Exercising Function Over Form: The Second Circuit Corrects the Christian Louboutin Ruling while Avoiding the Doctrine of Aesthetic Functionality

About a year ago, I wrote an article discussing the Christian Louboutin v. Yves St. Laurent decision, Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F. Supp.2d 445 (S.D.N.Y.2011) (the “Mistaken Case”), and how it exposed the lack of communication between Customs and Border Protection (“CBP”) and the United States Patent and Trademark Office (“USPTO”).  A link to that article can be found here.  What I left out of my article was my confusion and disagreement with the court’s decision to purportedly cancel Christian Louboutin’s (“CL”) trademark (trade dress) for the red lacquered sole adorning its high heeled shoes (“Mark”). 

In the Mistaken Case, the lower court made an overreaching and overbroad ruling that prohibited single color trademarks (trade dress) from being protected in the fashion industry.  A couple of months ago, the U.S. District Court of Appeals for the Second Circuit overturned the lower court’s holding, which was based on, as Judge Cabranes put it, an “[i]n correct understanding of the doctrine of aesthetic functionality”.  See Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc., 696 F.3d 206 (2012) (the “New Case”). 

It wasn’t until I was at a Christmas party explaining the case to some friends, one of which was rocking the long heels and red bottoms (CL shoes), that I decided to revisit the case.    I was pleasantly surprised to have one of those “it’s not me, it’s you” moments, when I realized that it was the lower court that misunderstood the application of the aesthetic functionality doctrine, not me.  The New Case, although punting on a decision regarding the aesthetic functionality doctrine, holds that a single color is worthy of trademark protection, even in the fashion industry, if it has acquired distinctiveness by establishing secondary meaning in the public’s eye.  In other words, the mark or symbol has come to be known as a brand or source identifier.

The courts in the Mistaken Case and the New Case both made quick work of determining that the Mark had acquired distinctiveness by establishing secondary meaning.  However, in the Mistaken Case, the court used the doctrine of aesthetic functionality to terminate the Mark.  A mark is aesthetically functional when an ornamental feature of the mark effectively limits competition within the relevant market.  I can understand the argument that by allowing CL a monopoly over the lacquered red sole, the Mark could limit competition.  However, as the Mistaken Case failed to appreciate, and the New Case deftly articulated, it is the contrast; the arbitrary presence of the lacquered red sole that makes the Mark distinctive.  With this in mind, the court directed the USPTO to amend the Mark so that it only applies in situations where the upper shoe contrasts with the lacquered red sole.

This decision was a win-win for everybody involved, including all the consumers out there who spent the premium for the long heels and red bottoms.

Patent Attorney, Richard Litman and Six Other IP Attorneys Join Becker & Poliakoff

Becker & Poliakoff announced that Richard C. Litman, a patent attorney and founding shareholder of the Litman Law firm based in Manassas, Virginia has joined Becker & Poliakoff. With more than thirty years in legal practice, Mr. Litman joins Becker & Poliakoff along with five other registered patent attorneys, six registered patent agents, a trademark attorney and a staff of twenty. He will chair the firm’s Intellectual Property & Emerging Technologies Practice Group, and serve as the Managing Shareholder of the firm’s new office in Northern Virginia. Based near the U.S. Patent and Trademark Office (USPTO) in Virginia, the new Becker & Poliakoff practice also includes former USPTO Director Richard J. Apley who leads the team of patent practitioners, and patent searchers, patent illustrators, technical specialists and client service managers. The new practice group represents universities, research centers, government programs, inventors, and emerging companies around the world and domestically which are developing and protecting inventions of all types, including energy, water and environmental technology, information and communications technology, and life sciences, medical and biotechnology.

Gary Rosen, the firm's Managing Shareholder and an IP litigation attorney noted that the addition of the Litman firm further expands the firm's capacity to handle complex IP litigation.  

"Richard's practice complements our existing practices and accelerates our efforts to grow and diversify our service offerings to clients," said Gary C. Rosen, Managing Shareholder of the firm. "Richard and his team have already begun working with attorneys in our New York and Florida offices on the formation and structuring of technology business entities, licensing and commercial contracting matters, mergers and acquisitions, international IP protection, and technology development and commercialization.

Litman, a 1979 cum laude graduate of the University Of Miami School Of Law, holds two advanced law degrees, a Masters in Forensic Sciences and a LL.M. in Patent and Trade Regulation Law obtained while serving as the Food and Drug Law Institute Fellow. He is a Registered Patent & Trademark Attorney and a member of the Florida, Virginia, D.C., Maryland and Pennsylvania bars. He also serves as chairman of a commercial bank in Northern Virginia

Use of "Lens" Mark for Software Less than Clear

In an interesting case, the U.S. Court of Appeals for the Federal Circuit recently ruled that Lens.com abandoned its trademark in "Lens" with respect to computer software featuring programs used for electronic ordering of contact lenses in the field of opthalmology, optometry and opticianry.

1-800 Contacts Inc. petitioned the TTAB to cancel the "Lens" registration claiming the registration was fraudulently acquired or, alternatively, abandoned as Lens.com did not offer any computer software for sale per the registration.   The TTAB granted summary judgment to 1-800 Contacts Inc. finding that the mark was indeed abandoned.  Lens.com argued that since its website, which sells contact lenses, ran on software it was using software and therefore was making such use in commerce.  While the Federal Circuit noted that "use in commerce" did not require an actual sale of goods, the key issue was whether the software was merely incidental to the retail sale of contact lenses and not purchased for its own intrinsic value.  The Court used a three factor test, namely whether the software "(1) is simply the conduit or necessary tool useful only to obtain applicant's services; (2) is so inextricably tied to and associated with the services as to have no viable existence apart therefrom; and (3) is neither sold separately from nor has any independent value apart from the services."  The Court found that the software used by Lens.com was merely the "conduit through which it renders its online retail services."  The key being that the mark was used in connection to the sale of contact lenses not the software.

"Please Do Not Disturb"

The Federal Trade Commission announced recently that it has filed suit against the Wyndham Worldwide Corporation and three subsidiaries for "alleged data security failures that led to three data breaches at Wyndam hotels in less than two years." The complaint claims that Wyndham's privacy policy failed to accurately reflect the security measures taken to protect consumers' personal information and that such failure had caused substantial consumer injury. As such, the FTC charged the company of engaging in unfair and deceptive security practices in violation of the FTC Act. According to the FTC, "the breach led to the compromise of more than 500,000 payment card accounts, and the export [of] hundreds of thousands of consumers' payment card account numbers to a domain registered in Russia." In its press release, the FTC noted that even "after faulty security led to one breach, Wyndham still failed to remedy known security vulnerabilities; failed to employ reasonable measdures to detect unauthorized access; and failed to follow proper incident response procedures." Based on the frequency of such breaches by numerous companies and organizations, it is critical that businesses consistently review their privacy policies and procedures so as to avoid the legal exposure, negative publicity and potential harm to its clients, customers or other stakeholders.

Decisions by Both FTC and Ninth Circuit in Less Than a Week Leaves POM Wonderful Feeling Not So Wonderful

In an Initial Decision, Chief Administrative Law Judge D. Michael Chappell upheld a Federal Trade Commission complaint that accused POM Wonderful LLC, its sister corporation Roll Global LLC and company principals of violating federal law by making deceptive claims in several advertisements. The claim made by POM in the ads included that POM Wonderful 100% Pomegranate Juice and POMx supplements would treat, prevent or reduce the risk of heart disease, prostate cancer, and erectile dysfunction.

An order issued with the decision would bar POM and the other respondents from making any representation about the “health benefits, performance or efficacy” of POM products unless the representation is not misleading and the POM respondents possess “competent and reliable scientific evidence…to substantiate that the representation is true.” The order would also bar POM and the other respondents from representing that any of the products “is effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease” unless it is not misleading and the respondents possess “competent and reliable scientific evidence…to substantiate that the representation is true.” Moreover, the order would also bar the respondents from misrepresenting “the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research.”

The Initial Decision rejected the part of the order proposed by FTC staff that would have required the POM respondents to receive prior approval from the Food and Drug Administration before representing that any POM product is “effective in the diagnosis, cure, mitigation, treatment, or prevention of any disease, including, but not limited to, any representation that the product will treat, prevent, or reduce the risk of heart disease, prostate cancer, or erectile dysfunction.”

The Initial Decision is subject to review by the full FTC on its own motion, or at the request of any party. Unless a timely notice of appeal is filed, along with a timely appeal brief, or the FTC places the case on its own docket for review or stays the date of the decision, the Initial Decision will become the FTC decision 30 days after being served on the parties.

If you would like to review the full release issued by the FTC earlier today, along with links to the Initial Decision and other related documents, please click here.

Ironically, just last week, the United States Court of Appeals for the Ninth Circuit filed its decision in the case of POM Wonderful LLC v. The Coca Cola Company. In that case, the Court affirmed the lower court’s summary judgment barring POM’s Lanham Act claim asserting false advertising on the part of The Coca Cola Company. We’ll take a closer look at that decision in a subsequent posting.

Second Circuit Reinforces 512(c) Safe Harbor in Viacom v. YouTube Opinion

Yesterday the United States Court of Appeals for the Second Circuit issued its opinion in the Viacom International, Inc. v. YouTube, Inc matter. Recall that this is the case pitting Viacom against YouTube and its parent, Google in which Viacom has argued that YouTube’s actions, or inaction, in relation to certain infringing material on the video site does not entitle it to the safe harbor protection afforded by §512(c) of the Digital Millennium Copyright Act. Viacom appealed the ruling by the United States District Court for the Southern District of New York, which had granted summary judgment to defendant YouTube finding that the site was, in fact, entitled to safe harbor protection.

While the Second Circuit agreed with the lower court’s position that the §512(c) safe harbor requires knowledge or awareness of specific infringing activity it vacated the order “because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website.” Interestingly, the Second Circuit, in an opinion authored by Circuit Judge Cabranes, referred to several email exchanges among YouTube personnel, including co-founders, Chad Hurley and Steve Chen, which the court believed could possibly, in the view of a jury, support such a finding of such actual knowledge. The court added, however, “that although the foregoing emails were annexed as exhibits to the summary judgment papers, it is unclear whether the clips referenced therein are among the current clips-in-suit. By definition, only the current clips-in-suit are at issue in this litigation.” While the court addressed several issues in its opinion, of particular interest was its findings related to the “actual knowledge or awareness of specific infringing activity” issue. Back in December of 2011, the Ninth Circuit had addressed substantially the same issue in UMG Recordings, Inc. v. Shelter Capital Partners, LLC, 667 F.3d 1022 (9th Cir. 2011), which I wrote about at the time and can be found here. The Second Circuit in referring to the Ninth Circuit’s holding in that case (which the Second Circuit called the “most explicit discussion of the §512(c) knowledge provisions”), as well as the decisions of other courts “generally in accord,” the Second Circuit went on to underscore that while “we decline to adopt the reasoning of those decisions in toto, we note that no court has embraced the contrary position – urged by plaintiffs – that the red flag provision ‘requires less specificity’ than the actual knowledge provision.

The Second Circuit opinion can be found here.

Good Ol' Fashion Invasion of Privacy

A complaint was recently filed in the United States District Court for the District of Rhode Island by Gabrielle Lisnoff against her doctor, Michael Stein, M.D. The complaint alleges that Dr. Stein intruded upon Ms. Lisnoff’s seclusion, appropriated her likeness, gave unreasonable publicity to her private life and intentionally inflicted emotional distress. The complaint stems from publication of Dr. Stein’s book, The Addict: One Patient, One Doctor, One Year, which according to the complaint is about the plaintiff’s “life and history with drug addiction.” Apparently, Ms. Lisnoff was treated by Dr. Stein from “approximately 2005 through approximately 2010” when, during the course of “purporting to treat the Plaintiff”, Dr. Stein “elicited private facts and stories from her and probed into her personal affairs.” The complaint states that in or about late March, 2009, Ms. Lisnoff was conducting online research for a college class when she discovered Dr. Stein’s book. After purchasing the book, to her “shock, surprise and dismay, many of the stories contained in the book were quoted from what she had told the Defendant during her treatment sessions or were closely adapted from private facts that she had confidentially shared with him during her appointments with him for treatment.”

Without delving deeply into the particular facts of this complaint as they appear to be rather sparse and, naturally, drawn only from the plaintiff’s purview, it is worth using this complaint and its filing to at least revisit the heart of privacy law, namely the privacy torts. Today, privacy law is implicated in everything from social media to mobile apps to big data to GPS tracking and technology breaches, so it might be worth taking just a moment to remember the kinds of privacy breaches that were applicable a hundred years ago before technology and ease of informational access changed the nature of the conversation. The privacy breaches I am referring to are (i) public disclosure of private facts, (ii) intrusion upon seclusion, (iii) false light and (iv) appropriation of name and likeness. Each of these represents a fairly distinct type of privacy tort (although early cases sometimes seemed to intertwine the “public disclosure” and “seclusion” torts) defined specifically on a state level, but generally in the Restatement (Second). For a good analysis of these torts, I would recommend the classic article by William Prosser titled Privacy, 48 Cal. L. Rev. 383 (1960). It can be found here.