Parties Seeking Injunctive Relief Under Lanham Act

On August 26, 2014, the U.S. Court of Appeals for the Third Circuit held in Ferring Pharmaceuticals, Inc. v. Watson Pharmaceuticals, Inc. that parties seeking injunctive relief under the Lanham Act will not be afforded a presumption of irreparable harm and must demonstrate that irreparable harm is likely. In affirming the lower court’s decision to deny the plaintiff’s request for an injunction, the Court of Appeals based its ruling on precedent set by two recent U.S. Supreme Court cases, eBay Inc. v. MercExchange, L.L.C. and Winter v. Natural Resources Defense Council, Inc.

Ferring is yet another precedential decision, among several other recent cases, that demonstrates a continuing trend in rejecting a presumption of irreparable harm for parties seeking injunctions in actions involving claims under the Lanham Act. The Second and Ninth Circuits also have applied this rationale to copyright actions. An even greater number of courts across the nation have recognized that the eBay analysis is applicable in lawsuits filed pursuant to the Lanham Act and concurred that it casts doubt on the application of the presumption of irreparable harm, but have nevertheless declined to rule on the matter.

The Ferring litigation arose from a dispute among two New Jersey-based pharmaceutical companies that market competing products designed to assist women undergoing in vitrofertilization to become and remain pregnant. In the complaint, filed on September 17, 2012, plaintiff Ferring alleged that defendant Watson coordinated two programs, during which Watson conveyed false and misleading information about Ferring’s competing product in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), the New Jersey Consumer Fraud Act, and New Jersey common law.

Ferring moved for a preliminary injunction on November 9, 2012, seeking to obtain corrective advertising and enjoin Watson from making any additional false statements. In denying Ferring’s motion, the district court found that Ferring was not entitled to a presumption of irreparable harm and had failed to demonstrate a likelihood of irreparable harm.

On appeal, Ferring argued that a presumption of irreparable harm should be applied in Lanham Act comparative false advertising cases and, accordingly, the district court erred in declining to permit Ferring to benefit from this presumption for the purposes of obtaining a preliminary injunction. Watson, in turn, argued that the Third Circuit has never recognized this presumption; the U.S. Supreme Court’s rulings in eBay and Winter do not support the application of this presumption; and, without the presumption, Ferring is unable to demonstrate a likelihood of irreparable harm.

Where a party in a comparative false advertising case, like Ferring, seeks a preliminary injunction, courts in various jurisdictions have historically permitted the application of the presumption of irreparable harm after a likelihood of success on the merits has been demonstrated. The Third Circuit pointed out, however, that this rationale preceded eBay and Winter, which set the precedent that broad categorical rules are inappropriate when determining whether to award injunctive relief, a determination that should be made within the court’s discretion and in accordance with the traditional principles of equity. The Court of Appeals alsocited a 2013 Ninth Circuitdecision as concurring analysis, which held that “the likelihood of irreparable injury may no longer be presumed from a showing of likelihood of success on the merits.”

The reasoning employed in Ferring provides a clear interpretation and explanation of precedent set by the Supreme Court with regard to issuing injunctions in actions not only involving claims under the Lanham Act, but in various types of cases governed by similar standards, and certainly reinforces the growing trend to reject the application of the presumption of irreparable harm for parties seeking injunctions in the future.

Please see the following citations for further reading on this topic:

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)

Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008)

Ferring Pharms. v. Watson Pharms., 2014 U.S. App. LEXIS 16426 (3d Cir. 2014)

Does Your Business Need a Trademark Audit?

A trademark audit evaluates and reports on the status of your business’ trademarks and related name rights.  An audit outlines considerations relevant to your ability to secure, protect and enforce your rights and, if desired, provides an appraisal of the dollar value of these rights.

To know if you need a trademark audit, consider:

• Does your business use a brand name for your goods or services, has this brand name been registered and can you locate these registrations?
• Does your business use different names for its goods and services, have these names been registered and can you locate these registrations?
• Does your business use its brand name as your domain name and do you have confirmation of your domain name registration?
• Does your business use a domain name and has that domain name been registered?
• Does your business do business out of the United States and are your names registered in the countries where you do business?
•  Does your business use the names of others and do you have copies of the authorizations to use those names?

Your answers to these questions will indicate if it is time to contact an IP audit specialist to ask about a trademark audit.

Whose Name Is It Anyway?

Rapper William Leonard Roberts II, professionally known as Rick Ross, was recently the victor in a legal dispute with former drug trafficker Ricky D. Ross over the use of Roberts’ stage name.

According to the California Court of Appeal’s Dec. 23, 2013, opinion in Ross v. Roberts, et al., plaintiff Ricky D. Ross, also known as “Freeway Rick Ross,” rose to infamy in the 1980s as he ruled the West Coast while overseeing a multimillion-dollar cocaine trafficking enterprise and became a street legend.  Ross’ network packaged and transported cocaine directly into at least six states and indirectly into many others.  He was the subject of the Black Entertainment Television true-crime documentary series “American Gangster,” which profiled the rise and fall of certain criminals.

Defendant Roberts admittedly lived a different life.  He is a successful recording artist who is professionally known as Rick Ross.  Although Roberts, through his lyrics and music, has created a fictional image of a cocaine-trafficking gangster, he in fact attended college on a football scholarship and was once a correctional officer.  He later signed a record deal with Island Def Jam, a major record label known for breaking hip-hop superstars such as Kanye West and Jeezy.

While in jail, Ross read a magazine article about up-and-coming rappers and learned of Roberts’ use of the stage name Rick Ross.  In 2010, Ross sued Roberts, his record label and several other parties in California state court for allegedly misappropriating his name and likeness to further Roberts’ rap music career.  Ruling that the First Amendment protected Roberts’ creative expression, the state court judge granted summary judgment in his favor.

California, like most jurisdictions, recognizes that “the right of publicity protects an individual’s right to profit from the commercial value of his her identity.”  Gionfriddo v. Major League Baseball (2001) 94 Cal.App. 4th 400, 4009.  California also recognizes a statutory right of publicity. Comedy III Productions, Inc. v. Gary Saderup, Inc. (2001) 25 Cal.4th 387, 391 (Comedy III).  California Civil Code § 3344(a) provides, in pertinent part, that “[a]ny person who knowingly uses another’s name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person’s prior consent . . . shall be liable for any damages sustained by the person or persons injured as a result thereof.”

The appellate court in Ross, citing the California Supreme Court’s analysis in Comedy III, applied the transformative test and chose to “ ‘balance’ the right of a celebrity to control the commercial exploitation of his or her likeness . . .  against another individual’s right to free expression under the First Amendment.”  The application of the transformative test seeks to determine “whether the new work merely ‘supersede[s] the objects’ of the original creation . . . or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning or message.”  It looks at “whether a product containing a celebrity’s likeness is so transformed that it has become primarily the defendant’s own expression rather than the celebrity’s likeness.

Comedy III involved a visual artist who sold lithographs and T-shirts bearing the faces of the Three Stooges.  The transformative test became whether the use of celebrity likeness “is one of the ‘raw materials’ from which an original work is synthesized, or whether the depiction or imitation of the celebrity is the very sum and substance of the work in question.”  Relying on Comedy III, the Ross court also noted that First Amendment protection extends not only to visual expressions but to all forms of expression, including written and spoken words and music.

In Ross, the court acknowledged that Roberts’ “work — his music and persona as a rap musician—relies to some extent on plaintiff’s name and persona.  Roberts chose to use the name ‘Rick Ross.’  He raps about trafficking in cocaine and brags about his wealth. These were ‘raw materials’ from which Roberts’ music career was synthesized. But these are not the ‘very sum and substance’ of Roberts’ work.”

Further, “Roberts created a celebrity identity, using the name Rick Ross, of a cocaine kingpin turned rapper.  He was not simply an imposter seeking to profit solely off the name and reputation of Rick Ross. Rather, he made music out of fictional tales of dealing drugs and other exploits— some of which related to plaintiff.  Using the name and certain details of an infamous criminal’s life as basic elements, he created original artistic works.”

Simply, Roberts’ fictional entertainment persona was found to be transformative.  So the answer to the question of whose name is it anyway is both Ross and Roberts.

But For Trademark Parody – Jovial Jabs or Bad for the Brand?

In the somewhat murky world of trademark parody disputes, various courts often are torn as to how to best reach the appropriate decision. Such uncertainty, among other PR and business considerations, often leads some plaintiffs to ponder whether they might have been better off having a good chuckle and ignoring tongue-in-cheek brands in their space rather than marching into court.

However, since lawyers typically aren’t paid for public relations consultations, judge for yourself how these parties faired as we look at some common themes of interesting trademark parody cases decided over the past few years worth some light-hearted discussion.  If you don’t crack a smile reading about these cases, and the creative minds behind them, definitely stick to reading legal treatises.

At the outset, it is important to distinguish between what is parody and what is not.  Although sometimes confused with sarcasm and/or satire, both of which lean toward derision, parody is different and often looked upon more favorably in our culture, likely due to its joviality.  Where trademark law often becomes intertwined, is that for parody to work it necessarily relies upon an interrelationship to a prior known object or text giving meaning and the basis for the presumed humor.  However, those prior known text/object owners often choose not to laugh off the jovial jab, instead bringing trademark infringement suits claiming likelihood of consumer confusion.

To begin our analysis of this unique brand of cases, we need look no further than the recent final appeal decision that concluded a 12-year dispute between Starbucks and Black Bear Micro Roastery’s “Charbucks” blend.  Impressively, the defendant weathered the bitter battle and prevailed, with the 2nd U.S. Circuit Court of Appeals determining there was no sufficient finding of likelihood of consumer confusion through blurring of Starbucks brand.  See Starbucks Corp., et al. v. Wolfe’s Borough Coffee, Inc. d/b/a Black Bear Micro Roastery (2nd Cir. 2013).  In the final analysis, a survey of 600 people became a key piece of evidence showing that less than 5 percent of consumers thought they could actually buy “Charbucks” blend at Starbucks stores.

One case worth noting that slid past most people — although it is admittedly somewhat juvenile and without rulings on the merits — illustrates what may come of similar disputes between parties with significant market disparity.  Not long ago, a teenage boy had a great idea.  What if he mocked some really popular clothing brand, and then sold it to those amused by the obviously humorous contrast?  Brilliant!  Sort of.  As evidenced in The North Face Apparel Corp. v. The South Butt, initiated in 2009, a teenager did just that and started a clothing brand by flipping the iconic half-dome curves of the North Face logo upside down.  The North Face was not amused.

After several cease-and-desist letters did not garner the desired effect, nor did their success in an opposition to prevent The South Butt from gaining trademark registration, The North Face sued The South Butt in the U.S. District Court for the Eastern District of Missouri alleging trademark infringement in addition to drawing sizable amounts of public awareness.  In The South Butt’s answer to the complaint, the teenager’s lawyers somewhat accurately quipped “[b]ut for the actions of North Face, the South Butt saga might have been relegated to local Friday fish-fry banter.”

The case did not get to the merits before a confidential settlement was worked out in 2010 and The North Face made it go away.  However, one wonders if The North Face would have been better off laughing this one off after a quiet victory at the trademark office, particularly once articles about the lawsuit made national news and the company ended up filing another suit a few years later to enforce the settlement because The South Butt’s product apparently was still in demand.

A more recent battle, where the humorist ultimately won the war, is the Facebook-Lamebook dispute.  Graphic designers in Austin, Texas, established Lamebook to out all those who end up oversharing (i.e., TMI) on Facebook.  The idea behind the launch of the site was to showcase the funniest and lamest of Facebook and get public feedback, arguably as a means for social commentary of modern society.  As with The South Butt dispute, Facebook went after Lamebook by alleging trademark infringement and dilution and requesting that Lamebook cease and desist.  However, Lamebook took the offensive in the U.S. District Court for the Western District of Texas and filed a declaratory judgment that it did not violate Facebook’s rights. Lamebook claimed it was protected as a parody under the First Amendment.  Ultimately, the two came to an agreement in 2011 allowing the Lamebook site to continue its mission and provide revenues to its founders, albeit without its own federal registrations and with a disclaimer on its homepage.

What can we glean from these and other similar cases?  Parody is not really an affirmative defense to trademark infringement, although it may be a means to show lack of likelihood of confusion. Rather, parody is an assertion of First Amendment rights concerning noncommercial speech for the most part.   Thus, one should pay careful attention to the reasons and target chosen to be mocked.

Trademark infringement issues surrounding confusion are more likely to be excused where there is an artistic or social message behind the parody and not mere commercial interests.  Further, the allegedly infringed mark itself ideally should be the interrelated element for the parody defense under the First Amendment.  Despite the above, it would appear the courts do not take themselves too seriously on the matter with various circuits taking slightly different approaches to get to the most amicable results.