Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • A Service Mark Is Not Always a Trademark

    The Port Authority of New York and New Jersey owns the site on which the World Trade Center in New York sits. The original two towers complex was completed in 1973 and included the “Top of the World” observation deck and gift shops, which were operated under a lease with the Port Authority. As part of the lease, the lessee could only sell merchandise with the WORLD TRADE CENTER or TWC marks with the Port Authority’s consent.

    When the New York World Trade Center was built, there were already other World Trade Centers in the world. They were interested in creating a network, so the Port Authority incorporated the plaintiff World Trade Centers Association in 1969, which received dues from the member organizations.

    By November 1985, the Port Authority had obtained six New York state service mark registrations for advising businessmen as to prospective customers and suppliers, operating facilities for commodities trading, erecting international trade facilities, telecommunications services, commuter rail services, and restaurant services, exhibitions and seminars. On February 18, 1986 the Port Authority assigned the marks to WCTA:

    PORT AUTHORITY has sold and does hereby sell, transfer and convey to WTCA, its successors, assigns and legal representatives, the entire right, title and interest in and to said service mark WORLD TRADE CENTER, said service mark registrations and the good will of PORT AUTHORITY’s business in the services in respect of which the mark is used, together with all rights to apply for, obtain and hold registrations of the same and renewals and extensions thereof, and together with all right to bring suit for any past and future infringement of said mark. PORT AUTHORITY reserves to itself the right and license to use said service mark for the existing and future services.

    About two weeks later the WTCA and the Port Authority entered into a license agreement for the “Licensed Marks,” which were defined as the six New York registered marks, a federally registered design mark for association services, and two Argentinian registrations. The Port Authority was granted a license to use the marks for “the service of fostering world trade and for such additional trade services as LICENSOR may from time to time approve in writing.”

    WTCA then filed an application to federally register WORLD TRADE CENTER for “association services, namely, fostering and promoting world trade and international business relationships.” The application averred that “to the best of [Tozzoli’s] knowledge and belief no other person, firm, corporation or association has the right to use said mark in commerce, either in the identical form or in such near resemblance thereto as may be likely, when applied to the services of such other person, to cause confusion, or cause mistake, or to deceive,” although there were World Trade Centers in New Orleans, San Francisco, Boston, San Diego and Houston that predated WTCA’s incorporation.

    The original five buildings and mall were each leased to single-purpose entities controlled by Silverstein Group. Four of the five buildings and the mall signed trademark license agreements with WTCA. When in 2001 WTCA later sub-leased office space from the Port Authority, the parties signed a letter confirming the Port Authority’s rights under the 1986 Assignment to use the WORLD TRADE CENTER and WTC service marks royalty free and to sublicense them as contemplated by the assignment.

    After the World Trade Center complex was destroyed on 9/11/2001, new buildings 2 through 4 were to be leased again to the Silverstein single-purpose entities, but the Port Authority acquired the single-purpose entity for One World Trade Center, at the time of suit called WTC Tower 1 LLC. WTCA entered into an “Amended and Restated Trademark License Agreement” with the single-purpose entity. The agreement referenced the 2001 letter agreement between the Port Authority and WTCA and stated that “the Original License is hereby continued in full force and effect as amended, restated and superseded in its entirety as follows.” However although the Port Authority was referenced in the agreement, it was not a signatory of this agreement.

    In 2013, WTC Tower 1 LLC contracted with Legends Hospitality LLC to lease and operate the rebuilt observation deck at One World Trade Center. The logo was a combination of the terms “One World Observatory” and “One World Trade Center.” When the observation deck opened, it had souvenirs with ONE WORLD TRADE CENTER on them. WTCA sued the Port Authority for trademark infringement. The accused infringment was in the combining, or authorizing Legends to combine, the term “World Trade Center” with “One World Observatory” in a logo, a mode of use that was prohibited by the 2006 agreement, and by sublicensing the WTC marks for use on merchandise without WTCA’s consent.

    We start with sovereign immunity – the Port Authority was immune from any remedy of injunctive relief or specific performance on the state law claims, so they were dismissed. WCTA’s federal claims, for federal trademark infringement and unfair competition, as well as the claim for declaratory judgment that the 1986 and 2006 contracts were enforceable, survived.

    On the trademark infringement claim, WTCA claimed that it acquired all WORLD TRADE CENTER trademarks and service marks in the 1986 assignment. Not so, the court said – read the assignment carefully: “PORT AUTHORITY has sold and does hereby sell, transfer and convey to WTCA … the entire right, title and interest in and to said service mark WORLD TRADE CENTER, said service mark registrations and the good will of PORT AUTHORITY’s business in the services in respect of which the mark is used …. PORT AUTHORITY reserves to itself the right and license to use said service mark for the existing and future services.” (Emphasis in original.) Recall that the Port Authority at this point was already selling World Trade Center merchandise in the Top of the World observation deck and gift shop. “The assignment contains no language from which the Court could rationally infer that the parties intended to transfer any other rights, including those in trademarks affixed to goods.”

    Indeed the Lanham Act says, and the WTCA argued, that a “service mark” has the same effect as a trademark. But that doesn’t make them the same thing:

    Whatever the legal similarities between the two species of marks, the use of the term “service mark,” particularly when used in reference to the provision of specific services, is not broad enough to suggest that the parties intended to refer to trademarks affixed to goods.

    The grant back in the 1986 license agreement didn’t change anything; “no further licensing agreement could empower WTCA to restrict the Port Authority’s use on goods of a trademark that WTCA did not own.”

    WTCA also claimed that the Port Authority breached the 1986 license agreement because its use of the marks on merchandise was not for the purpose of “fostering world trade and … such additional trade services.” As already mentioned the license did not apply to goods, and, further, using the marks on goods is not inconsistent with “fostering world trade.”

    As to the 2006 agreement? The Port Authority wasn’t a party, and the only defendant in the case was the Port Authority, not WTC Tower 1 LLC. WTCA’s arguments that an agreement with a subsidiary binds the parent, and that the corporate veil should be pierced, both failed. The restriction in the agreement barring co-branding therefore was not enforceable against the Port Authority. Even if it had been, we come back to the fact that WTCA does not own the trademarks, only the service marks.

    The Port Authority also went on the offensive, claiming that the 1986 assignment wasn’t a full transfer of rights and that it retained some aspect of ownership of the New York service marks. “Surplusage” alert: the Port Authority argued that it retained a “right and license” to use the marks, so “right” and “license” must mean something different. However,

    reading the Defendant’s reservation of rights in the context of the whole document, the Court finds that Defendant unambiguously retained the privilege to continue to use the service mark, but did not retain any ownership rights. Through the assignment, Defendant covenanted to “sell, transfer and convey to WTCA” “the entire right, title and interest in and to said service mark WORLD TRADE CENTER, said service mark registrations and … the good will of its business in the services in respect of which the mark is used.” (1986 Agreement at 1-2.) Defendant’s grant to Plaintiff clearly evinces an intent to transfer ownership, to include title, of the service mark and registrations. Defendant reserved only “the right and license to use” the service marks. (1986 Assignment (emphasis added).) The phase “to use” must modify both the terms “license” and “right,” otherwise Defendant would have reserved an undefined “right.” Because the reservation clause references Defendant’s continued right “to use” the service marks and did not include the same broad affirmative language of ownership that appears in the assignment clause, the Court construes the 1986 Assignment as unambiguously granting all ownership rights in WORLD TRADE CENTER as a service mark, and the corresponding New York- and Argentina-registered service marks, to Plaintiff and granting only a privilege to Defendant to continue to use such marks.

    However, as senior user of the mark for goods, the Port Authority could continue to use the marks for goods without WTCA’s interference. The court did not, though, award summary judgment to the Port Authority on the ownership of the marks because the Port Authority had not offered evidence or argument on the distinctiveness of the mark.

    Finally is a claim for cancellation of the 1987 registration for WORLD TRADE CENTER on the basis of fraud. There wasn’t enough evidence on summary judgment that WTCA knew it didn’t have the exclusive right to use WORLD TRADE CENTER:

    Here too, the Court must determine whether Plaintiff exhibited the requisite scienter, specifically whether Plaintiff knew or should have known that its declaration was false or misleading. Defendant has proffered evidence that Plaintiff was aware of the purported rights of these other WTCs prior to the application and that Tozzoli was generally uncomfortable about applying for a federal service mark for that reason. Plaintiff contends that there is a genuine issue of fact as to whether it knew or should have known that the rights of any prior users were superior, because all were WTCA members at the time of the service mark application. WTCA’s unique relationship with its members, in which it licensed its centralized intellectual property to them, is a sufficient basis for a jury to conclude that WTCA did not believe that it was subject to any allegedly superior rights to the marks retained by its members.

    World Trade Centers Association, Inc. v. The Port Authority of New York and New Jersey, No. 15 CV 7411-LTS-RWL (S.D.N.Y. Dec. 18, 2018).

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  • Are These Registrations Valid? The Answer

    In my last post I posed questions about the validity of two registrations. If you guessed that both registrations were valid, you were right.

    The first application was filed and assigned at a time when the entity had been administratively dissolved. DC Bocce claimed that the non-profit still had the capacity to sue and be sued after it was dissolved, and therefore had the capacity to register. The petitioner claimed that an administratively dissolved entity may only wind up its affairs. The Board concluded:

    Petitioner has the burden of proof, and has not shown by a preponderance of the evidence that the nonprofit was not the proper applicant and owner of the application. As to the assignment of this application, Respondent has presented a reasonable timeline by which Respondent LLC was formed on April 8, 2010; the nonprofit assigned all of its assets, including this application to Respondent on May 11, 2010; and the nonprofit filed its articles of dissolution on November 4, 2010, while Respondent continued forward with operations using the mark in the 136 Registration.

    As for the second registration, filed by “DC League Bocce” when the actual entity at the time was Major League Bocce:

    Here too [as in Great Seats, Ltd., v. Great Seats, Inc., 84 USPQ2d 1235, 1240 (TTAB 2007)], there was only one entity in existence at the time of the filing of the application that matured into the 456 Registration. That entity is Respondent, Major League Bocce, LLC. There is no dispute that DC Bocce League, nonprofit, was no longer in existence as of the filing date in 2012. Respondent’s witness, Ms. DeLucas, testified that as part of the process of its dissolution the nonprofit “transferred all of its assets” to Respondent. She also testified that the application that matured into the 456 Registration was filed “on [Respondent’s] behalf.” ¶ We find that while the name and entity were listed incorrectly, Respondent is the correct owner of the 456 Registration. Respondent’s motion to amend is granted.

    The fraud-based claim based on improper ownership also therefore failed.

    United Social Sports, Inc. v. Major League Bocce LLC, Cancellation No. 92060936 (TTAB Nov. 6, 2018).

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  • Are These Registrations Valid? A Quiz

    Non-profit DC Bocce League was incorporated in DC in 2004. Its status was revoked in 2007 but it continued to operate through 2010. It filed its formal articles of dissolution on November 4, 2010.

    The respondent, owner of the challenged registrations, is Major League Bocce, LLC d/b/a DC Bocce League. It is a Delaware LLC formed on April 28, 2010. It registered to do business in DC on November 5, 2010. It claimed that the assets of the non-profit were transferred to it.

    The non-profit filed the application that became Reg. No. 3,956,136 on May 3, 2011. The non-profit assigned the application on May 10, 2011 to Major League Bocce, LLC.

    Reg. No. 4,221,456 was filed in the name of “DC Bocce League” on February 18, 2012.

    The petitioner challenged the ‘136 Registration on the basis that the non-profit didn’t have the capacity to file or assign the application because the events occurred after the non-profit was administratively dissolved by the District of Columbia.

    The petitioner challenged the ‘456 Registration because it was filed in the name of DC Bocce League, an entity that didn’t exist in 2012.

    How do these challenges come out?

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  • The Agreement At Work

    I have a crush on the trademark assignment agreement of the Tavern on the Green mark. It’s a tour de force of drafting.

    In a nutshell, for decades the City of New York leased the premises for the famous Tavern on the Green to a restauranteur. In 2009 the restauranteur lost its lease, but by then had registered the TAVERN ON THE GREEN trademark for restaurant services and for salad dressing and oils (now dead, but a new application is pending and stands opposed by the City of New York). The restauranteur filed for bankruptcy, claiming that the trademark assets were worth $19 million. The retauranteur lost the lawsuit over the ownership of the name, after which the City and the trustee in bankruptcy entered into a stipulated settlement agreement that would allow the assignment of trademark rights for restaurant services outside of of New York, New Jersey, Connecticut and certain parts of Pennsylvania as long as the concurrent user added a geographic identifier to “Tavern on the Green,” e.g., “Tavern on the Green – Los Angeles” and the remote locale did not mention or refer to Central Park or the Central Park restaurant.

    In 2011 a buyer paid $1.3 million for the rights, but the arrangement has already gone south. This is the telling part of the decision:

    Tensions finally came to a head on February 16, 2017, when Gerald Singleton, an attorney in the City’s Law Department, sent a letter to TOGI’s attorney claiming that TOGI had violated the Use Agreement. Specifically, Singleton asserted that MBB Management, a “restaurant licensing consultant” hired by TOGI to market Tavern on the Green restaurant franchises, violated Section 2.04(c) of the Use Agreement when it launched a marketing campaign that invoked “the spirit of Central Park and the energy of New York City.”

    Of course they violated it. The agreement essentially prevented the not-New York Taverns on the Green from riding on the coattails of the New York establishment. I’m not sure why that arrangement was worth anything at all, much less $1.3 million. So it’s no surprise that a marketing company saw what it thought was a missed opportunity and recommending referring to the “spirit of Central Park” in marketing.

    The City of New York brought suit against Tavern on the Green International for breach of contract, trademark infringement, false designation of origin, dilution, unfair competition and violation of New York Business Law. And the agreement did the job it was designed to do. The court granted summary judgment in favor of the City on its breach of contract claim for breach of section 2.04(c) of the agreement, which is the one prohibiting reference to Central Park. Notably, the agreement said

    Concurrent User acknowledges that the City will suffer immediate and irreparable injury by reason of any breach specified in Section 12.02 [which cross-referenced 2.04] and 12.03 that is not cured within the time period specified therein, and agrees that remedies available at law (such as monetary damages) are inadequate to compensate for such injury.

    The court acknowledged that an injunction for breach of contract was unusual, but “because the contract at issue here involves intellectual property rights in valuable trademarks, and because the parties have agreed that in the event of a breach by TOGI, ‘the City will suffer immediate and irreparable injury,’ the Court is persuaded that injunctive relief is clearly appropriate.”

    The court also found that the City had proven ownership of a mark and likelihood of confusion, but not “damages” (I assume it meant “harm”). A dilution claim was made good with little examination also by virtue of the drafting of the agreement:

    As for the third element, blurring ‘is an “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctivness of the mark.” ‘ Given the parties’ stipulation in the Use Agreement that a ‘likelihood of consumer confusion shall be presumed to exist’ in the event of a breach, there can be little question that the parties’ use of the exact same name to refer to different sources of similar products (i.e., restaurant services) will amount to dilution by blurring.

    City of New York v. Tavern on the Green Int’l LLC, No. 17-cv-1376 (S.D.N.Y. Sep. 28, 2018).

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  • A Covenant Not to Sue Is Not An Exclusive License

    I am quite puzzled by this decision. It is designated by the court as “not for publication,” which may explain why the reasoning is so unclear.

    In March 1989, John Z. DeLorean, creator of the DeLorean car, entered into a license agreement with Universal Pictures, licensing the use of the car in “Back to the Future” II and III:

    The agreement gave Universal a royalty-bearing license to use the appearance of the DeLorean automobile, the name “DeLorean” and the logo “DMC” as it appears on the radiator grille of the DeLorean automobile. DeLorean granted Universal the exclusive right “forever” in connection with “time machines” and any and all merchandising and commercial tie-ups, such as toys, games, gadgets, novelties, books, apparel, food and beverages and services using or based upon the material.

    Fast forward to 2014. John DeLorean had passed away and Sally DeLorean is administratrix of his estate. The estate sued DeLorean Motor Company for “illegally appropriat[ing] for its own use Mr. DeLorean’s legacy, including the DeLorean Identity, together with the intellectual property such as the DMC Marks and DMC 12 [automobile] Trade Dress.” This lawsuit is where the estate learned about the Universal license agreement.

    The estate and the DeLorean Motor Co. reached a settlement. In it, the DeLorean Motor Co. agreed to pay the estate “in full satisfaction of any and all claims against it in the [2014 Action]” in exchange for the estate releasing and discharging any and all claims “that were sought, or could have been sought, in the [2014 Action].” The Settlement Agreement stated:

    The Estate acknowledges DMC Texas’ trademark and rights to use the DeLorean automobile brand, and associated products and services, further, the Estate covenants and agrees that … it will not willingly participate in any legal proceeding against DMC Texas in the future in connection with (i) the use by DMC Texas of (a) the name “DeLorean Motor Company”, or (b) the trademark registered to DMC Texas of the DMC logo, or (ii) the use by DMC Texas of the trademark registered to DMC Texas of the stylized word “delorean; (“DeLorean Marks”) (“any of which are used in conjunction with the automobile industry and associated business ventures, including those associated with the DeLorean automobile, or other automotive products and services, and related brand merchandising and licensing associated or related to the business of the DeLorean Motor Company, DMC Texas and its associated brand.

    The Estate retains all right in (i) any other use of the name DeLorean, (ii) any aspect of the personal life of John Z. DeLorean, or (iii) any depiction of the likeness of John Z. DeLorean that is not public property or purchased from those legitimately holding publishing rights thereto.

    Sally DeLorean, Individually and as Administratrix of the Estate of John DeLorean, hereby acknowledges the worldwide rights of DMC Texas to use, register, and enforce any of DeLorean Marks for any and all goods and services, relating to automobile dealerships, automobiles, automobile parts and accessories, clothing, and promotional items.

    (Punctuation as in original.) Fast forward again, this time to 2018, when the DeLorean estate contacted Universal for non-payment of royalties. It didn’t go well. Universal informed the estate that the DeLorean Motor Co. claimed it owned the rights to the Universal license agreement pursuant to the 2014 Settlement Agreement, and, based on that representation, Universal paid the DeLorean Motor Co. the royalty payments owed under the Universal Agreement. After that, the estate received a letter from the DeLorean Motor Co. threatening to bring an action against the estate for tortious interference. The estate therefore brought another action against the DeLorean Motor Co., this time for declaratory judgment that the settlement agreement didn’t give DeLorean Motor Co. any rights to the Universal license agreement, and for unjust enrichment for the money that Universal paid to the DeLorean Motor Co.

    So how does this come out? Mystifyingly to me, the court agreed with the DeLorean Motor Co. It stated the claim thusly:

    The main issue before this Court is whether the materials licensed in the Universal Agreement were included in the Settlement Agreement, thereby barring Plaintiff from asserting a claim under the Universal Agreement as a matter of law.

    The court concluded “yes”:

    Though the terms “Universal Agreement” or “royalty payments” are not mentioned in the Settlement Agreement, the Court nonetheless finds that the subject matter of the Universal Agreement is covered by the Settlement Agreement. The Court reaches this conclusion based on the overlap of the clear terms in both agreements. In the Settlement Agreement, Plaintiff’s covenant not to sue Defendant pertained to the latter’s use of the following words and trademarks: (i) “the name ‘DeLorean Motor Company,’ ” (ii) “the DMC logo,” and (iii) “the stylized word ‘delorean.’ ” In the Universal Agreement, Universal was given the right to use (i) “[t]he appearance of the DeLorean automobile,” (ii) “[t]he name ‘DeLorean,’ : and (iii) “[t]he logo ‘DMC’ as it appears on the radiator grille of the DeLorean automobile.” As shown by this language, the agreements share the same or similar terms, such as the use of the word DeLorean and the DMC logo.

    But I don’t see how the fact that the two agreements cover similar subject matter means that the the car company suddenly acquired the overlapping rights. I don’t read the language in the settlement agreement cited by the court as having that effect. The settlement agreement was simple, a release for past infringement and a covenant not to sue for the DeLorean Motor Co.’s future use in specified ways. There is no suggestion that the DeLorean Motor Co. acquired any exclusive rights, it simply won’t get sued. The estate also covenanted that it would not participate in a legal proceeding against the DeLorean Motor Co., but a proceeding against Universal is not that. The estate released all claims that could have been brought in 2014, but there is no reason to think on the facts given that the Universal claim had anything to do with the claims against the DeLorean Motor Co. in 2014.

    The estate’s argument that the license agreement wasn’t assigned was only footnoted:

    Even if Plaintiff is correct that Defendant was not “assigned” the Universal Agreement and Plaintiff retained some rights in same, the Court agrees with Defendant that Plaintiff’s attempt to enforce the Universal Agreement would violate the Settlement Agreement, because the subject matter of the Universal Agreement is covered and barred by the Settlement Agreement. Based on this conclusion, Mr. DeLorean’s Estate is no longer the “the sole owner of the rights in the Material granted or agreed to be granted to [Universal] hereunder,” as Mr. DeLorean initially warranted in the Universal Agreement.

    I can’t really make head or tails of that footnote, or of the decision altogether.

    DeLorean v. DeLorean Motor Co., No. 18-8212 (JLL) (D.N.J. Oct. 12, 2018).

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  • Illustrating Why Registration Should Not Be Required

    I suggested in a recent blog post that the Copyright Act should be amended to eliminate the requirement that a copyright must be registered before one can file a copyright infringement lawsuit. My position is that the registration does nothing to aid the court in its decisionmaking and the additional step it adds to the lawsuit, the attack on the registration, makes copyright litigation more expensive and time-consuming.

    I suppose the theory is that the registration reduces some burden on the courts. By statute, a certificate is prima facie evidence that the copyright is valid, i.e., the work is copyrightable, and that the facts stated in the certificate are accurate. 17 U.S.C. § 410. This is only true though if the registration was made within five years of publication; if the registration was after that, or the work was unpublished, then the evidentiary weight is within the discretion of the court. So already we can see that the registration is of questionable value.

    But the irrelevance of the certificate goes further than that. The owner listed on the certificate may not be the owner now; the copyright may have been assigned, requiring an examination of chain of title. Or the claim may involve a license, so standing is an issue. Often a copyright infringement claim involves questions of joint authorship (every lawsuit over a commissioned work has a joint authorship allegation lurking). A certificate claiming a work was made for hire won’t be the end of it; the parties will litigate whether the facts actually support the claim. The authorship and ownership stated on a certificate is only a jumping off point, but is by no means dispositive.

    Nor is an examination of a copyright application a deep dive into the originality of the work. It is binary, “yes,” copyrightable, or “no,” not copyrightable. But the scope of copyright, which matters for infringement, is far more complicated than that. Is the copyright “thin” because it is a factual work, a depiction of something existing, like a jellyfish, or are some elements so commonplace that they are scenes a faire? If it is a compilation or derivative work, what are the earlier works and how much was used? The fact of registration is little or no help to the court in sorting these questions out.

    And courts do just fine at figuring it all out, no matter what the certificate says. Today’s example is Sweet Gisele, Inc. v. True Rock CEO, LLC, a case about copying souvenir T-shirt designs. Below are the works at issue, the registered work on the left and the accused work on the right (click to embiggen):

    The defendant defaulted; even so the magistrate denied the motion for default judgment. So while there was no adversary to point out the weaknesses of the plaintiff’s claims, the court nevertheless had no problem examining the facts and found them wanting.

    A copyright claim requires proving ownership of a valid copyright, what the registration process theoretically examines, and copying of constituent elements of the work that are original. The ownership element requires that the plaintiff sufficiently prove both that it owns the copyrights in question and that the copyrights are valid.

    On proof of ownership, in this case the registration provided some evidence that aided the court. The complainant was Sweet Gisele and the complaint said Sweet Giselle was the owner and author of the works. However, the registration certificate listed Josef and Lidor Cohen as the authors of works made for hire. The court pointed out the discrepancy and asked the plaintiff for more information. Thereafter, Sweet Gisele told the court that the works were created by one Shalom Mallachi and the Cohens acquired the copyright through transfer. But a declaration signed by the Cohens did not mention any assignment, and the assignment dates in the assignment agreements were before the year of completion of the works stated on the certificates. The court also questioned in a footnote whether one registration certificate was even for the works in question, but let that slide. There also appeared to be no documentary evidence of a written assignment from the Cohens to the plaintiff; the entity’s claim of ownership was testimonial only. The court therefore held that the plaintiff had not proven its ownership of the copyrights.

    So the registration certificate had some value to the court; it exposed inconsistencies in the claim of ownership. However, without a registration certificate, the plaintiff still has the burden of proof on ownership. The proof would necessarily include evidence of the full chain of title from the author of the work to the plaintiff, something that appears not to exist here. The inconsistency between the complaint and the registration may have been the first sign that something was amiss, but the problem is not something that otherwise would not have been discovered.

    Although the copyrights were registered, and therefore entitled to a presumption that they were valid, this case shows why often that just isn’t enough. Here, the court still had to assure itself that the works were original and creative. Even after supplemental briefing from the plaintiff, it wasn’t so sure:

    Plaintiff, in its supplemental submissions, extensively cites irrelevant case law regarding protection of photographs. These images are clearly not, however, original photographs. By plaintiff’s own admission, these designs are “graphic and computer-enhanced interpretations of famous New York building[s] and themes.” These works clearly draw heavily on preexisting material—common images of famous New York City landmarks. They thus appear to be either compilations or derivative works. From the pleadings, however, it is unclear whether that material it draws on is itself in the public domain or is otherwise subject to copyright protection.

    Compilations and derivative works are eligible for copyright protection, 17 U.S.C. § 103(a), but they must still constitute original works of authorship. Moreover, such protection extends only “to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.” 17 U.S.C. § 103(b). In addition, that protection “does not extend to any part of the work in which such material has been used unlawfully.” 17 U.S.C. § 103(a).

    The court explained at length why it wasn’t so sure that the works were entitled to copyright protection. It describe the photographic images as mere depictions of reality. It stated that dramatic representations of Lady Liberty’s torch are “pervasive” in American visual culture (with illustrations) so the use here therefore a scene a faire. It also described putting Lady Liberty in front of New York’s two most iconic buildings, the Chrysler Building and the Empire State Building, “standard, unoriginal, and therefore unprotectable.”

    The plaintiff argued essentially that the collaging of the various constituent images created an original whole, but even that didn’t persuade the court:

    To be sure, courts have found specific layouts or graphic designs that contain otherwise public domain images to be copyrightable. In such cases, however, plaintiffs have established that those layouts or designs were, in fact, original. Thus, courts in this circuit have rejected the notion that taking a public domain image and placing it on a generic background is a sufficiently original design to create a valid copyright. Similarly, the Second Circuit has affirmed that there is no copyright protection for a background component of a design when another design is placed on top of that background, and the background is copied from a public domain source.1

    The court’s view was that the plaintiff therefore had not met its burden of proving originality, even though it had registered copyrights.

    Moreover, the court mentioned that plaintiff said it purchased artwork from a graphic designer, but did not delve into what that might also mean for the copyrightability of the shirt designs.2 It might be that those underlying works weren’t properly licensed, meaning the derivative work was unlawful. It also would only be in comparing the original to the derivative work that one could discern what might be original in the new work. This is yet another area where the fact of registration has nothing to offer the court in the way of help; when examining copyright the Copyright Office does not explore whether the underlying work was properly licensed or not, or compare source works and the derivative work. This is entirely within the court’s purview.

    The point here is not whether the court was right or wrong on copyrightability, but rather this case highlights that the existence of a copyright registration, and a presumption that something is copyrightable, is of very little use to a court. The court still has to tease out exactly wherein the originality lies.

    To complete the cycle, assuming arguendo that there was a copyright, the court also held that the plaintiff had not proven that its “thin” copyrights in the designs were infringed:

    I am not persuaded, however, that the images are close enough to constitute extremely close copying of the protectable elements of plaintiff’s designs, under the “more discerning” test endorsed by the Second Circuit in such cases. There are, for one, visible differences: for example, the alleged infringing copy of TBO41 appears to blur or omit much of the background rose pattern and incorporates rhinestone decoration. Similarly, the alleged infringing copy of TBO75 appears not to incorporate the “Kissing Sailor” photograph, and incorporates additional rhinestone decoration. Finally, TBO86 appears to have quite different, arguably more vivid, coloring, and to be embroidered with rhinestones in place of the rays of the torchlight.

    I am unable to say copying has occurred here because plaintiff has not met its burden of establishing that its designs include protectable elements. I therefore cannot reasonably conclude that there has been copying of such elements, as opposed to the permissible taking and re-creation of the public domain imagery and ideas expressed in plaintiff’s designs.

    I have no objection to permissive registration and the benefits given to those having a registration, such as statutory damages. I have no problem with a certificate being prima facie evidence of the facts stated on it (which this case shows can cut both ways). But the registration requirement is of little to no value to a court yet puts a significant barrier in the way of the plaintiff, both by delaying a lawsuit by having to file an application (and in some circuits, wait for it to register) and then by spending an extra year of litigation on a collateral attack on the statements on the registration before even getting to the substance of the claim. It is nothing but a trap.

    Sweet Gisele, Inc. v. True Rock CEO, LLC, No. 17 CV 170 (FB)(RML) (E.D.N.Y. Sep. 4, 2018); adopting Report and Recommendation No. 17 CV 170 (FB)(RML) (E.D.N.Y. Sep. 28, 2018)

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    1. The court even went so far as to identify an image from a video game that was very similar to a portion of one of the shirts. Compare the words “From the makers of” on the red sign in both images. ↩
    2. Note in this case too that the plaintiff had not mentioned in its registration certificate, as it was required to do, that there were preexisting works used in the designs. Nevertheless, the court had no problem figuring that out and considered the information when deciding copyrightability. ↩
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  • The Cluster That Is Copyright Registration

    Subtitled “Writing it so @RickSanders doesn’t have to“

    The copyright registration system, as it relates to an infringement case, is utterly and completely broken. We need reform.

    Here are the facts we’ll assume are true for purposes of today’s rant. Plaintiff SellPoolSuppliesOnline.com, LLC (SPSO) provided Ugly Pools Arizona, Inc., the defendant and a company SPSO thought was a potential customer, with access to an online version of a website platform SPSO created and licensed to pool supply companies. Without SPSO’s knowledge (but with the help of an unfaithful employee), Ugly Pools downloaded the code and content and used it to create its own website. SPSO wanted to sue for copyright infringement, which meant SPSO had to register the copyright. Of course, SPSO needed to allege infringement of the copy of the work that Ugly Pools had access to. However, SPSO no longer had a copy of that version when it filed its copyright application predicate to filing the lawsuit.

    When registering a copyright, one must identify earlier published versions of the work. By statute, the copyright application form must include:

    in the case of a compilation or derivative work, an identification of any preexisting work or works that it is based on or incorporates, and a brief, general statement of the additional material covered by the copyright claim being registered.

    17 U.S.C. § 409.

    What SPSO’s lawyer assumed was that the registration had to be for the same version of the work allegedly infringed. This is inassailable in its logic. It may also be true, but not necessarily. There is a doctrine called the “effective registration doctrine,” which says that a registration of a derivative work is sufficient for purposes of alleging infringement of the underlying original work also. Streetwise Maps, Inc. v. VanDam, Inc., 159 F.3d 739 (2d Cir. 1998). Consider what might happen if this isn’t true. In some fields, websites being one, the concept that there is such a thing as a “work” that exists for anything more than a moment in time is fallacious. Today’s websites are continuously changing. On a commercial site, there may be press releases, blog posts, new product launches, help pages updates, and so on, all happening in the same day. Two edits per second made are made on Wikipedia. Does this mean that there was a work, and two seconds later there is a new derivative work? Netflix deploys new code on its production servers thousands of times a day. How many derivative works is that? If registration is required1, the best we can do is register a snapshot of a moment in time and hope that Streetwise fills the gap.

    However, there is also AFL Telecommunications LLC v. SurplusEQ.com Inc., 946 F. Supp. 2d 928 (D. Ariz. 2013), which held that that because the copyright registration “excluded” a previous version, unmodifiable language on the registration form, then the allegedly infringed work wasn’t registered. So one is on uncertain legal footing if the registration is not for exactly the same work infringed.

    Which brings us to the fiasco that was the attempt to register the copyright needed to bring a copyright infringement lawsuit in SellPoolSuppliesOnline.com LLC v. Ugly Pools Arizona, Inc. On September 15, 2015 SPSO filed an application claiming a publication date of August 26, 2015. The original claim was for computer code, text and photographs. The Copyright Office inquired (p. 11) of SPSO’s lawyer whether anything in the deposit was previously published, stating that anything previously published had to be “excluded from this claim since the extent of claim for a revised, or derivative, work is based only on the new and revised material contained in the later version of the work.”2 Counsel responded “They may have been from an earlier version of the website BUT we need special dispensation because this is the first time registration of the website and no copy (i.e., mirror or backup) of the prior website exists.” (p. 12).3

    SPSO’s counsel complained, “This policy makes no sense vis-a-vis how the marketplace works for websites. Clients don’t hire lawyers usually until they believe they have a viable site. By that time, according to this rule, it would be impossible to copyright the site as it existed a year earlier (i.e., without excluding all previously published material).” (p. 14.) Indeed that is true, but it’s statutory. If Streetwise was settled law, or adopted by statute, then there would be no harm. But it isn’t.

    SPSO then filed a declaration from the website owner stating that the deposit copy submitted with the application was the same as how the website appeared on July 3, 2014. The Copyright Office asked whether the date of publication should be changed in the application, pointing out that there was a copyright notice for 2015 in the submitted materials. (p. 18-19.) Counsel confirmed that it should be changed.4

    Of course, the defendant discovered during the lawsuit that new materials had been added between July 3, 2014 and the date of the deposit, September 15, 2015. (It wasn’t hard; the defendant just used the Wayback Machine.) And therein is the basis for the allegation that the registration was invalid under 17 U.S.C. § 411(b). That section says:

    (1) A certificate of registration satisfies the requirements of this section and section 412, regardless of whether the certificate contains any inaccurate information, unless—

    (A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and

    (B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration.

    (2) In any case in which inaccurate information described under paragraph (1) is alleged, the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration.

    Before Section 411(b) was added to the Copyright Act, some courts held that invalidation of a copyright registration required a showing of fraud, but others did not. However, section 411(b) speaks only about inaccuracy, not fraud. According to this case,”the Ninth Circuit has found that ‘a showing of fraud is not required when the inaccurate information was knowingly included on the application, as opposed to being an inadvertent mistake.’” At least the Eleventh Circuit, though, has held that the registrant must have a scienter of intentional or purposeful concealment.

    But we’re in the 9th Circuit here. After identifying the inaccuracy, the court asked for the opinion of the Register of Copyright as required by § 411(b)(2), who unsurprisingly concluded that the Copyright Office would not have registered the copyright with the information stated on certificate if the office had been aware of the incorrect facts.5 SPSO therefore did not have a valid registration and its copyright infringement claim was dismissed.

    I don’t know how this would have come out under a standard with a scienter requirement. It certainly caught my eye that SPSO needed to get something registered because the lawsuit had already been filed, the attorney thought that the registration had to be for what was copied, therefore asked for “special dispensation” to register something other than what was submitted, and when that wasn’t allowed submitted an affidavit with a change of heart about the publication date. I wouldn’t have a big problem with a conclusion that this was enough evidence to show the applicant had intentionally misled the Copyright Office in order to obtain the registration, therefore invalidating the registration.

    But this case highlights how broken our copyright registration system is. We have a registration standard from the 1970’s, conceived of at a time when a work was only copyrighted if there was a copyright notice, combined with a now-quaint notion that works are demarked by discrete moments of “publication” (a concept that itself does not have a meaningful role in copyright law), and a legal standard for infringement in tension with the legal standard for registration. No one but an alleged infringer has anything to gain in challenges to registration, which only serves to deny on a technicality the benefits of copyright owner that we supposedly value. It is time for reform.

    SellPoolSuppliesOnline.com LLC v. Ugly Pools Arizona, Inc., No. CV-01856-PHX-BSB (Sept. 24, 2018.

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    1. Join me in my crusade to eliminate the requirement that a copyright must be registered before one can file a copyright infringement lawsuit. The rest of the world manages just fine without copyright registration. Courts are in a much better position to decide copyrightability because they have all the facts in front of them. ↩
    2. N.B. that the statute doesn’t say anything about “excluding,” it says only to “identify.” The Copyright Office has added the concept of “exclusion,” presumably inferring it from the reference to the registration being for “additional material covered by the copyright claim being registered.” ↩
    3. I searched the Compendium and the Copyright Office website for a reference to the ability to obtain some kind of “dispensation.” Didn’t find it. ↩
    4. There was some further back-and-forth, resulting in SPSO omitting computer code from the claim and registering only the text and photographs. ↩
    5. Again, a legal standard that should be changed. The Register would have allowed the application as filed except with the exclusion, which the Copyright Ofice has the authority to enter. The legal question should be whether the Copyright Office would have had the ability to register the claim if it had the accurate facts, not whether the registration was defective at the time of registration because there were some inaccurate facts. ↩
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  • What Is the Mark Being Used?

    What Is the Mark Being Used?

    Two entities are disputing the ownership of the domain name “coralgardens.com.” The domain name is owned by Reef Residences Management Ltd., a company that manages short term rentals for the Coral Gardens condominium resort in the Turks and Caicos Islands, British West Indies. The Proprietors, Strata Plan No. 36, is the homeowners association for the Coral Gardens property. The parties have thus far engaged in a number of actions, but the one relevant here is that Strata filed an in rem action against the domain name in federal court in Illinois, claiming a violation of the Anticybersquatting Consumer Protection Act. Strata’s claim was premised on ownership of trademark rights in CORAL GARDENS based on a registration in the Turks and Caicos Islands and a US registration. In response, Reef Residences filed a petition to cancel the Strata US trademark registration. The Illinois district court then stayed its action to wait for the outcome of the cancellation action.

    The homeowners association had registered the CORAL GARDENS trademark for “real estate management of condominium complexes” in Class 36 and for “providing temporary lodging services in the nature of a condominium hotel complex” in Class 42. The registration was more than five years old, so was susceptible to challenge on only a limited number of bases. Reef Residences challenged the registration on two theories: that the trademark had been abandoned and that it had been procured through fraud. The Board decided the case on abandonment and so did not reach fraud.

    The US application was registered under Section 44(e) of the Lanham Act, based on ownership of the Turks and Caicos Islands registration. However, a registrant under 44(e) still has to use the mark, and non-use for three years is a prima facie case of abandonment. Reef Residences claimed that Strata had never used the mark for the registered services.

    The specimen filed with the Section 8 & 15 was of a website at coralgardensongracebay.com:

    However, the website was owned and operated by a different entity, Seagate Management Company. Strata hired Seagate to manage the common property of the condominium association and Seagate also provided property management and rental management services to individual condominium owners. These latter services weren’t offered by the condominium association itself, although they were mentioned in the agreement between the two.

    I see the first question as what “real estate management of condominium complexes” means—if we don’t know that, then we don’t know whether the mark is in use. (I’m skipping “providing temporary lodging services”; it was clear that the homeowners association had nothing to do with property rentals, so I don’t disagree with the opinion on the Class 42 services.) Second, once we’ve identified what the services are, the questions is who is performing them, Seagate or Strata.

    Does a condominium association provide “real estate management” services? I would say yes. Strata’s bylaws said that the association’s duties were to “control, manage and administer the Common Property for the benefit of all Proprietors.”1 A homeowners association is responsible for landscaping and lawn care, for pool maintenance, paving, and so on. I think that is real estate management, and they have outsourced those task to Seagate. But the Board didn’t look at it in this way.

    Although setting it up as a question of whether the condominium association’s bylaws “extend to real estate management of a condominium complex” (note the use of the word “complex”), the Board instead narrowed it to whether the homeowners association had control over management of condo units:

    Notably, nothing in the Management Agreement establishes that Respondent has control over or involvement with the rental or management of the condo units or providing temporary lodging. Neither does the Management Agreement set forth any requirements, obligations or activities for Seagate in connection with the rental or management of the condo units or temporary lodging.

    But is that what “real estate management services” means? Why can’t it be the management of the common property, services that the Board acknowledged were provided to Strata by Seagate? The Board instead elided the two services, assuming the description applied only to management of units, not the Common Property.

    As to Seagate’s role, the Board reviewed the management agreement and concluded that Seagate didn’t have a trademark license to use CORAL GARDENS. But whether Seagate is a trademark licensee isn’t the legal question; the word “license” is not used in the statute. The correct question is whether Seagate is a related company whose use inures to the benefit of Strata.

    Let’s review the law. Section 5 says:

    Where a registered mark or a mark sought to be registered is or may be used legitimately by related companies, such use shall inure to the benefit of the registrant or applicant for registration ….

    A “related company” is defined as:

    any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with which the mark is used.

    A licensee may be a related company, but not all related companies are licensees. The Board said that Strata didn’t control Seagate with respect to managment and rental of individual units, which may be true enough, but it didn’t examine whether Strata controlled Seagate’s management of the common property. Presumably Strata did; presumably the homeowners association didn’t completely abdicate all responsibility for the maintenance of the common areas, collecting dues, budgeting, obtaining insurance, and other responsibilities once it hired Seagate.

    A valid question would be whether Seagate’s website was an adequate specimen for “real estate management services” in the meaning of the management of the common property. The website is for Seagate’s business of managing and renting units, but it doesn’t appear to say anything about property management of condominium common areas. But whether a specimen is adequate is a decision within the purview of the Trademark Office and is not subject to challenge in a cancellation. Marshall Field & Co. v. Mrs. Fields Cookies, 11 USPQ2d 1355, 1358 (TTAB 1989). So the inadequacy of the specimen does not an abandonment make.2

    So between a questionable interpretation of what “real estate management services” are3, and a failure to correctly apply the law as it relates to use of trademarks by others, particularly when that use inures to the trademark owner, the Board concluded the trademark was abandoned. But it’s not abandoned; it is a trademark and someone is using it.

    Recall the (long ago) introduction to this post, and that this trademark application is the basis for a cybersquatting claim in federal court. This poorly considered opinion, if not challenged, means that Reef Residences will win its ACPA claim too.

    And an interesting practice point: § 44(e) allows registration of a trademark based on ownership of a registration from certain foreign countries, those that are treaty members, most often the Paris Convention. Turks and Caicos Islands is not a member of any treaty country for purposes of § 44(e). Therefore, the application should not have been granted registration under § 44(e). In fact, the Registration Certificate for the Turks & Caicos Islands says on it “This certificate is not for use in legal proceedings or for obtaining registration abroad.” However, because the registration was more than five years old, this flaw could not be a basis for challenge.

    Reef Residences Management Ltd. v. The Proprietors, Strata Plan No. 36, Cancellation No. 92059352 (Sept. 14, 2018).

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    1. The Board inexplicably followed that quote with a discussion of whether “Common Property” can include ownership of trademarks. I have no idea how that is relevant to whether the homeowners association is providing real estate management services. ↩
    2. What would have been a suitable specimen, IMHO? A letter to homeowners on Coral Gardens letterhead telling them who to contract for common property-related services. Want to complain about the algae in the pool? Here’s who to contact. The services were being performed, and they were being performed by the homeowners association, it was just a bad specimen. ↩
    3. One I will concede may be because Strata allowed it to be framed that way. ↩
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  • Real Party in Interest

    There is an ongoing dispute between the National Grange of the Order of Patrons of Husbandry, more commonly known as “The Grange,” and a former chapter in California. National Grange established the California State Grange in 1873 and it registered as a California corporation in 1946. In 2012, there was a dispute between the California State Grange and the National Grange, so National Grange revoked the California Grange membership and the parties disaffiliated in 2013. California State Grange continued, under the same name, and in 2014 National Grange chartered a new chapter called The Grange of the State of California’s Order of Patrons of Husbandry, Chartered.

    Needless to say lawsuits ensued; National Grange sued California State Grange and California State Grange sued the Grange of the State of California’s Order of Patrons of Husbandry, Chartered, both for trademark infringement and other claims. National Grange won, surviving a genericism challenge and one for abandonment for lack of quality control. Ultimately the disaffiliated chapter was enjoined from using the name “California State Grange.” National Grange formed a new California State Grange in 2016 to safeguard the corporate registration of the name “California State Grange” after the disaffiliated organization relinquished it.

    We’re now up to the third lawsuit (fourth if you count the state court lawsuit over tangible property). This suit was filed by National Grange and “California State Grange, its chartered California chapter,” against the disaffiliated organization for the defendant’s use of the “CSG” and “formerly known as California State Grange.” (At some point the defendant’s name in the caption was changed to “California Guild,” but I couldn’t find where.)

    Which is all a long wind-up to a short point. California Guild challenged the California State Grange’s standing. National Grange argued that the party known as “the California State Grange” was not either the 2014 or 2016 entities, but the original chartered chapter. The court wasn’t buying it though:

    According to defendants, the California State Grange plaintiff is the incorrect corporation to bring the asserted claims in this case. The named plaintiff California State Grange is a 2016 corporation that was formed to safeguard the corporate registration of the name “California State Grange” after defendants were forced to relinquish the name in Grange I. This corporation has no bank account records and it does not collect dues. There is a separate 2014 corporation, which is not a party to this case, named the Grange of the State of California’s Order of Patrons of Husbandry Chartered which does collect dues and have bank accounts. Based on this information, defendants argue that the California State Grange party is merely a “holding corporation” for the name “California State Grange” and not the real party in interest.

    In a misguided argument, plaintiffs claim that “the party in interest is the California State Grange, not a 2014 or 2016 corporation.” Plaintiffs attempt to argue that this action was brought in the name of the California State Grange, not a specific corporate entity. However, “[a] civil action can be maintained only against a legal person, i.e., a natural person or an artificial or quasi-artificial person; a nonentity is incalculable of suing or being sued.” Oliver v. Swiss Club Tell, 222 Cal. App. 2d 528, 537 (1st Dist. 1963). In this case, plaintiffs have explicitly admitted that they are not bringing this case on behalf of a specific corporation or entity. Plaintiffs cannot assert a claim on behalf of some amorphous entity vaguely known as the California State Grange. See id. Thus, the court is not convinced by plaintiffs’ argument and agrees with defendants that the California State Grange is not an appropriate plaintiff in this case. Accordingly, summary judgment will be granted in favor of defendants and against the California State Grange, and the California State Grange will be dismissed from this case.

    Perhaps arguing there was a California unincorporated association known as “California State Grange” would have gotten more traction, although having a formal corporation, The Grange of the State of California’s Order of Patrons of Husbandry, Chartered, serving the same purpose might have still made that a hard position to win.

    Nat’l Grange of the Order of Patrons of Husbandry v. California Guild, No. 2:16-201 WBS DB (E.D. Cal. Aug. 13, 2018).

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    ,

  • Saved by the Paris Convention

    Here’s a drafting lesson: if you’re granting rights to a trademark, you should have the trademark rights.

    That sounds like an obvious lesson, but I’ll bet it happens all the time, in the same way it happened to defendant Worldwide Entertainment Group. I’ll bet a lot of you have done it.

    The plaintiff Adria MM Productions, Ltd. is a Croatian company. Worldwide Entertainment Group is a Florida corporation that promotes and organizes musical events, including the Ultra Music Festival in Miami. Worldwide Entertainment and Adria entered into a license agreement for Adria to promote an “Ultra” event in Croatia. The trademark license grant was:

    Ultra hereby grants to AMM, during the Term of this Agreement, the non-exclusive and limited right to use, in the Territory, those certain Proprietary Marks, namely “Ultra Europe,” “Ultra Europe: Croatia – Split/Hvar Edition,” “Road to Ultra,” Ultra’s distinctive “U” device logo or any other mark deemed appropriate by Ultra for time to time.

    The agreement also said:

    All marks used, registered, or to be registered in the Territory … shall be the exclusive property of Ultra.

    While the parties were renegotiating a new license agreement, Worldwide Entertainment issued a Notice of Continuing Default for various wrongs and terminated the agreement. Adria then investigated, learned that the trademarks had never been registered in Croatia, and sued Worldwide Entertainment for various claims, including for a declaratory judgment that the agreement was void for lack of consideration because the trademarks were not registered.1

    In Croatia, “[o]wners of trademarks have no rights absent registration and may not file lawsuits to protect their rights under the Trademark Law” (the court quoting Trademarks Throughout the World § 38:30). Adria claimed that Worldwide Entertainment therefore had nothing to license and there was no contract. However, Croatia is a member of the Paris Convention and it therefore affords protection to well-known marks. This is where the Paris Convention comes to the rescue:

    to the extent that Worldwide Entertainment can prove that the Marks qualify as “well-known” marks under the Paris Convention in Croatia, Worldwide Entertainment’s right to “use” protection endows it with the right to license the Marks to Adria Productions. Put differently, Worldwide Entertainment’s abstention from filing a lawsuit in Croatia against Adria Productions for unauthorized use of the Marks would be valid consideration because it is a promise to do something that Worldwide Entertainment was not already obligated to do.

    Or said another way, in a footnote,

    Adria Productions states that this argument amounts to Worldwide Entertainment stating: “We don’t currently have rights to the Marks, but we might be able to bring a lawsuit, and we might be able to get those rights.” While Adria Productions attempts to make light of this argument, it is in fact the case.

    I am curious though; this looks like a US view of the meaning of a trademark license. The court considered the choice of law issues presented:

    Worldwide Entertainment is correct that Florida law governs the Agreement. But Florida, as part of the United States, is subject to the “territoriality doctrine.” Each law will thus be applied where appropriate to the Court’s analysis—i.e., to the extent that construction of the Agreement is being disputed, Florida law will apply; but to the extent that the ownership of the Marks is being disputed, the “territoriality doctrine” will apply.

    So while the court considered the fact that in Croatia registration is the grant of rights, it didn’t go the next step and consider how a trademark license is viewed. In the United States, trademark rights exist because of use, and the grant of a non-exclusive license is understood as simply an agreement to forebear from suit, not a transfer of a property right. But what about in Croatia? If a trademark registration is the property right, and a license a transfer of property, then there was nothing transferred. I’d be curious to hear how Croation law would view the validity of this agreement.

    Nevertheless the lesson here is, when licensing a trademark, it’s probably a really good idea to have registered it. There are a lot of first-to-file countries out there.

    Adria MM Prods., Ltd. v. Worldwide Enter. Group, Inc., No. 17-21603-CIV-MORENO (S.D. Fla. Sep. 6, 2018).

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    1. Hilariously, five days after the lawsuit was filed, both parties filed trademark applications for the marks within 34 minutes of each other, Adria filing in Croatia and Worldwide Entertainment filing an EU trademark application. Which is a whole other can of worms. Or two. ↩
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