Trademark
Willfulness not Required to Recover Profits in Trademark Infringement Cases: Romag Fasteners, Inc vs Fossil Group
The U.S. Supreme court ruled last Thursday that trademark infringers may be subjected to disgorge profits to the trademark owner even in cases where the infringers did not willfully, effectively increasing the monetary relief available to trademark owners.
Under the Lanham Act, trademark owners can recover the defendant-infringer’s profits in cases of trademark confusion or false designation of origin “subject to the principles of equity.” 15 U.S.C. §1117(a). While Section 1117(a) requires a showing of “willful” infringement in order to recover an infringer’s profits for claims of trademark dilution under §1125(c), the Act does not expressly require willfulness for other types of infringement claims, i.e., trademark infringement under §1125(a). The lower circuit courts were split as to whether “willfulness” was an implied requirement for disgorgement of profits in other trademark infringement cases. The Supreme Court on has clarified that the answer is “no.”
In this case, Romag and Fossil had signed an agreement that allowed Fossil to use Romag’s fasteners in Fossil’s handbags and other products. Romag soon discovered, however, that the factories Fossil hired in China to make its products were using counterfeit Romag fasteners—and that Fossil was doing little to guard against the practice. Unable to resolve its concerns amicably, Romag sued. The company alleged that Fossil had infringed its trademark and falsely represented that its fasteners came from Romag.
The district court’s jury ruled in favor of Romag but found that Fossil’s conduct had not been willful. The district court then refused to award $6.8 million, as requested by Romag, in lost profits as the U.S. Court of Appeals for the Second Circuit precedent required a finding of willful infringement as a prerequisite to a lost-profits award. On appeal, the Second Circuit affirmed.
The Second Circuit’s ruling was vacated by unanimous opinion. Eight of the nine justices signed the ultimate opinion. Justice Sonya Sotomayor, the only justice not to sign the majority opinion, concurred on the judgment but criticized the majority for staying “agnostic” about whether profits can be granted in cases of “innocent infringement.”
It is important, however, to note that the Supreme Court still held that a defendant's state of mind, i.e., whether the infringement was willful, is still a "highly important consideration in determining whether an award of profits is appropriate," although not a precondition.
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Don’t Step on New Balance’s Shoes: New Balance Wins $1.5 million Suit Against Chinese Competitor New Barlun and Settles with Nautica.
On April 16, 2020, The Shanghai Pudong New District People’s Court ruled in favor of New Balance Trading (China) Co., Ltd (New Balance) against Niu Ba Lun (China) Co., Ltd (New Barlun) for unfair competition and awarded New Balance 10.8 million RMB or approximately $1.53 million USD in damages. Additionally, the court issued an injunction against further use of the New Barlun logo.
New Balance is a Massachusetts-based athletic apparel and shoe company, founded in 1906, that has long branded its merchandise using a slanted or block N logo. New Barlun is also an athletic apparel and shoe company that is based in Fujian, China and similarly uses a slanted N logo to market its merchandise. Here the Chinese subsidiary of New Balance sued New Barlun under China’s unfair competition laws claiming that New Barlun’s logo, under Chinese Trademark 4236766, not only causes customer confusion between the two companies’ products but also constitute unfair competition as New Barlun’s use of its logo unduly affects New Balance’s reputation and goodwill.
In China, trademarks may be protected via exclusive rights granted by the Chinese Trademark Office or via “Commodity decoration with certain influence” civil rights protected by the Unfair Competition law. The two are separate types of intellectual property rights with different scopes and durations. Although a trademark infringer may cause both trademark infringement and unfair competition at the same time, they are different legal causes of action and the right holder can clearly choose which claim(s) to pursue.
Here, New Balance brought action against New Barlun under China’s Unfair Competition law. The court, using the “principle of good faith,” and held that even though New Barlun’s logo is a registered trademark, it violates the principle of good faith due to its infringement on the previous rights and interests held by New Balance. Specifically, it found that New Balance has long used its slanted N logo in the apparel and shoe industry, which has obtained influence and serves to identify a source of goods. New Barlun’s logo causes market confusion, which violates the principles of good faith and recognized business ethics and constitutes unfair competition.
Additionally, New Balance has also reached a settlement with Nautica Brand (an American based apparel company owned by Authentic Brands Group) after it had filed a trademark infringement lawsuit last year against Nautica for its similar use of a N logo on its apparel and shoes in the United States.
Specifically, New Balance claimed that Nautica, which had recently begun using a block N design logo on its clothing and apparel, was likely to cause confusion among customers and/or suggest an affiliation, connection, or association between New Balance and Nautica. This in turn, as New Balance claims, would dilutes the distinctive quality of New Balance’s famous ‘Block N Marks;’ and constitutes unfair competition.”
The parties agreed to dismiss “without prejudice” all claims against Nautica, with both brands to cover their own costs and attorneys’ fees, according to a court filing.
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3M Wins restraining order against Price Gouger
As explained in last week's article, 3M had filed numerous trademark lawsuits to combat price gougers of its 3M branded n95 respirator masks. On Friday, the United States District Court for the Southern District of New York has granted a motion for a temporary restraining order against Performance Supply LLC from performing a variety of allegedly misleading behavior. It also ordered briefing and a hearing on a longer-term preliminary injunction.
The court found that price-gouging was causing permanent damage to the company's reputation. Specifically, the court stated “[d]efendant’s exploitation of a global health disaster to confuse and deceive government officials into believing that defendant is an authorized representative of 3M’s products — and offering those products for sale at inflated prices — threatens immediate and irreparable harm to 3M’s brand and to those desperately in need of [masks], including healthcare workers working on the front lines of COVID-19,” 3M wrote in the motion."
The court has given Performance Supply LLC until April 30 to explain why the court should not impose a longer restriction. The company is also required to appear in court on May 4.
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Copyright
Religious Institutions not always safe from Copyright suits
Ever since the COVID-19 pandemic has forced governments to impose stay at home orders, a number of religious institutions have resorted to streaming their religious services online. Although, the internet makes sharing content to a wide array of audiences easy and US Copyright laws grants certain exemptions to religious organizations to perform otherwise copyrighted musical works, they are not immune from copyright lawsuits.
Section 110[3] of US Copyright law contains an exemption for religious institutions to perform or reproduce musical works for religious worships, which many federal courts have interpreted to narrowly apply to only “places of worship.” More specifically, this exemption does not apply to live streaming or rebroadcasting a recording of protected works in a service.
An example of the “potential risks and liabilities for copyright infringement occurred in late 2011 when music composer Yesh Music filed a complaint against First Baptist Church of Smyrna, Tennessee, seeking a judgment exceeding $150,000. The church performed two of Yesh’s musical compositions in a worship service live-streamed from its website. More recently, Yesh filed a similar $3 million lawsuit against renowned pastor Joel Osteen and Lakewood Church in Houston, Texas for streaming Yesh’s song “Signaling Through the Flames” during a worship gathering.”
Religious organization need to vigilant when holding online religious services and performing musical works that are not licensed or otherwise not in the public domain.
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