarding its Potential Reach, and/or (c) Facebook stands tall and defends its Potential Reach.

It was only a matter of time.

THE “GOOD OLD DAYS” BEFORE DISPARAGING, VULGAR AND SCANDALOUS TRADEMARKS

For seventy years the United States Patent and Trademark Office (USPTO) refused to register marks that consisted of “immoral, deceptive, or scandalous matter; or matter which may disparage…..” citing § 2(a) of the Lanham Act.

Last June the Supreme Court struck down section 2(a)’s prohibition of disparaging marks and the other shoe just dropped when the Federal Circuit struck down its prohibition of vulgar, immoral or scandalous marks, allowing someone to register the mark FUCT.

The Slants Crush § 2(a)’s Prohibition of Disparaging Marks 

In 2010, Simon Shiao Tam, lead singer of the Oregon based Asian American rock band, sought to disarm the “toxic language and symbols” associated with the term “slants” by registering the mark “THE SLANTS” for the band.  The USPTO found the term disparaging to people of Asian descent and refused to register the mark under § 2(a).  Tam appealed, the Trademark Trial and Appeal (TTTBA) affirmed, Tam appealed, the Federal District Court initially affirmed the TTTBA’s decision, but later decided on its own to grant en banc review and reversed, finding that § 2(a) violated the First Amendment.  The USPTO still refused to register the mark and the Supreme Court granted certiorari.  In June 2017, the Supreme Court affirmed the Federal Circuit Court, holding that the disparagement clause of § 2(a) “violates the Free Speech Clause of the First Amendment.”

The Slants decision effectively rescued the Washington Redskins’ trademarks.  In 2014, the TTTBA decided to cancel the team’s registered trademarks, finding the term “Redskins” disparaging.  The team appealed to District Court, which affirmed the TTTBA’s decision, the team appealed to the Fourth Circuit and while the matter was pending, the Supreme Court issued its Slants decision.  Early this year the Fourth Circuit  reversed and remanded the district court, effectively ordering that the team’s marks be reinstated.

The Federal Circuit Orders USPTO to Register FUCT Mark, Striking Down Section 2(a)’s Prohibition of Vulgar, Immoral and Scandalous Marks 

In 2011, Erik Brunetti sought to register the mark FUCT for his clothing brand. The USPTO refused to register the mark, finding that “ ‘FUCT’ is the past tense of the verb ‘fuck,’ a vulgar word, and is therefore scandalous.”  Brunetti appealed to the TTAB.  The TTAB noted that Brunetti “used the mark in the context of ‘strong, and often explicit, sexual imagery that objectifies women and offers degrading examples of extreme misogyny’” and held the mark was “vulgar and therefore un registerable under section 2(a) of the Lanham Act.”

Brunettti appealed the TTAB decision to the Federal Circuit, which heard the appeal after the Supreme Court issued its Slants decision. In a ruling that rivals a South Park episode for the number of swear words, the Federal Circuit agreed with the TTAB that the mark FUCT is vulgar, but followed the Supreme Court’s Slants decision, holding that “the bar in § 2(a) against immoral or scandalous marks is unconstitutional because it violates the First Amendment.”   The Court rejected the USPTO’s argument, similar to its argument in the Slants case, that trademark registration is a government subsidiary, which allows the government some leeway in regulating speech.  The Court noted that “[t]here are countless songs with vulgar lyrics, blasphemous images, scandalous books and paintings, all of which are protectable under federal [copyright] law” and reversed the TTAB’s holding that the mark FUCT “is unregisterable under section 2(a).”

What’s Next for Vulgar and Scandalous Trademarks?

We are likely to see a race to the bottom. Much like shock jocks Howard Stern and Don Imus seek to increase market share with outlandish speech, some business owners are likely to see some value in garnering attention via shocking, vulgar and/or scandalous trademarks, and the USPTO will have no choice but to register those marks.

Since 1946, when the Lanham Act was enacted, the United States Patent and Trademark Office (USPTO) has denied registration of any trademark that “[c]onsists of … matter which may disparage [any] persons living or dead….” Today, the Supreme Court struck down this “disparagement clause,” finding that it violated the First Amendment.

Oregon Rock Band Blazes New Law

For seventy years, the USPTO relied on the disparagement clause to reject trademarks that were racially or ethnically offensive, but The Slants, a rock band from Portland, Oregon changed the law. The Slants’ lead singer, Simon Tam, sought to trademark the band’s name, seeking to reclaim the term by their “deliberate disarmament of toxic language and symbols.” (See The Slants’ Press Release on Tam Decision.)

The USPTO refused to register “The Slants,” citing the disparagement clause. Tam appealed to the Federal Circuit, which held that Section 2(a) was unconstitutional restraint of free speech under the First Amendment.

The USPTO Strikes Out

The Supreme Court granted certiorari, and today, Justice Alito issued the Court’s opinion holding that the disparagement clause “violates the Free Speech Clause of the First Amendment.”

The Court rejected three USPTO arguments: “(1) that trademarks are government speech, not private speech, (2) that trademarks are a form of government subsidy, and (3) that the constitutionality of the disparagement clause should be tested under a new ‘government-program’ doctrine.”

Because “[t]he Federal Government does not dream up these marks, and it does not edit marks submitted for registration” “it is far-fetched to suggest that the content of a registered mark is government speech.”

Next the Court rejected the USPTO’s argument regarding the “constitutionality of governmental programs that subsidize speech expressing a particular viewpoint.” The Court distinguished those cases because they “involved cash subsidies or their equivalent.”

The Court rejected the USPTO’s position that the trademark registration program “creates a limited public forum for private speech” because even in such cases “viewpoint discrimination is forbidden.”

Finally, the Court found that the disparagement clause fails even the relaxed First Amendment scrutiny applied to commercial speech. Citing the government interests of “encouraging racial tolerance” and “protecting the orderly flow of commerce,” the Court found that disparagement clause was not narrowly drawn and was therefore unconstitutional.

But What About the Washington Redskins?

The USPTO had deregistered the Washington Redskins’ trademark based on the disparagement clause. The team had appealed the USPTO’s decision, and the appeal is pending in the 4^th Circuit.  Today’s Tam decision will knock the legs out from the USPTO’s decision and should pave the way for the team to reclaim its trademark.

What About Section 2(a)’S Other Prohibitions?

Section 2(a) also precludes registration of any trademark that “consists or comprises immoral, deceptive or scandalous matter….” Presumably, the Court’s Tam decision will also preclude the USPTO from denying registration to marks that are immoral or scandalous. However, one would assume the prohibition on deceptive marks would survive, since it is consistent with other provisions in the Lanham Act precluding “deceptively misdescriptive” marks and marks that are “likely …to deceive.”

We previously wrote about the copyright battle between two of the largest cheerleader uniform manufacturers. Plaintiff Varsity Brand, Inc. claimed that Star Athletica, LLC had infringed its copyrights by manufacturing cheerleader uniforms with similar design elements, like stripes, chevrons, zigzags and color blocks. The Supreme Court granted certiorari to resolve at least nine conflicting tests for “separability”: the test as to whether the decorative elements can be “identified separately from, and …existing independently of, the utilitarian aspects of the article.”  (17 U.S.C. § 101).

Justice Thomas, writing for the 6-2 majority established a two-part test:

[T]he artistic feature of the design of a useful article is eligible for copyright protection if the feature (1) can be perceived as a two-or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic or sculptural work either on its own or in some other medium if imagined separately from the useful article.

Relying entirely on the text of The Copyright Act, the Court concluded that “if the arrangements of colors, shapes, stripes and chevrons on the surface of the cheerleading uniforms were separated from the uniform and applied to another medium-for example, on a painter’s canvas-they would qualify as ‘two-dimensional … works of …art’ §101.”

The Court upheld the 6th Circuit’s decision that design elements, like those on Varsity’s cheerleader uniforms, were subject to copyright protection but remanded the case for further determination as to whether Varsity’s surface decorations “are sufficiently original to qualify for copyright protection.”  Fn 1.

The Court’s decision may have wide implications in the clothing and furniture industries, where design elements are often intertwined with the utilitarian elements of the products.

Today the Supreme Court found an ambiguity in the Patent Act, reversing Apple’s $399 million infringement award against Samsung.

In the ongoing international litigation war between Apple and Samsung,  Apple prevailed at the trial court level on a design patent infringement case regarding Apple’s rounded corners and user interfaces. Apple was awarded $399 million, representing Samsung’s total profits from sales of the infringing smartphones. Samsung appealed that Apple was only entitled to the profits based on the infringing aspects (the corners and interfaces) not the profits from the entire phone. The Federal Circuit disagreed, affirming the Apple award. In its appeal to the Supreme Court, Samsung ridiculed the lower court’s ruling, arguing that under the Federal Circuit’s logic “profits on an entire car – or even an eighteen-wheel tractor trailer – must be awarded based on an undetachable infringing cup-holder.”

The Supreme Court Decision

Justice Sotomayor, writing for a unanimous court, agreed with Samsung, finding that “the term ‘article of manufacture’ [in Section 289 of the Patent Act] is broad enough to embrace both a product sold to a consumer and a component of that product.” The Court acknowledged that the parties asked “us go further and resolve whether, for each of the design patents at issue here, the relevant article of manufacture is the smartphone, or a particular smartphone component.” But the Court punted: “Doing so would require us to set out a test for identifying the relevant article of manufacture at the first step of the §289 damages inquiry and to parse the record to apply the test in this case.” Instead, the Court remanded the case back to the Federal Circuit.

What’s Next?

So the Federal Circuit is tasked with determining (A) the proper test for whether, with regards to Samsung’s smartphones, the “article of manufacture” are the infringing components or the entire smartphone, and then (B) to calculate the proper amount of damages associated with the article of manufacture.

Patent Infringement Litigants (Their Attorneys and Damages Experts) Must Hold Their Breath

Like gamblers on a sporting event over which they have no control, parties litigating patent infringement actions can only hold their collective breath and wait to see which test the Federal Circuit devises and whether the test is pro-plaintiff or defendant. Undoubtedly, the losing party (Apple or Samsung) will argue the Federal Circuit got it wrong, and ask the Supreme Court for a do-over.

Hard Candy, LLC (“Hard Candy”) sued The Procter & Gamble Company (“P&G”), parent company to CoverGirl in the federal district court of Florida for 1) federal trademark infringement, 2) federal unfair competition, 3) common law trademark infringement, and 4) common law unfair competition over the alleged infringing design of Katy Perry’s makeup line with CoverGirl. Hard Candy alleges that P&G copied Hard Candy’s registered design marks in a confusingly similar manner.

Although Hard Candy did not specifically state what aspect of the Katy Perry CoverGirl makeup line infringes upon its design marks, it appears that Hard Candy is claiming that the logos/marks (capitalized words in black before and after a black heart shape) are similar in their overall design. See examples below.

Hard Candy cited the following three (3) registered design marks in support of its complaint against P&G:

In support of its argument that the Katy Perry CoverGirl makeup line is likely to cause confusion among consumers, Hard Candy alleges that they sell the same or similar products (cosmetics) and offer these products in the same channel of trade at similar price points to similar target customers. Hard Candy may also argue that the black heart shape design is the dominant feature of the marks and similar (if not identical) in both marks.

While these factors are strong ammunition against Katy Perry/CoverGirl, it may be difficult for Hard Candy to argue that the overall commercial impressions are similar. For instance, the font and words before and after the black heart shape design look and sound different.  As a self-proclaimed make-up lover, I personally would not be confused by the design marks, especially if the CoverGirl logo is used in connection with the Katy Perry name and the black heart shape design. Both Katy Perry and CoverGirl have established their own brand for years and also have successfully campaigned together to promote this makeup line, which further differentiates themselves from other makeup lines. Nonetheless, it will be interesting as to how each paints the other.

If, like me, you’re a fan of PBS and its soothing, soft-focus, food-related shows (ahem, Great British Bake-off), you were probably devastated when you heard that longtime host Chris Kimball, was leaving America’s Test Kitchen. If you’ve never seen it, the premise of America’s Test Kitchen (“ATK”) is that a “test kitchen” comprised of several cooks experiments with and tweaks recipes for everything from roast chicken to chocolate cake to figure out which combination of ingredients and cooking methods will achieve the best outcome – the flakiest crust, the most flavorful stew, the perfect chewy chocolate chip cookie. These recipes are then demonstrated to viewers on the show. Kimball was the bespectacled, bow-tied host that brought his brand of quirky, nerdy humor to an otherwise straightforward cooking show. ATK also publishes print magazines, Cook’s Illustrated and Cook’s Country, and has an online cooking school.

Around this time last year, Kimball announced that his employment with ATK was ending, apparently on good terms. Earlier this year, Kimball started a new project called “Milk Street” in Boston, which involves…a television show, print magazine, and an online cooking school. Now it’s gotten ugly.

On October 31, America’s Test Kitchen Inc. sued Kimball and some of its other former employees for misappropriation of trade secrets, breach of fiduciary duty, and breach of contract, among other things. The lawsuit claims that Kimball “literally and conceptually ripped off America’s Test Kitchen” and had planned to start his own competing business using ATK’s confidential information and trade secrets while he was still employed with ATK. The complaint identifies several alleged similarities between ATK and Milk Street’s media content and design aesthetic, and accuses Kimball of stealing ATK’s employees, media contact lists, and magazine subscriber information, and usurping or interfering with ATK’s business opportunities with television and radio stations.

ATK filed its action in Massachusetts, which is one of two states that have not adopted the Uniform Trade Secrets Act. ATK did not file claims under the recently adopted federal Defense of Trade Secrets Act. To prevail on its trade secret claims, ATK will need to prove that the alleged trade secret information is not generally known, has independent economic value and ATK took reasonable steps to protect its secrecy. (See the 1972 Massachusetts case Jet Spray Cooler, Inc. V. Crampton.)

With regards to ATK’s allegations that Kimball breached his fiduciary duty, employees like Kimball are generally allowed to prepare to compete with their current employers, so long as they don’t actively compete by soliciting customers or fellow employees.

In many such actions, employers like ATK promptly seek temporary restraining orders or preliminary injunctions, seeking to prevent the former employee from using the alleged trade secrets. ATK’s failure to do so may indicate that it does not feel it has sufficient evidence, at least at this early stage, to obtain such extraordinary relief.

Kimball’s response to the complaint is due later this month.  I can’t wait to see what his attorneys cook up.

I previously wrote about a Supreme Court case pitting the United States Patent and Trademark Office (“USPTO”) and Section 2(a) of the Lanham Act against the First Amendment, the Federal Circuit, the Slants and, lurking in the wings, the Washington Redskins.

The USPTO filed its 92 page opening brief this week, repeating many of the same arguments rejected by the Federal Circuit.

Argument 1: Trademark Registration is a Privilege, Not a Right

The USPTO argues that “Section 1052(a) does not prohibit any speech but simply defines the criteria for participation in the government’s voluntary trademark program.” Citing the government’s right not to fund certain types of art or to disallow certain symbols on license plates, the USPTO argues “[t]he First Amendment does not require the federal government to assist those, who wish to sell products or services using racial slurs, religious insults or other disparaging marks.”

Argument 2: Banning Disparaging Marks Does Not Restrict Speech

The USPTO describes the history of the Lanham Act and the common-law rights a trademark owner holds even if he or she lacks federal trademark registration. The USPTO argues that “Section 1052(a) limits the marks that may be federally registered, but it does not restrict the mark holder’s ability to use its mark or to engage in any other speech.”

Argument 3: Section 1052(a)’s Ban On Disparaging Marks is Consistent with Other Constitutional Restrictions

Citing the government’s right not to participate where “government assistance will closely associate the government with offensive terminology,” the USPTO analogized to artists who have been denied federal arts funding, or proponents of specialty state license plates including the confederate flag.  “Registration of THE SLANTS would cause the mark to be published on the Principal Register; would cause a certificate  for the mark to be issued ‘in the name of the United States’ (which may be transmitted to foreign countries); and would entitle respondent to use the ® symbol to convey to the public that the mark has official status.”

Where Did the Washington Redskins Go?

The Washington Redskins asked the Supreme Court to join The Slants in opposing the USPTO, but the Supreme Court refused. The team’s case before the Fourth Circuit is stayed pending the outcome of the USPTO-The Slants decision.

What’s Next

The Slants will be filing their brief, along with a likely flood of amicus curiae briefs on either side, and then the matter will be heard by eight justices, unless a ninth supreme court justice is confirmed before oral argument.

On Halloween, the highest court in the land heard oral argument on whether cheerleader uniform designs are subject to copyright protection. Varsity Brand, Inc. (“Varsity”), the country’s largest maker of cheerleader uniforms, sued Star Athletica, LLC (“Star”), a chief competitor, alleging Star’s uniforms use design elements that infringe Varsity’s copyrights.

The Supreme Court sought to reexamine the question previously posed and answered by the Sixth Circuit: “Are cheerleading uniforms truly cheerleading uniforms without stripes, chevrons, zigzags, and color blocks?”

The Blurry Line Between Art & Function

The test of whether a design element is art (and worthy of copyright protection) or function (and unworthy) is called “separability.” A “useful article” like a chair, dress or uniform cannot be copyrighted, and its component features or elements cannot be copyrighted unless capable of being “identified separately from, and … existing independently of, the utilitarian aspects of the article.” (17 U.S.C. § 101). For example, one couldn’t copyright the functional aspects of a bed with four legs, a mattress, a headboard, etc., but one could probably copyright the waterbed/aquarium design from the James Bond movie Diamonds are Forever.

10 Separability Tests are 9 Tests Too Many

In granting certiorari, the Supreme Court noted that “Circuit courts, the Copyright Office, and academics have proposed at least nine different tests to analyze this separability [concept]. The Sixth Circuit rejected them all and created a tenth. The first question is: What is the appropriate test to determine when a feature of a useful article is protectable under § 101 of the Copyright Act?”

Star’s Position — It’s Not a Cheerleader Uniform Without Designs

Star, supported with amicus briefs from consumer groups and costume hobbyists, argued that stripes, chevrons and zigzags are integral parts of a cheerleading uniform that serve core functional purpose of identifying the uniform as a cheerleader uniform and making cheerleaders appear taller and slimmer. The district court agreed with Star.

Varsity’s Position — Plain Vanilla Cheerleader Uniforms are Still Cheerleader Uniforms

Varsity, supported with amicus briefs from fashion designers, argued: (A) there are many design elements available, (B) Varsity owns the stripes, chevrons, zigzags and color blocks , and (C) “you can have a white cheerleading uniform worn by a cheerleader with the team name and team logo on it.” A split Sixth Circuit panel agreed with Varsity.

Wider Implications for the 3D Printing Industry

Major 3D printing companies filed amicus briefs  asking the Supreme Court to grant certiorari and provide “a single test for determining conceptual separability under copyright law” because  “the current circuit split surrounding conceptual separability is significant and chills innovation and creativity.”

Oral Argument at the Supreme Court

Justice Ginsburg appeared to back Varsity, describing the uniforms as “a two-dimensional artwork” and agreeing that “the pictorial graphic element is not part of the design of the cheerleader’s uniform. It’s superimposed on it.”

Chief Justice Roberts appeared to disagree: “The design on a lunchbox doesn’t make the lunchbox a lunchbox. It’s still a lunchbox. But the design on a cheerleader uniform is what makes it a cheerleading uniform, as opposed to a plain dress.”

Reading the Tea Leaves

There are dozens of ways to read the tea leaves. The Supreme Court granted certiorari, which could either mean it disagreed with the Sixth Circuit’s decision or that it wanted to clean up the messy situation with 10 tests for separability.

Maybe it’s just wishful thinking, but I’m hoping the Court rules for Star. Otherwise, Varsity will hold a monopoly on the design elements, and we will see  a lot of cheerleaders dressed like tennis players from the 1950’s.