Page 11 - Intellectual Property

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Intellectual Property | MONDAY, MARCH 27, 2017 | S11
be registered if “secondary meaning” can be shown. 15 U.S.C. §1052(f). “Secondary meaning arises when a symbol or device, not inherently distinctive at the time of its adoption, later acquires distinctiveness such that the symbol or device serves as a mark to indicate the source of the associated goods.” G.H. Mumm & Cie v. Denoes & Geddes, 917 F.2d 1292, 1294 (Fed. Cir. 1990). An owner can establish secondary meaning by show- ing through marketing expenditures, sales volume, and other means that the consum- ing public associates the mark with a single source. For example, AMERICAN AIRLINES is an enforceable trademark because the public associates the mark with a speci c airline. As another example, GALLO has secondary meaning for wine because the public associ- ates wines baring that mark as originating from a single source. E. & J. Gallo Winery v. Pasatiempos Gallo, S.A., 905 F. Supp. 1403 (E.D. Cal. 1994).
Preclusion of Others: ‘Taylor Wine’
Where a family name is an enforceable trademark, others can be precluded from using it. While it may at rst blush seem offen- sive to prohibit someone from using their own name, the law concludes that prevent- ing consumer confusion is more important that allowing for the use of a family name as a trademark with competitive goods. After all, we would not want anyone with the last name “Ford” to be able to sell cars using a FORD trademark and confusing consumers as to what cars originate with the genuine producer. Nor would we want someone to be
Overseas
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to determine whether its foreign activity (e.g., procurement, manufacturing and distribution) properly falls into this seemingly narrow excep- tion to “sales” and “offers to sell” under U.S. patent law. This is especially true for those companies that generate substantial revenue from “foreign sales.” Nevertheless, Halo leaves open that under a different fact pattern, where additional activity occurs in the United States, foreign sales could be captured by U.S. patent law. For instance, in FlowRider Surf v. Paci c Surf Designs, although the court technically denied the discovery of foreign sales, it still permitted the plaintiff to discover whether the defendant was improperly classifying these sales under Halo, because the defendant did not state how it was “de ning foreign sales and offers to sell.” No. 15cv1879, 2016 U.S. Dist. LEXIS 153560 at *19-20. (S.D. Cal. Nov. 3, 2016). This case proves the point that it is better to audit foreign conduct prior to U.S. litigation, where it will be susceptible to costly and resource intensive scrutiny.
The Foreign Catch
Trademarks have not escaped the foreign claw either. In Trader Joe’s v. Hallatt, the Ninth Circuit found that Lanham Act claims were suf ciently alleged based on products purchased in the United States and resold in
able to change their last name to try to get a business advantage. For example, where a defendant changed his last named from Mumm van Schwarzenstein to “Mumm” and sought to use it as a mark on champagne, the Second Circuit found this to infringe on the established MUMM mark for champagne. Societe Vinicole De Champagne v. Mumm, 143 F.2d 240 (2d Cir. 1944).
The use of family names as trademarks can also present thorny issues where there is a falling out within the business and different members of the family attempt to indepen- dently continue doing business under the fam- ily name. The most notable trademark case concerning this issue is Taylor Wine v. Bully Hill Vineyards, 569 F.2d 731 (2d Cir. 1978).
In that case, the plaintiff, Taylor Wine, was founded in 1880 by Walter Taylor and “Tay- lor” wines developed into the premier Finger Lakes brand. Walter Taylor’s grandson, Walter S. Taylor, served in an executive position with the Taylor Wine Company until 1970 when he was promptly terminated after giving a speech at an industry reception in which he blasted the wine industry for hiding from the public that chemicals and other ingredients were being added to wines.1 After his termi- nation, Walter S. Taylor incorporated Bully Hill Vineyards and proceeded to dedicate his efforts to developing the winery.
In early 1977, Bully Hill began marketing wines under the trademark “Walter S. Taylor” and using on its label the statement that it was “Owner of the Taylor Family Estate” and that it was founded in 1878. In fact, in 1878 Walter Taylor had started the winery whose assets were transferred to the Taylor Wine
Recent U.S. cases have cre-
ated benchmarks of patent, trademark, copyright, and trade secret liability for foreign activ- ity, and businesses should take heed.
Canada because of reputational harm owing from the Canadian sales to U.S. trademarks. 835 F.3d 960, 970-72, 975 (9th Cir. 2016).2 This case should cause companies to re-evaluate their conduct in other countries to deter- mine whether any foreign activity could be construed as causing reputational harm to another’s brand or trademarks in the United States. Normally, a company operating in a foreign country would only be concerned about complying with that country’s laws; however, Trader Joe’s highlights the need to have uniform procedures across all countries to ensure the same high standards are fol- lowed throughout the product life cycle.
The extraterritoriality of copyrights has also been pushed. In Geophysical Servs. v. TGS-Nopec Geophysical Servs., the Fifth Cir- cuit af rmed that there is no claim for con- tributory copyright infringement because the “direct infringement ... occurred entirely extraterritorially” despite the eventual impor- tation of the alleged copied material to the United States. 2017 U.S. App. LEXIS 4286 at
Company. Shortly after Coca-Cola acquired the Taylor Wine Company, it led suit against Bully Hill Vineyards to stop the use of the Taylor name and succeeding in obtaining an injunction prohibiting Bully Hill from using the Taylor name.
While it may at rst blush seem o ensive to prohibit someone from using their own name, the law concludes that preventing consumer confusion is more important that allowing for the use of a family name as a trade- mark with competitive goods.
On appeal, the Second Circuit immediately recognized that the Taylor Wine Company had established secondary meaning for the TAYLOR mark entitling it to protection. The Court also recognized that a strict prohibi- tion on using the Taylor name altogether was inappropriate. It therefore remanded the case to determine speci c limitations:
We have concluded that neither Bully Hill nor Walter S. Taylor should use the “Taylor” name as a trademark, but that the defendant may show Walter’s per- sonal connection with Bully Hill. He may use his signature on a Bully Hill label or advertisement if he chooses, but only
*26-27.(5th Cir. March 10, 2017). A contrary result for foreign conduct was reached for trade secrets. In Certain Rubber Resins and Processes for Manufacturing Same, Inv. No. 337-TA-849, the full Commission issued a 10-year ban on products developed based on trade secrets misappropriated in China. Inv. No. 337-TA-849, Comm’n Opp.3
Foreign Conduct Matters
These cases demonstrate that foreign con- duct can still be ensnarled by U.S. IP laws. And it is critical for companies operating overseas to apply the same U.S. principles consistently abroad in dealing with their resellers, partners, suppliers, and other entities in the manufac- turing and distribution chain. This includes drafting uniform guidelines, procedures, and contracts that clearly delineate the expecta-
with appropriate disclaimer that he is not connected with, or a successor to, the Taylor Wine Company. He must also be restrained from using such words as “Original” or “Owner of the Taylor Fam- ily Estate.”
After remand, a narrower injunction was issued, which was largely af rmed by the Second Circuit. Taylor Wine v. Bully Hill Vineyards, 590 F.2d 701 (2d Cir. 1978). Among other things, the injunction precluded Bully Hill from using TAYLOR as a trademark.
Following the issuance of a permanent injunction, Walter S. Taylor personally drove to the Taylor Wine Company to deliver infring- ing Bully Hill labels for destruction. He was closely followed by a Bully Hill tractor pull- ing a manure spreader. Walter S. Taylor also adopted a goat that he kept on display at the winery and he issued a statement that christened Bully Hill wines for years to come: “They took my name and heritage, but they didn’t get my goat.”
While Bully Hill was clearly dissatis ed, the Taylor Wine decision represents the court’s attempt to balance the need to enforce trade- mark laws while still allowing an individual to acknowledge his own last name. The deci- sion addresses many of the legal complexi- ties involved when using a surname as a trademark.
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1. The background of this case was addressed in de- tail in Lucien Rhodes, “They Took My Name But They Didn’t Get My Goat,” Inc., Dec. 1, 1981, available at http:// www.inc.com/magazine/19811201/2124.html.
tions and responsibilities of the parties. Com- panies should further understand their own product life cycle and every entity the affects that cycle to ensure there is no gap. To do oth- erwise would expose such companies to U.S. IP liability and potentially signi cant damages.
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1. This case was appealed to the U.S. Supreme Court, and a decision is expected soon.
2. One could potentially argue that this case has a unique set of facts, where the defendant “chose to name his [Canadian] store Pirate Joe’s, suggesting that he knowingly treads on Trader Joe’s goodwill and pirates Trader Joe’s’ intellectual property ... [and one of defen- dant’s] employees allegedly admitted that we’re pirat- ing Trader Joe’s, sort of.” Id. at 974 (internal quotations omitted).
3. The Federal Circuit af rmed under Fed. Cir. R. 36 without opinion. Sino Legend (Zhangjiagang) Chem. v. ITC, 623 F. App’x 1016 (Fed. Cir. 2015). The Supreme Court denied certiorari. Sino Legend (Zhangjiagang) Chem. v. ITC, 137 S. Ct. 711 (2017).
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