In a trademark infringement dispute between Bluetooth and Fiat Chrysler Automobiles (“FCA”), the Ninth Circuit vacated the District Court for the Western District of Washington’s order granting partial summary judgment that the first sale doctrine did not apply to the Bluetooth’s trademark claims. Instead, the Ninth Circuit found that the first sale doctrine applies to component parts embedded in a new, downstream product and remanded the district court’s grant for further proceedings.
The case arose out of FCA’s use of Bluetooth’s trademarks and logos on FCA’s websites and in-vehicle displays called “head units.” FCA’s use of the marks extended across its Fiat, Chrysler, Dodge, Jeep, and Ram brands. Generally, rightful users of the Bluetooth marks must join Bluetooth’s “Special Interest Group” (“SIG”), where members of the SIG are required to (1) execute licensing agreements, (2) submit declarations of compliance, and (3) pay royalties. Here, FCA bought head units, which bore Bluetooth’s marks, manufactured by SIG-approved third parties. Bluetooth then brought trademark claims against FCA, and FCA raised numerous defenses, including the first sale doctrine. On cross-motions for summary judgment, The District Court rejected the first sale defense, reasoning that FCA’s conduct went beyond “stocking, displaying, and reselling a producer’s product,” which precedent has found does not constitute infringing behavior.
Under the first sale doctrine, “with certain well-defined exceptions, the right of a producer to control the distribution of its trademarked product does not extend beyond the first sale of the product.” Indeed, a producer or registrant’s trademark rights are “exhausted as to a given item upon the first authorized sale of that item.” The Ninth Circuit found that the District Court’s reading of the first sale doctrine was too “narrow.” While the District Court cited to Sebastian Int’l. v. Longs Drug Stores Corp., claiming that FCA did more than just “stock, display, and resell a producer’s product,” the Ninth Circuit found that Sebastian did not actually articulate the outer bounds of the applicability of first sale doctrine. Instead, the Ninth Circuit found FCA’s activities to be more akin to a 1924 Supreme Court case Prestonettes, Inc. v. Coty, in which a cosmetics manufacturer that purchased a trademark-protected powder, “subject[ed] it to pressure, add[ed] a binder to give it coherence and s[old] the compact in a metal case.” Accordingly, the Ninth Circuit found that where a vehicle manufacturer purchases a component part bearing registered marks from a licensed manufacturer, and incorporates it into a new, downstream product, the first sale doctrine applies and can be a viable defense to claims of trademark infringement. Notwithstanding the win in the Ninth Circuit, FCA is not paired with Bluetooth quite yet. Because the first sale doctrine is “generally focused on the likelihood of confusion among consumers,” a key issue remaining to decide whether FCA’s defense will be successful is “whether FCA had adequately disclosed its relationship with, and qualification to use, Bluetooth technology.” On remand, the district court will decide the “fact-intensive” issue.
In the latest trademark case spurred by Covid-19, the District Court of Arizona (“the court”) denied Arizona Board of Regents’ (“ASU”) motion for default judgment for a permanent injunction against an Instagram user because the vulgar Covid-related messages from the user (“John Doe”) did not rise to the level of trademark infringement.
ASU owns various trademarks for “ASU” or “Arizona State University” for different goods and services. ASU also owns trade dress for the school’s maroon and gold colors which are used in ASU’s promotional materials as well as ASU’s social media accounts. Around July 19, 2020, John Doe created an Instagram account called “asu_covid.parties.” The account touted itself as “throwing huge parties at ASU.” John Doe’s first message used the ASU logo and ASU’s maroon and gold trade dress. His later messages did not use ASU’s trade dress or colors but continued to use ASU’s logo and word marks. Doe’s messages touted that it would throw parties “like… if COVID never existed” and that masks would be banned for health and security reasons. Doe’s messages were laced with profanity and made numerous criticisms of ASU for requiring masks and Covid-19 testing, including: “Do not let Führer Crow force you to wear a mask or test.”. After Instagram would not remove or modify Doe’s account, ASU filed a trademark complaint naming Facebook (the parent of Instagram) and Doe as defendants. Facebook was dismissed after it agreed to disable the account and to prevent Doe from creating new accounts. Doe filed an answer to the complaint, but the court struck it as it was filled with “obscenities, inflammatory language, and insults directed toward [ASU] and its counsel.” Doe thereafter refused to participate in the case. ASU moved for default judgment and permanent injunction.
The court noted it had discretion whether to enter a default judgment under the seven Eitel factors. Although several of the factors favored entry of default, the merits of the claims and the sufficiency of the complaint factors did not. ASU claimed the unauthorized use of its marks likely caused confusion as to ASU’s affiliation, endorsement, or sponsorship of Doe’s “hoax” party, Doe’s “covid.parties” account, and the account’s messages. The court disagreed and found that a reasonably prudent consumer would not be deceived or confused into believing that ASU was the “source or origin” of the messages. The court explained only one of the posts used both the ASU logo and ASU’s trade dress, and that no university would drop the “f-bomb” in a party invitation. Likely anticipating said conclusion, ASU also argued that “even if a consumer were to conclude, after reading one or more posts by [Doe] that the account may not be affiliated with ASU, there is nevertheless actionable initial interest confusion.” The court disagreed and said Doe’s comments were too crude to create initial confusion and, stated more broadly that “it cannot be the case that every social media post written by a college student that happens to use the school’s colors and/or logo in the post creates initial interest confusion and qualifies as an actionable trademark violation.” The court thus dismissed the case.
This court’s decision will likely serve as precedent for individuals who create parody social media accounts of schools and other public institutions. This case is also of note due to its narrow view of initial interest confusion, a doctrine developed when e-commerce was in its nascent stages, but which has fallen out of favor as online shopping has evolved. Indeed, days before this decision, an Eighth Circuit litigant petitioned for certiorari to resolve whether courts can impose trademark liability based on initial interest in a mark, even where consumers are not confused as to source by the time they complete their purchases.
The Trademark Trial and Appeal Board (“TTAB”) recently dismissed musician Charles Bertini’s opposition to Apple Inc.’s Trademark Application for “APPLE MUSIC.” Bertini, applicant of the word mark “APPLE JAZZ,” opposed on the grounds that his mark held priority and there was a likelihood of confusion between “APPLE JAZZ” and “APPLE MUSIC.” In dismissing the opposition, the TTAB held that Apple Inc. could claim prior first use all the way back to 1968 by tacking its 2015 application onto the priority of its predecessor – The Beatle’s media company Apple Corp. The TTAB found that the applied-for mark “APPLE MUSIC” was legally equivalent to Apple Corp.’s prior marks “APPLE,” “APPLE FILMS,” and “APPLE RECORDS.” The TTAB had previously granted summary judgment that a likelihood of confusion existed between the marks.
Apple Inc. filed an application for its mark “APPLE MUSIC” on June 11, 2015 for a large array of music-related goods and services under an intent-to-use basis. The record later stated that “Apple Music” launched on June 8, 2015, which would be Apple’s apparent date of first use. Bertini filed an application for his mark “APPLE JAZZ” for identical goods and services on June 5, 2016 on an actual use basis, claiming a first use date as early as 1985. Subsequently, Bertini filed an opposition with the TTAB on September 2, 2016, on the ground of priority of first use in 1985 and a likelihood of confusion between the marks “APPLE MUSIC” and “APPLE JAZZ.” Nevertheless, Apple Inc. has The Beatles to thank for overcoming the seemingly easy-to-compare dates of first use.
In 1963, The Beatles set up a corporation to produce and distribute the iconic band’s music. Though originally named The Beatles Ltd., The Beatles changed the name to Apple Corps Ltd. as of 1968. Apple Corp., during their time distributing The Beatles’ music, which TTAB noted was considered “evergreen” and “available continuously every year after their original release,” had continuously used the “APPLE” word mark in connection with music production and distribution and additional word marks like “APPLE RECORDS” and “APPLE MUSIC PUBLISHING.” In 2007, Apple Inc. and Apple Corps settled an ongoing trademark dispute where Apple Inc. took ownership and control of every of Apple Corps’ trademarks that included the word mark “APPLE,” while Apple Corps became a licensee of these marks.
Because the TTAB found that “APPLE MUSIC” created the same continuing, commercial impression as Apple Corp.’s prior “APPLE” marks in light of shifting technology in the music industry, it permitted Apple to “tack” its application onto the first use by Apple Corp. in 1968, overcoming Bertini’s priority date in 1985. Nevertheless, even the TTAB notes that the standard for tacking is very strict and tacking in general is permitted only in “rare instances.”
This decision, though non-precedential, is important to note. It is not uncommon for entities looking to gain priority to purchase an earlier mark. Entities that do so must be sure their mark as used post acquisition meets the strict standard of creating the same continuing, commercial impression as the pre-acquisition use of the mark.
Determining Andy Warhol’s artistic works titled “The Prince Series” were not a fair use of photographer Lynn Goldsmith’s photograph of musical artist Prince, the Court of Appeals for the Second Circuit reversed the Southern District of New York’s grant of summary judgment. The Second Circuit further held “The Prince Series” works substantially similar to the Goldsmith’s photograph as a matter of law.
The Andy Warhol Foundation (AWF), holder of copyrights in a series of Warhol’s works depicting musician Prince, filed for declaratory judgment that the silk screens and pencil drawings did not infringe the copyright in the source photograph, or alternatively that fair use provided a defense. The primary work was an image taken by Goldsmith, a celebrity portraiture photographer, in 1981. Struck by Prince’s reticence, Goldsmith arranged lighting and makeup to accentuate the musician’s sensuality and bone structure. Through a 1984 licensing agreement with Vanity Fair, the magazine was permitted to create a work of art as an illustration, limited to two images and requiring attribution. Unbeknownst to Goldsmith, however, Vanity Fair had commissioned Warhol to create the illustration and Warhol went on to create an additional 15 works he titled “The Prince Series.” When Prince died in 2016, the magazine’s parent company contacted AWF, obtained a commercial license for a different image from The Prince Series, and published a tribute cover. Goldsmith then raised copyright infringement concerns, leading to AWF’s declaratory judgment action.
The district court concluded fair use existed, based on its subjective determination that Warhol’s applied aesthetic made the secondary work transformative, disproportionately relying on the new expressive result. But on appeal, the Second Circuit emphasized that under 17 U.S.C. § 107, the fair use defense required a context-sensitive assessment, balancing 1) the purpose and character of the use, 2) the nature of the work, 3) the quality and quantity used, and 4) potential market harm. By focusing subjectively on the perceived expressive differences between Warhol’s graphic images and Goldsmith’s source photo, the lower court failed to objectively assess whether the use fit within purposes defined by statute—including criticism, commentary, or teaching—or fair use purpose defined by case law, e.g. parody (see Campbell v. Acuff-Rose, 510 U.S. 569 (1994)). Mistaking changed aesthetics for transformative use supporting an altered purpose, the initial error rippled through the other factors, said the Second Circuit, which carefully reassessed each of the fair use factors. The Court concluded by determining as a matter of law that a reasonable juror acting as an ordinary observer could only find that Warhol’s prints—“down to the glint in Prince’s eyes”—were substantially similar to the source work.
The case is important for its thorough application of statutory fair use, contextually resetting transformative use when weighing the purpose and character of a secondary work. Further, by ruling the subsequent work is substantially similar, the case shows how quickly prior dismissal may turn into damages on appeal.
Irwin IP is excited to announce that Daniel Zhang has joined our team as a lateral associate. Daniel focuses on trademark litigation matters, and while attending law school, Daniel represented various clients in trademark and patent matters with the University of Miami’s Startup Practicum. We’re very excited to have him join our team.