The U.S. Patent and Trademark Office has a new random audit procedure for trademarks aimed at removing deadwood from the Register.

Trademark owners seeking to register marks in the U.S. Patent and Trademark Office (PTO) often claim a broad array of goods and services based on optimistic marketing or business plans, or in the hope that a broader goods and services description will keep competitors from using their mark. Some trademark owners never fulfill their optimistic plans, are unable to show trademark use, and consequently do not receive a registration. Others can only show use of their registered trademarks on some of their goods and services, despite signing an affidavit that all listed goods and services are in use under the mark. The Section 8 Affidavit requires trademark owners to show continued use of the mark between the fifth and sixth year of registration and requires that any goods and services no longer provided under the registered mark must be deleted from the record. Ignore this requirement and you had better hope the Hound can hold off the White Walkers.

The random audit is the result of a multi-year pilot program launched in 2012 to assess the accuracy and integrity of the Trademark Register as to actual use of marks with the goods/services listed in the registry.

Under the pilot, 500 trademark registrations with six-year Section 8 or Section 71 Declaration of Use filings were randomly selected for additional proof of use. In the pilot investigation:

  • Fifty percent of registrations were unable to verify previously claimed use
  • Thirty-five percent of registration owners deleted goods/services for non-use
  • Sixteen percent failed to respond to pilot office actions and were cancelled

The pilot ended, but the dismal showing indicated a need for ongoing measures to encourage registration owners to file accurate declarations of use.

Under the new rules, trademark owners will need to heed the motto of the House of Stark. As the meaning behind the words “Winter is Coming” is one of warning and constant vigilance, so the trademark owner should make sure now that goods and services are accurately identified in a registration.

The U.S. PTO will conduct random audits of Section 8 Affidavits and Declarations of Continued Use or Excusable Non-Use, where the mark in question is registered for more than one good or service in a single class. Trademark owners selected for an audit may be required to provide additional proof of use of their marks in commerce. Further, marks should be used as originally registered because a modified mark is not entitled to the same protections as the original mark. No new spaces, hyphens, or font changes.

For additional information on maintaining the registration of your trademarks or on how the new rules may affect your registrations, please contact Micheline Johnson or any member of the Firm’s Trademark and Branding Group.

When filing a patent application with the United States Patent and Trademark Office (USPTO), certain applicants have the option to designate “small entity status” or “micro entity status.” Claiming either small or micro entity status has some benefits, but can also have drawbacks. When faced with that decision, what should the company do?

Most patent applicants pay regular undiscounted patent fees (referred to as large entity fees). However, certain applicants qualify for reduced fees. A “small entity,” which the USPTO has defined as an individual, a small business concern (i.e., less than 500 employees), a 501(c)(3) nonprofit organization or a university, pays fees that are reduced (for the most part) by 50 percent, as long as the applicant has not assigned, licensed or otherwise conveyed an interest in the invention to a non-small entity. Other applicants may qualify for “micro entity status,” which entitles the applicant to a 75 percent reduction in official patent office fees.

Authorized by the American Invents Act, micro entity status is intended to benefit independent inventors that are just beginning to file for patent protection as well as applicants that work for institutions of higher education. An applicant can qualify for micro entity status as long as they qualify as a small entity and meet additional qualifications (see “Gross Income and Previous Application Basis” or the “U.S. Institution of Higher Education Basis“).

Like with most matters that appear to be too good to be true, micro entity status does have drawbacks, which ultimately can affect the validity of an issued patent. Unlike an application that claims small entity status, micro entity status must be re-evaluated and recertified each and every time a fee is paid to the USPTO. Having to pay a fee to the USPTO, as is the case with many governmental agencies, happens quite frequently during the patent prosecution process. Further, notification of a loss of entitlement to micro entity status, such as if a technology is licensed to a licensee who does not qualify for micro entity status, must be filed in the application or patent prior to paying, or at the time of paying, any fee after the date on which status as a micro entity is no longer appropriate. These burdens are not placed on those claiming small entity status, where small entity status only needs to be determined at the time of filing the application, at the time of payment of an issue fee or at the time of payment of a maintenance fee.

Of importance to emerging companies whose value is often tied closely to a handful of patents and applications, the validity of the patent may be at stake if micro entity status is incorrectly (and intentionally) claimed. If micro entity status was established in good faith but in error, the USPTO will excuse the error upon payment of a fee and completion of other formalities. If micro entity status was established fraudulently, the patent may be held as invalid.

Alas, as with many decisions entrepreneurs and business owners make, the decision to file as a small entity or as a micro entity often requires a cost-benefit analysis of whether the cost savings of micro entity status justifies the additional hurdles and pitfalls during the patent process.

The United States Supreme Court’s May decision in TC Heartland LLC v. Kraft Foods Group Brands LLC was widely seen as a limitation on the jurisdictions in which a patent owner can file infringement claims. That decision set off a minor scramble among patent owners to find suitable and accessible alternative forums. More recently, a district court decision has swung the pendulum in the other direction and could potentially preserve the ability of patent owners to choose their own venue, including one so-called “rocket docket” in the Eastern District of Texas.

Despite its relatively rural environs, the Eastern District of Texas has historically been the most popular venue for patent litigation filings in the United States, collecting more than 38 percent of new case filings in 2016. The Eastern District of Texas is favored by many patent owners due in part to factors such as the “rocket” pace of the district’s litigation timetable and the experience of many members of the district’s bench with the complex issues arising in such cases. U.S. District Judge Rodney Gilstrap alone was assigned more than 20 percent of all patent cases filed in U.S. federal district courts in 2016, and has handled more than 4,000 patent infringement lawsuits since taking the bench in the U.S. District Court for the Eastern District of Texas in 2011.

In TC Heartland, however, the Supreme Court threatened to throw a wrench in the ability of districts such as the Eastern District of Texas to accept a disproportionate amount of patent lawsuits by interpreting one specific provision of 28 U.S.C. § 1400(b), the “sole and exclusive” venue provision for patent infringement actions. Section 1400(b) reads that a patent owner can only bring an infringement claim “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” The TC Heartland decision interpreted the first clause of § 1400(b), holding that a defendant “resides” only in its state of incorporation. As a result, the number of new patent suits filed in the Eastern District of Texas dropped by an estimated 18 percent in the immediate aftermath of the TC Heartland decision, while the number of new patent suits filed in Delaware, where the bulk U.S. entities are incorporated, approximately doubled.

Now, however, a decision authored by Judge Gilstrap out of the Eastern District of Texas has interpreted the other clause of § 1400(b), allowing suits to be filed in districts where the defendant “has committed acts of infringement and has a regular and established place of business,” a provision of § 1400(b) that didn’t receive very much attention until the Supreme Court’s relatively restrictive decision in TC Heartland. However, Judge Gilstrap’s ruling appears to re-inject some flexibility back into the venue statute.

The case is Raytheon Co. v. Cray Inc., filed by patent owner Raytheon Company, a Delaware corporation, against Cray, Inc., a Washington corporation headquartered in Washington but with a (now former) sales executive who kept a home office in Athens, Texas. In determining that Cray was eligible to be sued in the Eastern District of Texas, despite not being incorporated in Texas, Judge Gilstrap outlined four flexible factors to be used in ascertaining whether a defendant “has a regular and established place of business” under the statute: (1) physical presence, (2) defendant’s representations, (3) benefits received and (4) targeted interactions with the district.

Under the first factor, any physical presence by the defendant in the district in question, including the presence of retail stores, warehouses and/or employees, weighs in favor of finding that the defendant “has a regular and established place of business.” Under the second factor, the extent to which a defendant represents, internally or externally, that it has a presence in the district, can lead to a finding that the venue is proper for the defendant in the district in question. The third factor looks at the extent to which a defendant derives benefit from its presence in the district, including but not limited to sales revenue: “significant” revenue earned by the defendant in the district in question would tip the balance in favor of a finding that the defendant has a regular and established place of business there sufficient to be sued in that jurisdiction. Finally, the fourth factor considers the extent to which a defendant interacts in a”targeted way” with existing or potential consumers, users or entities within the district, including offering localized customer support, the existence of ongoing contractual relationships and “targeted marketing efforts” in the district.

Although no single one of the factors outlined by Judge Gilstrap is always determinative, it’s clear that a company’s acts of placing a billboard on a Texas highway or having a distribution warehouse in the district involve a much more tenuous attachment to a given district than incorporating a business there. Of course, Judge Gilstrap’s decision is not binding on other districts, but patent owners and other entities should keep aware of how this post-TC Heartland jurisprudence develops in order to exercise whatever control may be available to them to sue or be sued in a venue of their choosing.

On July 1, 2017, an important grace period terminated for Canada’s Anti-Spam Law (CASL), which initially took effect on July 1, 2014. The beginning of this month marked the end of the two-year grace period for entities to rely on “implied consent” as a basis for sending commercial electronic messages to potential customers, donors, clients or the like. Going forward, entities will need to obtain express consent from all email recipients, or expunge “stale” contacts to avoid potential violations of CASL. A private right of action against offenders that was also set to become available on July 1, 2017 has been put on hold indefinitely subject to Canadian government review.

CASL applies to U.S. companies, including U.S. non-profit corporations, that send email or other electronic messages to recipients in Canada, whether or not the entity is actually aware that one or more recipients is in Canada. This post points out CASL requirements through the lens of a U.S. non-profit, but all companies with geographically wide customer bases or email distribution should review CASL requirements to ensure that they comply before the end of the grace period this weekend.

CASL applies to any electronic message sent to a recipient in Canada if that electronic message qualifies as a Commercial Electronic Message (CEM). A CEM is a message that encourages participation in a commercial activity. CEM includes all types of electronic messages including email, text messages, or audio or video messages sent electronically. By way of example, the following types of electronic messages commonly sent by non-profits may qualify as CEM: (1) emails or other electronic messages soliciting donations; (2) emails or other electronic messages soliciting ticket sales to a paid fundraising event; (3) emails or other electronic messages soliciting sponsorship; (4) emails or other electronic messages soliciting new members, or participation in events; (5) emails or other electronic messages advertising another entity’s commercial products or services; or (6) electronic newsletters or event updates including any of the above types of messaging.

For any emails or other electronic messages which may fall into any of the above categories of CEM, or any other type of messaging that can reasonably be characterized as “encourage[ing] participation in commercial activity,” and which may be sent to a recipient in Canada, the sender should ensure that the message complies with the following consent and content requirements.

Consent Requirements for CEM

Prior to sending any CEM that may be transmitted to a recipient in Canada, the sender should receive and document consent from each recipient of the message in one of the following forms:

A) Express consent (g., electronic mailing list subscribers):

This could be in the form of recipient sign-up for an electronic mailing list or listserv. In order to serve as express consent, all of the following conditions must be present:

  1. An indication at the time of sign-up that the sender is seeking the recipient’s consent to send the recipient future emails/electronic messages;
  2. Notice of an unsubscribe option or other statement indicating that the recipient can withdraw their consent to receive future emails;
  3. The sender’s legal name and mailing address;
  4. Either a website, email address or phone number at which the sender can be reached.

B) Implied consent (g., recent donors):

This would exist if the recipient and the sender have an “existing business relationship.” However, implied consent only lasts for two years from the end of the most recent “business relationship” and must be renewed after that timeframe if the sender wishes to continue to send CEM to these recipients. Prior to July 1, 2017, implied consent did not have a time limit; that is, an entity could send CEM to its entire list of former customers, donors, or volunteers regardless of how long the relationship had been “stale.”

By way of example, implied consent may be found for any recipient that has:

  1. Made a donation to the sender/non-profit within the past two years;
  2. Paid a registration fee for an event held by the sender/non-profit within the past two years;
  3. Volunteered for the sender/non-profit within the past two years;
  4. Purchased products or services from the sender/non-profit within the past two years; and/or
  5. Entered into a contract with the sender/non-profit within the past two years.

Content Requirements for CEM

Any CEM that may be transmitted to a recipient in Canada must include the following:

  1. An unsubscribe mechanism;
  2. The sender’s legal name and mailing address; and
  3. Either a website or email address at which the sender can be reached.

The U.S. Supreme Court recently struck down as unconstitutional the ban on disparaging trademark registrations, but that doesn’t mean a dispensary can get a federal trademark registration.

The Supreme Court’s June 19 decision in the “Slants” case1 undoubtedly makes the other previously prohibited categories of marks registrable – those that are deemed scandalous or immoral. Accordingly, red-light sector businesses, or brands seeking to capitalize on the shock value of a racy or potentially offensive name, should slink through the USPTO now. The PTO itself has said that, if the disparagement clause is an unconstitutional restriction on free speech, then the ban on immoral or scandalous registrations is unconstitutional as well.

However, trademarks used exclusively on illegal (under federal law) goods or services are still blocked from federal registration.  Accordingly, the TTAB on June 16 affirmed the rejection of PharmaCann LLC’s applications for “Pharmacann” and “Pharmacannis” for retail services relating to medical marijuana2. Goods or services related to marijuana are not intended for use in legal commerce and thus may not be registered, despite the fact that 29 states, the District of Columbia and two U.S. territories have legalized marijuana and cannabis for medical use, according to the National Conference of State Legislatures.

The majority of the impact of the Slants decision will likely be in the creative industries, where elements of the music, art, fashion and the like have always sought to shock. The cannabis industry, evolving as it is from criminality, is more than a bit scandalous. However, cannabis commerce will need more than action from the Supreme Court in order to protect its intellectual property. It will need action from Congress to legalize marijuana at the federal level. Decriminalization of the drug is unlikely to happen soon, given both the legislature’s reluctance to address this issue, and its difficulty in working together generally.

At present, Congress has refused to provide funding to enforce federal marijuana prohibitions in states with medical marijuana laws. However, the Trademark Trial and Appeal Board ruled June 162 that a lack of enforcement funds doesn’t mean a law is repealed. The TTAB said that should Congress change its view and appropriate enforcement funds next year, individuals who sold medical marijuana during the funding freeze could be prosecuted.

1 Matal v. Tam, Lee v. Tam, U.S.S.Ct., No. 15-1293, 6/19/17

2 In re PharmaCann LLC, TTAB, No. 86520135, 6/16/17

Yesterday, the Supreme Court of the United States handed down a landmark trademark decision that will pave the way for those with so-called “offensive” or disparaging trademarks to secure federal trademark registration for those marks. To date, the poster child for “disparaging” trademarks has been the Washington Redskins football team, whose name and logo have been the subject of increasingly vocal challenges by Native Americans and others as an offensive stereotype against Native Americans. (Ironically, even the members of the band The Slants, whose lawsuit eventually paved the way for the Redskins to maintain trademark registrations for the team name, were allegedly against the team’s use of the arguably offensive name.)

The case decided yesterday by the Supreme Court originated in 2011 when The Slants, an Asian American rock band, tried to obtain federal trademark registration for their band name. The U.S. Patent and Trademark Office (USPTO) rejected The Slants’ application, citing evidence that the term “slant” is disparaging to Asian Americans. As an arm of the Federal Government, the USPTO is not subject to many of the First Amendment’s restrictions on the regulation of government speech – this is known as the government-speech doctrine. With respect to federal trademark registration, the Lanham Act, enacted in 1946, includes a restriction known as the “disparagement clause,” which prohibits federal registration for a trademark “which may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” Thus the USPTO has, although somewhat inconsistently, refused federal registration for trademarks that it deems to meet this subjective criteria.

Simon Tam, lead singer of The Slants, appealed the USPTO’s decision and the fight eventually made its way to the Supreme Court, where yesterday the Court found the so-called disparagement clause to be unconstitutional as a violation of the Free Speech Clause of the First Amendment. In so doing, the Court rejected the USPTO’s argument that federal trademark registrations fell under the government-speech doctrine. Even though federal trademark registrations are issued by the USPTO, the Court reasoned, “[t]he Federal Government does not dream up these marks, and it does not edit marks submitted for registration.” In other words, “[i]f the federal registration of a trademark makes the mark government speech, the federal government is babbling prodigiously and incoherently … saying many unseemly things … [and] unashamedly endorsing a vast array of commercial products and services.”

The other primary argument advanced by the USPTO in favor of the constitutionality of the disparagement clause was that trademarks are a form of government subsidy. This argument was also rejected by the Court, which contrasted federal trademark registration, for which the applicant pays a fee to the government, to previously-disputed forms of government subsidy, involving instances where the government paid cash or cash equivalents to individuals.

In rendering its decision, the Court held as unconstitutional a provision that has been a fundamental aspect of trademark law for more than 70 years. It’s a victory for free speech advocates, and although it has the potential to open the floodgates for federal registration of marks that some or most may deem offensive, it does not impact the right to actually use those marks in commerce, which right has existed for decades and will continue for the foreseeable future.

Last month, the Federal Circuit issued a decision confirming that a “private” sale of an invention, more than one year before the effective filing date of a patent application for that invention, invalidates the resultant patent. The case, captioned Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., addressed the “on-sale bar” in 35 U.S.C. § 102 and verified that the America Invents Act (AIA) did not change the pre-AIA statutory meaning of “on sale.”

Helsinn owns four patents directed to reducing the likelihood of chemotherapy-induced nausea and vomiting (CINV), which is a serious side effect of chemotherapy. Helsinn sued Teva Pharmaceuticals, which was attempting to market a similar product, for patent infringement. In response, Teva asserted that the patents were invalid due to the on-sale bar. Under U.S. patent law, the sale of an invention more than one year prior (i.e., the “critical date”) to the effective filing date of a patent application for that invention can invalidate any patent claim to the invention.

All four of Helsinn’s patents at issue had established a “critical date” of January 30, 2002, due to a priority claim to a provisional patent application filed on this date. However, in April 2001, almost two years before applying for a patent, Helsinn had entered into a Supply and Purchase Agreement with MGI Pharma. Under the agreement, MGI agreed to purchase certain dosages of the products covered by the patents, depending on which were approved for sale by the FDA.

During a bench trial, the district court held that Teva infringed all the patents in question and that the patent claims were valid. Three of the patents were subject to pre-AIA law, under which the district court recognized that the MGI Supply and Purchase Agreement would constitute a “sale,” although the district court further found that the claimed invention was not ready for patenting until after the critical date, the Federal Circuit later reversed on this point. The fourth patent was governed under the provisions of the AIA and here the court held that the AIA had changed the meaning of the on-sale bar to require a public sale or offer for sale of the invention. Since the MGI Supply and Purchase Agreement did not publicly disclose the details of the invention, the district concluded that there was no sale.

In its decision last month, the Federal Circuit reversed. With regard to the fourth patent, governed by the AIA, the Federal Circuit held that the AIA did not change the meaning of the on-sale bar under § 102. In doing so, the Federal Circuit rejected Helsinn’s argument that the inclusion of new language (“or otherwise available to the public”) in the AIA suggested that the on-sale bar required that the details of the claimed invention be publicly disclosed. The Federal Circuit declined to implement such a “foundational change” to the theory of the statutory on-sale bar, relying upon the U.S. Supreme Court’s discussion in 1829 of commercial exploitation in Pennock v. Dialogue. Accordingly, even Helsinn’s “private” sale of its invention prior to its critical date was sufficient to invalidate the relevant claims in the fourth patent.

While patent applicants in the U.S. have the benefit of a one-year grace period for filing a patent application after novelty-destroying disclosures, this case underscores the hazards of relying upon that grace period. Recommended practice is to meet the absolute novelty requirements generally applicable worldwide and thus avoid any issues in the U.S. as well.

Yesterday, the Supreme Court issued a unanimous decision in TC Heartland LLC v. Kraft Foods Group Grands LLC. At issue was whether Kraft Foods selected the proper venue for suing TC Heartland for infringement. TC Heartland asserted that venue was improper in the District of Delaware because TC Heartland did not “reside” in Delaware and did not have a regular place of business there. The District of Delaware denied TC Heartland’s motion to dismiss or transfer the case to the Southern District of Indiana. The Federal Circuit affirmed denial. The Supreme Court reversed and held that venue was not proper because TC Heartland did not “reside” in Delaware. This is a significant decision because it has the potential to impact a vast number of patent infringement cases currently filed in courts throughout the United States and where such cases will be filed in the future. For example, if you are currently a plaintiff or defendant in a patent infringement case in the Eastern District of Texas, which has the most pending patent infringement cases, your case may be subject to moving to a new district court.

28 U.S.C. § 1400(b) provides the exclusive venue provision for patent infringement cases. Section 1400(b) states: “any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement.” This provision has remained unchanged for nearly 70 years. However, the general venue statute, 28 U.S.C. § 1391, has changed over the years. In particular, Section 1391(c) changed by providing venue for all civil action generally where a defendant is subject to the court’s personal jurisdiction. In its VE Holding Corp. v. Johnson Gas Appliance Co. decision in 1990, the Federal Circuit interpreted the revision in Section 1391(c) to apply to the definition of “reside” in Section 1400(b).

The Supreme Court’s TC Heartland decision rejects the Federal Circuit’s VE Holding decision. The Supreme Court held that “a domestic corporation ‘resides’ only in its State of incorporation for purpose of the venue statute.” No longer can a patent owner select venue simply based on where personal jurisdiction can be found. This greatly decreases the number of venues for a patent infringement case to only the state of incorporation or effectively where infringement occurs and the defendant has an established, on-the-ground presence.

The net result of today’s decision will be the redistribution of patent infringement cases throughout the United States. Whereas the Eastern District of Texas has seen three to five times as many patent cases filed in its court than any other court (2,523 cases in 2015 and 1,654 in 2016), Delaware, a common choice for incorporation, is likely to become the busiest patent court in the nation with many other courts about to see significant increases as well. The redistribution of cases will impact the duration of cases; assessments of likelihood of success and damages in particular cases; the cost of cases; and the efficiency of cases in venues that do not routinely handle patent cases.

With a footprint that includes 24 offices across the southeast and experience with patent infringement cases in courts throughout the United States, Baker Donelson is available to assist both patent owners and those sued for infringement as cases are redistributed. This transition is a particularly good time to obtain a second opinion on your case or to evaluate the efficiency and effectiveness of your current counsel. Baker Donelson welcomes the opportunity to discuss your patent infringement strategy and options as a result of the TC Heartland decision.

The United States Supreme Court, in the case Star Athletica, LLC v. Varsity Brands, Inc., et al., Case No. 15-866, ruled in a 6-2 opinion that two-dimensional designs applied to three-dimensional useful articles, in this case cheerleading uniforms, are entitled to copyright protection. The majority opinion by Justice Clarence Thomas held that a feature of the design of a useful article is eligible for copyright if “the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work — either on its own or fixed in some other tangible medium of expression — if it were imagined separately from the useful article into which it is incorporated.”

Under Section 101 of the Copyright Act, a “useful article” is an item or object “having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.” Such utilitarian objects, including the three-dimensional designs of cheerleading uniforms, are not protected under U.S. Copyright Law.

Justice Thomas wrote for the Court that its test for separability starts with Section 101, in which “‘pictorial, graphic, or sculptural features’ of the ‘design of a useful article’ are eligible for copyright protection as artistic works if those features ‘can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.'” The Court explained that its decision is “not a free-ranging search [f]or the best copyright policy, but rather ‘depends solely on statutory interpretation,'” citing the last Supreme Court opinion to address the issue of separability – the 1952 case of Mazer v. Stein.

The Court described its task in the Varsity case as “to determine whether the arrangements of lines, chevrons, and colorful shapes appearing on the surface of [Varsity’s] cheerleading uniforms are eligible for copyright protection as separable features of the design of those cheerleading uniforms.” The Court, applying this test, held that “one can identify the [designs] as features having pictorial, graphic, or sculptural qualities” and can separate the designs from the cheerleading uniforms on which the designs appear. The majority opinion and the concurrence of Justice Ginsburg gave substantial credence to the fact that Varsity had “applied the designs in this case to other media of expression – different types of clothing – without replicating the uniform.”

By affirming the Sixth Circuit’s reversal of the district court, the Supreme Court rejected two of Star’s arguments: (1) Varsity’s designs are not protectable because they are “necessary to two of the uniforms’ ‘inherent, essential, or natural functions’ – identifying the wearer as a cheerleader and enhancing the wearer’s physical appearance;” and (2) that the separability analysis should include objective components asking whether the design elements reflect the designer’s artistic judgment exercised independently of functional influence or are marketable to a “significant segment of the community” if separated from the underlying useful article.

The Court opined that “asking whether some segment of the market would be interested in a given work threatens to prize popular art over other forms, or to substitute judicial aesthetic preferences for the policy choices embodied in the Copyright Act.”

PRO TIP: The Varsity ruling will impact the fashion industry and its approach to copyright protection, but the ruling also supports other businesses that apply artistic elements on useful articles and may want to consider seeking copyright protection by registering copyright protectable designs at the U.S. Copyright Office.

Baker Donelson represented Varsity from the filing of the complaint through oral argument before the Sixth Circuit and briefing of the case before the Supreme Court. Goodwin Procter and Cowan Liebowitz were also involved with the Supreme Court briefing, while Goodwin Procter handled oral argument before the Supreme Court.

Trademark owners applying for “intent to use” applications risk loss of trademark rights if the identification of goods services in the intent to use application is broader than the actual intended use of the mark.

Brand owners generally want to protect a potential trademark as broadly as possible. Often, this leads to specifying as many goods or services in their intent-to-use trademark applications as might possibly be covered by the planned mark. If no proof of bona fide intent can be marshaled, the registration is vulnerable to attack.

A recent case demonstrates that dreaming big in trademark applications is not to be encouraged. While Kelly Services v. Creative Harbor did not result in a punitive cancelation of the mark’s resulting registration, it nonetheless made it clear that goods and services with only potential plans for use with a mark will be cut out of the registration when challenged. See Kelly Services, Inc. v. Creative Harbor, LLC, No. 16-1200 (6th Cir. 2017).

Section 1(b) of the Lanham Act does not define “bona fide intent,” but the Federal Circuit in Kelly Services required that “the applicant’s intent must be demonstrable and more than a mere subjective belief.” That is, the applicant must show more than a mere intention to reserve a right in the mark. Particularly suspicious circumstances that cast doubt on the bona fides of the application include: (1) excessive numbers of intent-to-use applications in relation to the number of products the applicant is likely to introduce; (2) unreasonably vague descriptions of the proposed goods; (3) excessive numbers of intended products; and (4) excessive numbers of desirable trademarks intended for use on a single new product.

To demonstrate the presence of their bona fide intent to use a mark, however, brand owners can do a number of things. For example, the owner can: (1) conduct a trademark availability search on the mark; (2) develop marketing materials for the brand; or (3) produce correspondence or documents mentioning the planned use of the mark, the licensing of the brand, the regulatory approval of the branded line or the business development of the brand.

Such evidence shifts the burden of proof back to the challenger, who must then produce a preponderance of evidence to the contrary – a much more difficult task in light of demonstrated bona fide intent.

PRO TIP: Before filing a statement of use, compare the identification of goods and services in the trademark application to the goods and services currently offered under the brand, then tailor the identification to the goods and services in use under the mark.