Long Island Law Firm: Eryn Truong


My goal in creating this Intellectual Property (IP) Law blog is to serve as a source of information for anyone interested in Intellectual Property Law and to provide a few answers to commonly asked questions about intellectual property rights. For anyone looking for information on issues involving patents, trade secrets, trademarks, and copyright rights, as well as some of the most current court decisions in the legal field, you're in the right place. I want to provide some insight into the proper steps to take to protect your legal IP rights, though consulting with a competent, experienced attorney is essential if you have a specific questions.

Follow Up on Push for Federal Trade Secret Legislation
  (Posted Aug 22, 2014)

Earlier this year, a new bill was introduced in Congress seeking to add a federal civil cause of action for trade secret theft. With the most recent bill introduced by a bi-partisan coalition in the House, there appears to be momentum for the passage of federal trade secrets legislation this fall.

The proposed new legislation would permit a trade secret owner to bring a civil action in federal court for the theft or misappropriation of a trade secret. Currently, the Economic Espionage Act only authorizes federal actions by the Attorney General, not private parties, and plaintiffs are left to bring trade secret claims in state court.

Because companies conduct business across multiple states, there are inconsistencies and differences as to their interpretations of certain key issues across the state, such as the definition of a trade secret, what are reasonable measures to secure the secrecy, damages, and the statute of limitations. Further, although the Uniform Trade Secrets Act (UTSA) has been adopted by all states, except Massachusetts and New York, some courts have differing interpretations of the UTSA. In sum, a bill to provide uniform trade secret protection and federal remedies across the United States is needed.

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Redskins' Trademarks Canceled for Disparagement
  (Posted Jul 28, 2014)

On June 17, 2014, the Trademark Trial and Appeal Board (“TTAB”) of the U.S. Patent & Trademark Office (“USPTO”) canceled six trademark registrations of the Redskins football team as disparaging under Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a). Blackhorse v. Pro-Football, Inc., T.T.A.B., No. 92046185, 06/18/14.

Section 2(a) of the Lanham Act states that no trademark registration shall be refused unless it “[c]onsists of… matter which may disparage or falsely suggest a connection with… beliefs, or national symbols, or bring them into contempt, or disrepute.”

The 2-1 TTAB decision found that a substantial composite of Native Americans considered the term “Redskins” to be disparaging at the time the marks were registered.

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Direct Infringement Required for Inducement Claim
  (Posted Jun 23, 2014)

The Supreme Court recently reversed the Federal Circuit and unanimously held that a defendant is not liable for inducing infringement of a patented method unless a single actor performs all of the steps of the method.

In Akamai Technologies, Inc. v. Limelight Networks, Inc., the Federal Circuit had held that that an accused infringer can be held liable for inducement to infringe a claimed method if (1) the accused infringer knew of the patent, (2) the accused infringer induced performance of the steps of the method claimed in the patent, and (3) those steps were performed, even if the patent owner cannot prove direct infringement. Under the this holding, all the steps of a claimed method must be performed in order to find induced infringement, but it was not necessary to prove that all the steps were committed by a single entity. This decision overturned prior precedent that required proof of direct infringement by a single entity as an element of an inducement claim.

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New Bill May Change Nation's Trade Secret Laws
  (Posted May 27, 2014)

A new bill has been introduced in Congress seeking to add a federal civil cause of action for trade secret theft.

The "Defense of Trade Secrets Act of 2014" would permit a trade secret owner to bring a civil action for a violation of the Economic Espionage Act, which makes the theft or misappropriation of a trade secret a federal crime.

Unlike patents, copyrights, and trademarks, there is no federal civil cause of action for trade secret misappropriation. Today, trade secrets are protected only under state law, common law or contracts. However, with the increase in companies relying on trade secret protection and the international economy, companies are lobbying Congress to provide access to the federal courts to protect trade secrets and to place trade secret assets on the same playing field as patents, copyrights and trademarks.

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Preliminary Injunctions in Patent Cases
  (Posted Apr 27, 2014)

Preliminary injunctions are a powerful form of immediate relief, yet they are rarely obtained in patent cases. Although the standard for obtaining a preliminary injunction in a patent case is no different than other cases, several factors contribute to making a preliminary injunction in a patent case more difficult to obtain.

Generally, in order to obtain a preliminary injunction, a litigant must establish (i) likelihood of success on the merits of the underlying litigation; (ii) the existence of immediate and irreparable harm; (iii) the balance of hardships favors the litigant; and (iv) that the public interest is best served by granting the injunctive relief. This legal standard applies to patent cases and there are no patent-specific rules. However, establishing a likelihood of success on the merits of a patent infringement case requires a mini trial.

There is a two-step process to establishing infringement in a patent case. The court first determines the meaning of the disputed claim term and then it compares the accused device to the claims construed. Therefore, this requires a significant amount of work upfront for the district court to construe the claims in ruling on the motion for a preliminary judgment. Expert declarations are submitted and the court effectively conducts a “Markman” hearing at the start of the case.

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“Dumb Starbucks” – Is this Coffee Shop an Art Gallery?
  (Posted Feb 27, 2014)

A new coffee shop mocking Starbucks opened in Los Angeles in early February and quickly gained nationwide attention. The store looks identical to the typical Starbucks, but with the exception of the word “dumb” prefixed to the title and menu items.

Dumb Starbucks is not affiliated with Starbucks Corporation, and the company claims that their use of Starbucks’ trademark and logos is “fair use” because it is “making fun” of Starbucks.

The store’s FAQ sheet states the following:

Is this a Starbucks?
No. Dumb Starbucks is not affiliated in any way with Starbucks Corporation. We are simply using their name and logo for marketing purposes.

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Non-Disclosure Agreements – A Lesson to Be Learned
  (Posted Jan 18, 2014)

A non-disclosure agreement (NDA) is typically used between companies to protect confidential information during a potential transaction. Every NDA, however, is different. The specific terms and provisions in the NDA determine whether your trade secrets would be protected upon disclosure. Accordingly, each NDA should be tailored and specific to the transaction. A recent case decided by the Federal Circuit Court of Appeal demonstrates that special attention needs to be given to an NDA.

The Convolve v. Compaq and Seagate litigation involved a misappropriation of trade secret dispute between Convolve, the owner of certain intellectual property, and Compaq and Seagate. Although the dispute involved many different issues, of particular importance was the Federal Circuit’s holding that Convolve lost its trade secret status by failing to provide written follow-up memoranda as mandated by the NDA.

The particular NDA at issue stated that to trigger either party’s obligations, the disclosed information must be marked confidential at the time of disclosure or designated as confidential by written memorandum identifying the confidential information.

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A Word of Precaution with Use of Olympic Marks
  (Posted Dec 17, 2013)

With less than two months until the start of the 2014 Winter Olympic Games, it is important to keep in mind that any unauthorized commercial use of the Olympic trademarks, logos or symbols is prohibited and will be enforced vigorously by the U.S. Olympic Committee (USOC).

Federal law gives the USOC exclusive rights to the symbol of the five interlocking rings, the Olympic flame and torch, and to the words "Olympic," "Olympiad," "Team USA," and "Sochi 2014," among others. The statute is further extended to prohibit any advertising that tends to suggest a connection with the Olympics or the USOC. The USOC's rights, however, are limited to situations where these words or symbols are used (1) to offer goods or services for sale; or (2) to promote a theatrical exhibition, athletic performance, or competition.

In addition to the exclusive statutory rights, the USOC holds trademark rights to Olympic-related words and symbols. Section 43(a) of the Lanham Act prohibits the use of trademarks when they (1) are likely to deceive or create a false impression of affiliation or endorsement; or (2) misrepresent in adverting certain aspects of the product. Unauthorized use of the trademarks could subject a user to possible claims of false endorsement or affiliation, which operate separately from USOC's exclusive statutory rights. Although there are certain exceptions to infringement based on fair use, with the heightened exclusivity in regard to its trademarks, the USOC is not afraid to object to use of one of its trademarks by another party.

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Benefits of Copyright Registration
  (Posted Nov 24, 2013)

Many artists, especially entrepreneurs who are just starting off, often start talking to others about their work without realizing that they may be disclosing too much. Their creative ideas or works are assets, and if they do not establish ownership of these assets, the assets could be lost.

Artists often do not realize how important it is to establish ownership over their works, before displaying or disclosing them to the public.

Generally, copyright attaches automatically the moment the original work is created and "fixed" in a tangible medium. Copyright owners possess the right to prevent others from copying and selling the copyrighted work. However, in addition to those rights, the U.S. Copyright Act provides additional rights and protections to registered copyright owners.

First, copyright registration establishes a public record of the copyright ownership. This puts the public on notice of your ownership of the work. It also allows you to affix the copyright notice © to your work.

Second, the certificate of copyright registration serves as evidence in court of the validity of the copyright and your ownership. This is also helpful when a copyright owner seeks swift action and a response from an infringer. With a copyright registration, the effect of a "cease and desist" letter is stronger on an infringer who understands the consequences of a legal action.

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Cease and Desist Letter Imposes Reasonable Remedial Measures
  (Posted Sept 22, 2013)

According to a recent decision, recipients of cease and desist letters should do more than perform cursory remedial measures.

Consistent with similar situations in the U.S. Court of Appeals for the Seventh, Ninth and Second Circuits, the Sixth Circuit affirmed liability of a flea market operator for contributory trademark infringement for failure to stop the sale of counterfeit goods at the market despite numerous warnings. Coach Inc. v. Frederick Goodfellow, 717 F.3d 798 (6th Cir. 2013).

Plaintiffs, Coach, Inc. and Coach Services, Inc., who design and sell the famous Coach handbags, filed suit under the Lanham Act against Defendant, Frederick Goodfellow, who owned and operated a flea market in the Memphis area. After Goodfellow failed to take action in response to letters from Coach and the local district attorney informing him that counterfeit sales of Coach products were occurring at the flea market, Coach filed suit. In a raid by law enforcement officers, counterfeit Coach products were seized. Goodfellow admitted knowing that vendors were selling counterfeit Coach products, but did not take any effective remedial measures.

The district court granted summary judgment on liability to Coach after Goodfellow failed to respond to Coach's motion for summary judgment. After a jury trial on damages, Coach was awarded just over $5 million dollars in damages based upon willful infringement of 21 of Coach's marks. The district court also awarded Coach attorneys' fees and costs, finding the case exceptional based on Goodfellow's failure to litigate liability, and the jury finding of willful infringement.

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Use of Designer Handbags Images Leads to False Advertising Suit
  (Posted July 28, 2013)

Designer fashion label Michael Kors recently filed suit against Costco in the U.S. District Court for the Southern District of New York for falsely advertising that Michael Kors products were sold at Costco.

This action arose from an email that Costco sent to its customers offering handbags on sale for $99.99. The email used images of Michael Kors handbags, but the problem was that Costco is not an authorized retailer of Michael Kors products. In addition, Costco does not even sell Michael Kors handbags.

Michael Kors alleges that Costco's use of images of its handbags would make customers believe its handbags are for sale at Costco, effectively luring away prospective customers from Michael Kors retailers into Costco stores, and the advertisement of a low price destroys the value of the brand. The average price of Michael Kors handbags ranges from $128 to $1,395.

While the ad did not explicitly state that the purses in the photos were Michael Kors, the photos did depict features that would identify the bags as products of the luxury designer.

Michael Kors is seeking a court order barring any future marketing of Michael Kors products, as well as payment of monetary damages.

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Obama Plans to Take Action Against Patent Trolls
  (Posted June 28, 2013)

President Obama announced earlier this month a set of executive actions directed at cracking down on patent-holding firms that interfere with competition and abuse the patent system. The Wall Street Journal reports that these "patent trolls" are forcing technology companies, financial institutions and others into costly lawsuits to protect their products by collecting large numbers of patents and then pursuing licensing fees while not actually producing any products themselves. Many technology companies have dealt with multiple lawsuits from so-called "patent trolls," which aim to make money primarily through licensing fees.

These firms, also known as non-practicing entities (NPE) or patent assertion entities (PAE), say they are doing nothing wrong, just using patents that were legally granted by the U.S. Patent and Trademark Office. They say they promote a fair market by protecting smaller inventors.

Obama has constructed a five-step plan with a total of seven legislative changes, which will be released as part of a White House report on patent trolls. The plan includes a recommendation that the U.S. Patent and Trademark Office create rules that require patent owners to be identified and a request for Congress to pass legislation that puts sanctions on questionable lawsuits filed by patent-holding firms.

Additionally, Obama hopes to cut down on the International Trade Commission's involvement in patent disputes. Claims filed with the ITC are often resolved more quickly than standard federal lawsuits. The Obama administration would like Congress to change certain ITC legal standards and ensure that the agency has flexibility in hiring its judges.

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Second Circuit Holds that Appropriation Art Constitutes Fair Use
  (Posted May 29, 2013)

In a recent decision, Cariou v. Prince1, the Second Circuit held that 25 works of appropriation art that incorporated original copyrighted photographs constituted fair use under the Copyright Act, 17 U.S.C. § 107. Appropriation art is the "more of less direct taking over into a work of art a real object or even an existing work of art."2

In this action, defendant Prince took Cariou's photographs and incorporated them into 30 works. Images of the 30 works and the corresponding Cariou photographs used are available through the Second Circuit's website:

Cariou sued for copyright infringement and the district court granted Cariou summary judgment, holding that no reasonable jury could find Prince's work to be fair use. The Second Circuit reversed in part, vacated in part and remanded for further proceedings.

The Second Circuit's analysis focused on the four non-exclusive fair use factors provided in the Copyright Act: (i) the purpose and character of the use, including whether the use is commercial or for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (iv) the effect of the use upon the potential market for the value of the copyrighted work.

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License is Required for Playing Music in Public Establishments
  (Posted Apr 23, 2013)

Business owners should be advised that a license is required for any public performance of music. Some owners are unknowingly playing music in their restaurants, bars, gyms, and storefronts from CDs, iPods, or MP3 players in violation of Copyright Laws.

What is needed are public performance rights -- the right to play music that the general public will hear in one way or another. Public performance rights licenses are handled by two very large companies named ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Music Incorporated). Each one handles a catalog of about 4,000,000 songs. Their fees depend upon the type of establishment, size, etc.

Further information on how to obtain a license from BMI and ASCAP can be found at:

www.bmi.com/licensing   and   www.ascap.com/licensing/generallicensing.aspx

The penalty for failing to obtain a license is a potential lawsuit for copyright infringement. Under the Copyright Law, the violator can be subject to sanctions, which can include an injunction and the copyright owner's actual damages, as well as the infringer's profits, or statutory damages of up to $30,000 for each copyrighted song performed without a license (up to $150,000 if the infringement is willful).

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Copyright Claim Dismissed for Lack of Specificity
  (Posted Mar 18, 2013)

A recent decision from the Southern District of New York demonstrates the importance of pleading sufficient factual allegations in a copyright infringement case. In Kane LLC v. Scholastic Corp., Case No. 12-cv-3890, 2013 WL 709276 (S.D.N.Y. Feb. 27, 2013), the Court dismissed plaintiff's copyright claim because it did not specify which works were at issue, which acts constituted infringement, and the time period that the infringement occurred.

Plaintiff was a stock photograph agency that licensed certain copyrighted photographs to defendant. The parties entered into a licensing agreement which granted defendant the right to use the photographs under certain limited terms. In the complaint, plaintiff alleged that defendant used the photographs without permission or beyond the scope of the licensing agreement. Plaintiff listed the works in the complaint, but indicated that the list was not exhaustive. Defendant moved to dismiss the complaint.

The Court granted the motion to dismiss on the grounds that the complaint did not specify which works were at issue and did not allege the acts that constituted infringement. Specifically, the Court noted that it was unclear whether the copyright registration numbers contained in the complaint corresponded to the list.

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Fight Over Chocolate Kisses Trademark
  (Posted Feb 18, 2013)

As demonstrated by a recent lawsuit filed by a carpet manufacturer against chocolate-giant Hershey, one has to ask how far large companies are going to go in attempt to stretch their trademark rights. What these companies want is a monopoly over their marks in every good and service.

However, trademark rights are limited in scope. The goods and services listed on a trademark registration establish the scope of the applicant's rights in the relevant mark. This, however, does not prevent large companies from testing the boundaries.

In the lawsuit, Shaw Industries Group Inc., a carpet manufacturer owned by Berkshire Hathaway Inc., is seeking declaration that a carpet color it calls "Chocolate Kiss" does not infringe Hershey's "Kisses" and "Hershey's Kisses" trademarks.

Shaw has used the name "Chocolate Kiss" for a particular carpet color for over two decades without any indication of confusion between the products or the companies until December of 2012, when Hershey sent a cease and desist letter to Shaw in demanding that it stop using the "Chocolate Kiss" name. Despite Shaw's response that it already planned to phase out the use of the "Chocolate Kiss" color name in June of 2013, Hershey demanded that it immediately stop using the term and threatened to file suit. Shaw, however, beat Hershey to the punch.

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Covenant Not to Sue Forestalls Trademark Invalidity Claim
  (Posted Jan 21, 2013)

On January 9, 2013, the U.S. Supreme Court in Already, LLC v. Nike, Inc. unanimously ruled that Already could not dispute the validity of one of Nike's trademarks after Nike agreed not to sue the company for infringement.

Nike sued Already, a designer and marketer of athletic footwear, for trademark infringement and Already counterclaimed to declare the trademark invalid. Eight months after filing suit, Nike provided Already with a covenant not to sue, and subsequently moved to dismiss all claims. In the covenant not to sue, Nike agreed to "unconditionally and irrevocably" refrain from making any claims or demands against Already, as well as its employees, distributors and customers, for any possible cause of action based on trademark infringement, unfair competition or dilution relating to the Nike trademark. In its motion to dismiss, Nike asserted that the covenant not to sue terminated the case or controversy and rendered the case moot.

The district court dismissed the counterclaims as moot and the Second Circuit affirmed. The Supreme Court unanimously affirmed. It held that the broad covenant not to sue, which covered past and future shoes, met the demanding standard of mootness by voluntary cessation, particularly as Already has no plans to develop or market shoes which infringe on the trademark. Since Nike had agreed unconditionally not to sue Already, the federal courts lacked jurisdiction over Already's counterclaims that Nike's trademark is not valid.

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Standard to Obtain TROs in Trademark Infringement Claims Get Tough
  (Posted Dec 17, 2012)

As everyone shops for toys this holiday season, many have encountered counterfeits that are strikingly similar at first glance, but with their low price point compared to the actual licensed product, these counterfeits have lured away or even deceived consumers.

In response, toy developers and manufacturers who obtained federal trademark and copyright registrations commenced actions for trademark and copyright infringement, trademark counterfeiting, false designation of origin, and unfair competition, and sought a temporary restraining order and preliminary injunction to immediately stop the counterfeit sales.

The standard to which a court will grant a temporary restraining order and preliminary injunction requires a showing of irreparable harm. This showing, however, may have been made stricter in trademark cases by a recent decision by a District Court in California by that precluded a presumption of irreparable even upon a plaintiff's demonstration of a likelihood of success on the merits.

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Claim for Breach of Implied Contract not Preempted by Federal Copyright Act
  (Posted Nov 20, 2012)

In an important decision for the entertainment industry, the Second Circuit held that a claim under state law for breach of implied contract, including a promise to pay, is not preempted by the Federal Copyright Act.

In 2010, a suit was brought by Forest Park Pictures against Universal Television Network, Inc. (the television production arm of NBCUniversal, a subsidiary of Comcast Corp., which controls USA Network), for breach of contract over USA Network's show Royal Pains. Forest Park alleged that in 2005, it developed an idea for a show called "Housecall," in which a doctor, after being expelled from the medical community for treating patients who could not pay, moves to Malibu to attend to the rich and famous. Forest Park developed storylines and character bios, and pitched the concept to an executive at USA Network. Although nothing materialized after the meeting, in 2009, USA Network began airing Royal Pains, a show that focuses on the life of a "concierge doctor" providing medical services to the wealthy residents of the Hamptons. Forest Park brought suit against Universal for breach of contract.

The U.S. District Court for the Southern District of New York held that Forest Park's claims were preempted by the Federal Copyright Act because the allegations entailed theft of uncopyrightable idea and granted Universal's motion to dismiss.

The Second Circuit reversed by holding that a claim for breach of an implied contract, including a promise to pay, is not preempted by the Federal Copyright Act because even though uncopyrightable material may fall within the subject matter of the Copyright Act, there are qualitative differences between a contract claim and a copyright-violation claim.

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Red Soles of Designer Footwear can be Trademarked in the Fashion Industry
  (Posted Oct 23, 2012)

In a decision that is captivating the fashion industry, the Second Circuit held that a single color can serve as a legally protected trademark; specifically -- the color red used on the sole of luxury shoe designer Christian Loubotin's shoes is protectable as a trademark. Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc., 11-3303-cv (2d Cir., Sept. 5, 2012).

Louboutin's signature line of high-fashion women's footwear utilizes a high-gloss, red-colored bottom, and costs approximately $1,000 for a pair. Louboutin explained that "[t]he shiny red color of the soles has no function other than to identify to the public that they are mine." In 2008, Louboutin registered the red sole as a trademark with the United States Patent & Trademark Office, based upon the strength of the asserted recognition of the red-soled shoes in the fashion industry.

In 2011, Yves Saint Laurent (YSL) attempted to market a line of women's shoes that utilized a red sole, which allegedly infringed the Louboutin red-sole trademark. Last year Louboutin sued YSL under the Lanham Act and sought a preliminary injunction. YSL counterclaimed to cancel Louboutin's federal trademark registration. Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F. Supp. 2d 445, 451 (S.D.N.Y. 2011). The district court in that case denied Louboutin's motion for a preliminary injunction and ruled that a single color can never serve as a trademark in the fashion industry, because color is an element of fashion design. The court also declared Louboutin's trademark registration to be invalid.

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Trademark Expo and Education Event Returning to the USPTO
  (Posted Sept 20, 2012)

The U.S. Department of Commerce's United States Patent and Trademark Office (USPTO) will once again host its annual National Trademark Expo on Friday, October 19th, from 10:00 am to 5:00 pm and Saturday, October 20, 2012, from 10:00 am to 4:00 pm. at the USPTO's headquarters in Alexandria, VA.

This event advances the agency's mission in educating the public about trademarks and the value of intellectual property in the global marketplace. The event will highlight the importance of trademarks through educational seminars, exhibits, displays of authentic and counterfeit goods, and costumed characters featuring registered trademarks. There will also be numerous exhibitors from the U.S. government, non-profits, and corporations -- each showcasing their federally-registered trademarks and providing valuable information about trademarks. Some exhibitors include NASCAR, Mattel, GEICO and NASA. A full list of Exhibitors can be found below.

The event is free and open to the public. No registration is required. Additional information about the Trademark Expo can be found on the USPTO website at www.uspto.gov/TMexpo.

The schedule of the educational seminars is as follows:

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What the New gTLDs Mean for Trademark Owners
  (Posted Aug 29, 2012)

What is a gTLD? gTLDs are generic top-level domains similar to .com, .net or .org. The current system has 24 gTLDs. Soon, we will be seeing new gTLDs, such as .ART, .NEWS, .STORE, in the largest-ever expansion of the Internet's naming system. The Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit organization that manages this piece of the Internet's infrastructure, has been preparing for this domain name expansion for nearly a decade. In June of 2011, it formally approved the expansion and started planning the application process for new gTLDs.

On June 13, 2012, ICANN held a "Reveal Day" event during which the new gTLD applications were unveiled -- all 1,930 of them. The applications greatly exceed the 500 applications originally anticipated, demonstrating the impact of the new gTLD program on the Internet space in the coming months and years. The applicant list included several automakers like Fiat, Chrysler and Volkswagen -- as well as a few banks including JPMorgan Chase and Barclays. Several tech companies, including Apple, Google, Netflix and AOL, also submitted applications to turn their brand name into a domain. Amazon submitted applications for 76 gTLDs, including .read, .store, .music, .fire, .cloud, .news and .pay. Google also played big, applying for 101 new domains.

It is important for organizations -- even those that did not apply for their own new gTLDs -- to remain aware of the program, its upcoming deadlines, and potential enforcement options. For brand owners and trademark holders, this means taking steps and developing a strategy to detect and deter possible infringement.

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Keyword Infringement Litigation Heats Up
  (Posted July 24, 2012)

Google's AdWords is a powerful advertising platform. But what happens when a competitor bids on your trademark, or slips your mark and brand name into its website's metatags in order to lure away a potential customer searching for your business? Not surprisingly, companies who lost the placement wars weren't too happy and commenced trademark infringement lawsuits against the competitor and the search engine that sold the keyword bids and advertising placement. However, suits against Google and similar search engines died in August 2010, after a District Court's opinion in Rosetta Stone Ltd. v. Google, Inc., 2010 WL 3063152 (E.D. Va. August 3, 2010). But the flood gates may soon be opened.

The 4th Circuit in Rosetta Stone Ltd. v. Google, Inc., 2012 WL 1155143 (4th Cir. April 9, 2012) gave Rosetta Stone another chance. The bulk of the District Court's decision was reversed, allowing Rosetta Stone to proceed to trial. Although the Rosetta Stone litigation will not be resolved relatively soon, the 4th Circuit's decision is significant because (1) it clarifies that trademark infringement analysis in a keyword advertising context will follow the traditional legal standard applicable to likelihood of confusion; and (2) it establishes that a company can bring a trademark infringement action against Google, and similar search engines, on the basis that the sponsored links are confusing to the customers.

At the District Court level, Google argued that it legitimately used trademarks as keyword triggers to help make consumers make more informed choices, and its use of the trademarks are "functional" to its business, thus making it immune to trademark infringement claims. The District Court agreed and concluded that (1) there was no evidence to support a likelihood of confusion of consumers, in part because the search engine provider was not attempting to pass off its goods or services as Rosetta Stone's; and (2) that the use of marks as search engine advertising keywords was protected by a functionality defense, because the keywords served an indexing function in pulling up sponsored advertising links.

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