So Costco. They are a huge wholesale place right? You go there to buy 3-thousand gallon tub of maple syrup or a year’s supply of paper towels. They even sell electronics and jewelry there. But now they are selling…. Michael Kors purses? Well they claim(ed) to, at least.

In the most recent installment of a luxury brand suing Costco for trademark infringement (see the case of Tiffany’s), Michael Kors is alleging that an email sent by Costco to its customers offered handbags on sale for $99.99 for Mother’s Day, with a picture of a Michael Kors handbag appearing in the email. The pictures of the handbags included Michael Kors signature “MK” tags along with some of the signature designs (I’m not a woman, so no I don’t know which designs exactly). What’s the big deal you ask, I just got a Michael Kors bag for $89.99 at this smokin’ hot sale at the outlet mall last week, and I didn’t have to walk past aisles stacked from the floor to ceiling with pallets of drain cleaner! Well, Costco doesn’t actually sell Michael Kors stuff so putting a picture of one of the bags in an email and providing a bargain basement price (Michael Kors purses usually retail for anywhere between $128 and $1,395) is kind of somewhat confusing if you were a desperate lad looking for a quality handbag at a reasonable price for your mum. Here's a screenshot of the email that was sent out:

The complaint filed by Michael Kors is pretty cut and dry: Costco is not authorized to sell Michael Kors handbags and by putting images of the handbags in an email and advertising a low price, the email deceived consumers and made other bags being sold by Costco look better. What defenses does Costco have? Apart from “oh, we let a marketing intern put together to email so we didn’t even notice the images used in the email, lol”), I can’t really put my finger on anything in particular that might save Costco. I’m sure there must have been some documented case of consumer confusion (I myself would have been suckered into capitalizing on such an incredible price). And fair use probably isn’t available as a defense because Costco used the mark in such a way that people would probably be confused as to whether Michael Kors purses were actually sold at Costco. 

Luxury brand owners of course have a lot at stake. A luxury brand usually has significant goodwill and customer recognition attached to it, have a high probability of becoming tarnished due to the actions of counterfeiters, and is backed by a significant investment in marketing by the brand’s owner. The investment backing a luxury brand can sometimes be on-par with that of Fortune 500 brands such as Coca-Cola. To protect luxury brands, the owner might be very selective in the kinds of distributors that they use to sell their products. If a particular product is expensive and exclusive, then it of course makes sense to make the distribution channels exclusive right? For this reason, just like we saw in Tiffany’s case against Costco, there is likely to be a lot of mudslinging with Michael Kors saying that Costco is a “low-cost, low-slung purveyor of cheap crap” and that “our goods do not belong next to industrial sized packages of bubble gum”. Costco may strike back with some daggers of its own, like it has done against Tiffany by arguing that the Tiffany name itself is generic for jewelry settings.

I’m going to be extra charitable and say that somebody in the marketing department at Costco goofed. I mean, considering the high-profile battle between Costco and Tiffany’s, why would Costco want to become embroiled in another tussle with a different luxury brand? At the very least, this episode indicates the importance of brand clearance and communications auditing not only of your own brands as a trademark owner, but also of brands that you reference in your marketing pieces. Any reference to a third-party, particularly one that places significant value on their brand names, could put you in trouble, especially if you aren’t authorized to sell the third-parties products. 

The takeaway for luxury brand owners? Be careful who you go after. You might find yourself dealing either with the war chest of a well-funded retailer or the stinging rebuke of t.o’ed consumers.

Sidenote (yes another one!): I actually love going to Costco and think they have an excellent business model. So no snarky comments as to Costco or the layout of its stores, or the wares that it sells should be taken as anything more than an attempt at witty humor to make this topic more interesting as a blog post. For the record, Costco’s all-american chocolate cake is probably my favorite dessert of all time. 

Keeping in line with the obligatory blog posts that include not-so-subtle references to summer time things like play pools, umbrellas, and iced tea, I decided to write about something with a beach theme, with a little bit of an intellectual property spin (because we’re just that fanatical). So imagine my excitement when we found another legal commentator dissecting a summer time item and evaluating it from an I.P. perspective.

The subject item is a….. beach ball! What a quintessential symbol of the summer. In fact, Time magazine recently dubbed the beach ball one of 100 greatest toys of all time (well from 1923 to present, but who’s counting anyways?)

By now you are probably familiar with all the colorful details: a large, inflatable ball with colorful, alternating side stripes, where the article can be used for play at the beach or in water games (see, even that sounded very nerdy!). The point is that a beach ball has been in existence for a long time, and the coloring and design of the stripes along the side of the ball is virtually ubiquitous. Indeed, Time magazine (which recently ranked the beach ball as one of the greatest toys of all time) says that the design that utilizes the colors is relatively common.

So the plain color designs on beach balls (no matter what colors are used) are probably not protected by a copyright because they are already in the public domain by virtue of widespread use. Bad news if you are a beach ball maker and you are thinking about getting copyright protection for your very rad beach ball design, because your design is going to make you boocoo bucks. But is that the end of the line for your dreams to become the beach ball rock star?

Copyright only attaches to specific original works of authorship that include specific elements. As we all learned from the Feist phone book case, there must be some degree of creativity. Isn’t the placement of colored stripes across a beach ball creative? Yes, if you are the first person to do it and you are the actual author (or beach ball artist, in this case). After all, the “sine qua non of copyright is originality” and if your work isn’t original, then no copyright protection for you. Sorry to burst your beach ball.

But does this mean your idea to protect the most awesome beach ball design caput? Not necessarily. There’s always trade dress protection. If your color arrangement are unique enough to where the design itself points back to a particular source, then that may be enough to get you trademark protection in the colors on a specific product. However, the color arrangement must be inherently distinctive (think of the colorful assortment of LV monograms and ornamental designs that Louis Vuitton uses on its handbags). So the design must indicate a source. If it doesn’t then you have to show that everybody knows the color arrangement and knows that it belongs to you. If they don’t, well, you are just another ball lost in the sea of like-colored beach balls!

 So taking another look at the beach ball example, the simple arrangement of colored panels across a ball is not enough to make the design inherently distinctive because, well, the design is just so darn common. Now if you did some kind of a crazy, swirly pattern of a mishmash of colors and arranged them in a specific pattern across the face of the ball, you might be able to claim that that arrangement of colors is distinctive and capable of identifying you as the source. If not, then you would have to wait a few years and promote the heck out of your beach ball design so that consumers know who you are and that you are connected with the product. You can hit some snags (like having your design be found as functional because it is designed to help people find their lost beach ball in the water, or something utilitarian like that). But if you are set on achieving beach ball economic stardom with an arrangement of the traditional color panels, follow this advice you must.

Now go out there, toss a ball around, and have some summer fun!

We live in America (a wonderful enterprising nation filled with witty comedists and weekend-stand-ups), so it only seems natural that someone would come up with the idea of putting a choice phrase on a t-shirt in the hopes of striking it big and becoming the top seller on CafePress or at those shops in popular tourist shops where the merchandise all looks the same. I’m talking about phrases like “More Cowbell”, “Free Hugs”, and “Kind of a Big Deal”, all of which have become immortal as a result of their connection to some sort of event or pop-culture phenomenon.

That next big phrase could be connected with Anthony Weiner. In case you hadn’t heard, Anthony Weiner has done it again. Check out this trademark application filed two years ago for the mark RE-ERECT WEINER for t-shirts.

How clever is that! The trademark application has since been abandoned by the applicant because they failed to respond to an office action. The office action cited the fact that the trademark included the name of a person as an invalidating characteristic of the trademark (I wonder who that person could be…..) According to the USPTO, the mark identified Anthony Weiner, although no direct reference to Weiner was made in the trademark application. I guess the reasoning of the USPTO was that no one could possibly NOT get the obvious reference to Weiner based on the “erect” portion of the mark (whoever wrote this office action must have had a heck of a laugh) and Anthony Weiner’s flap (don’t read any innuendos into that last phrase, I beg you!). According to the well-supported argument of the USPTO, to use the “WEINER” name as a trademark would require the written consent of Mr. Weiner. Yeah right, like that was going to happen.

But, but…… what of my chances of making it big with this awesome phrase printed on every cheap $2 item known to man!? This gets us to the next portion of the office action, the portion dealing with the ornamental appearance issue. You see, for a phrase to be considered as a trademark, it has to, you know, actually indicate some source. It cannot be used as some sort of decorative phrase on merchandise. It has to say something about where the goods came from. This is why Anthony Weiner would have had to have given his consent to use of a phrase containing his name: people may have thought that the shirts came from him. So when you see a million other people on Café Press using phrases on all kinds of tchotchke items, the phrases on the shirts don’t have any trademark significance because nobody knows SalamanderShirts’ coffee mugs with “I Love N.Y.” from AlibabaTheGreat’s iPod cases bearing the same phrase. 

So how can a phrase like VOTE FOR PEDRO be trademarked? After all isn’t that phrase too merely ornamental and don’t you see it used on T-shirts and license plate frames and the like? Well, not quite. You see, when somebody encounters another person wearing one of those shirts, they probably put the shirt to a particular source. In this case, the source is the movie studio that produced Napoleon Dynamite. Nobody knows who the heck Joe Smith from Anywhere in the U.S. is who makes shirts on Cafe Press that say “Gun’s Don’t Kill People, I Do”. But even the "VOTE FOR PEDRO" mark faced opposition from the USPTO initially, on the basis that the phrase was not a trademark. The lawyers for 20th Century Fox wisely pointed out that even if the phrase was considered ornamental, it can still be registered as a trademark if it operates to identify a source. The phrase "VOTE FOR PEDRO" did bring to mind a source, the character in the movie Napoleon Dynamite. Indeed, this kind of source designation has found favor with the TTAB in the past,name in the decision of In Re Paramount Pictures Corporation where the TTAB reversed the USPTO examining attorney's refusal of the mark MORK & MINDY for decals for t-shirts. This choice phrase is worth highlighting:

"it is a common merchandising technique in [the U.S.] to license the use of character names and images as trademarks for a variety of products collateral to the product or services in respect of which the name or images are primarily known. Thus, while purchasers may be accustomed to seeing characters' names and images as part of the ornamentation of decals, T-shirts, and the like, they are also accustomed to seeing characters' names and images used as trademarks to indicate source of origin"

Besides, VOTE FOR PEDRO was tied to a very successful film that was critically acclaimed, mentioned numerous times in news reports, and grossed over $100 million between box office ticket sales and DVD sales. So there was likely significant secondary meaning between the phrase and the underlying film.

RE-ERECT WEINER, by contrast, is not tied to any particular source (except Anthony Weiner himself, which is why the USPTO demanded some sort of approval by Weiner for his name to be used as a mark). Perhaps the applicant for "RE-ERECT WEINER" would have been in better shape if he/she had applied for a different mark that wasn’t so obviously connected with Weiner, say the word “WEINER” itself (with the tagline Re-Erect being applied during the production of various items). However the applicant would still likely get an ornamental objection, if they were just using the word as a tagline on a shirt and not in the same way that HOLLISTER or ABERCROMBIE puts their names on the front of shirts. So trademark probably doesn't work (absent a showing of secondary meaning, that people equate the phrase with ONE source).

Thus the applicant would probably have to settle for copyright protection in the designs. Copyright protection in the phrase "Re-erect Wiener" itself is most likely out since the phrase is so short (no puns intended, get your mind out of the gutter!). This works out better for all those t-shirt entrepreneurs who want to make a buck quickly off their political satire because they can make their own shirts too with the phrase.

Sidenote: In case you thought you were going to pick up the phrase that is the subject of this blog post and run with it (no hurt feelings on my part, I don’t even have a Café Press site), it looks like somebody has already beat you to the punch. Somebody on Café Press is selling T-shirts, hats, and other tchotchke items with the phrase “RE-ERECT WIENER”. Nevertheless, the owner of this particular store has taken note of the proper I.P. protection for this particular creation by indicating that all designs are ©. 

Isn’t the opportunity to respond to an office action simply wonderful? Sometimes a response to an office action can be a prelude to a cancellation proceeding if the trademark owner cannot convince the USPTO that a trademark does not create a likelihood of confusion. Let’s take a look at how this works by examining a wonderful (no pun intended, I promise) case study.

Just this past week Nintendo filed its response to an office action issued by the USPTO against the trademark THE WONDERFUL 101, citing a likelihood of confusion with the trademark THE 101, owned by DirecTV. The USPTO cited  a likelihood of confusion as the basis for the rejection, specifically that DirecTV’s THE 101 mark was registered for providing on-line computer games; and providing a computer game that may be accessed network-wide by network users” (There’s more goods specified, but the listed goods are the only ones that were wonderfully relevant to this post, oh yes I did just say “wonderful” again!). Nintendo’s application claimed, among other things, video games (simply for reference purposes and in no way for trying to sell video games or turn you into a game nerd, here is a link to the underlying video game, a game involving a super hero called “wonder-red” who leads a pack of other super hero figures who have the ability to transform into menacing objects).

Nintendo used all the standard arguments that one might expect in responding to the rejection:  difference in appearance between 101 and WONDERFUL 101 (that the word “WONDERFUL” means something spectacular and this meaning is so much more exciting than simply “101”) and the fact that the word “WONDERFUL” itself is an awesome word because it is big and has been used without incidence by other trademark owners. (Okay, maybe that last argument isn’t standard across all other words because there is something truly wonderful about the word “WONDERFUL”, perhaps because it isn’t descriptive like saying “big wheel” for a video game about a spinning wheel).

But did Nintendo miss a wonderful opportunity to cancel DirecTV’s trademark?

Maybe, maybe not. One of the arguments made by Nintendo is that DirecTV isn’t even using the mark THE 101 in connection with video games anymore because the service for which THE 101 mark was used (websites for providing information about radio shows and video games) had since been rebranded THE AUDIENCE NETWORK. This essentially amounts to an argument for cancellation (without the formalities of the actual cancellation filing, which can be kind of expensive). The most typical scenario leading to a cancellation proceeding arises when an application for registration is refused on the basis of a prior registration. So, technically, if Nintendo had some significant evidence that DirecTV was no longer using the trademark, it could have simply filed a petition to cancel part of (or all of) DirecTV’s THE 101 mark.

So why a no-go on the cancellation option? Perhaps Nintendo is biding their time and hoping to dodge spending the money on launching a cancellation proceeding (The Wonderful 101 may be a low-budget game that Nintendo doesn’t care too much about, not like it cares about other games that include a short man in a red jumpsuit, at least). Or maybe Nintendo is worried about getting entangled in a fight with a powerful media company who may someday collaborate to distribute Nintendo games? Who knows. One thing that is certain: a cancellation may have allowed the WONDERFUL 101 mark to proceed to registration a lot more quickly than haggling with the USPTO (which no one really enjoys doing)?

For now, this is a valuable lesson about USPTO procedure and the importance of coming to the table prepared with lots of evidence that may be helpful later. If you are DirecTV and use of your mark on video games was important, well you could be facing a loss of your mark if a company like Nintendo wants their mark more desperately then you do.

Sidenote: Any why didn’t the USPTO issue a descriptiveness rejection against THE WONDERFUL 101 (or THE 101 for that matter) based on the connection between the mark and an underlying feature of the product/service? For Nintendo, THE WONDERFUL 101 is used in connection with a video game featuring 100 + 1 superheroes while DirecTV’s mark is used in connection with a platform tied to its channel 101. Both of these uses of the mark seem descriptive.

And that ladies and gentleman is response to likelihood of confusion rejections and cancellation arguments 101.

So here's the deal. Trademarks are ultra-important. They can help you distinguish your products in the marketplace. They can help generate millions of dollars worth of licensing revenue every year (if your trademark begins with the letters NHL, NFL, NBA, etc. it helps in this regard, but it isn't strictly necessary). They can be asserted against competitors using symbols that are identical or similar in appearance. Trademarks can be words. They can be logos/symbols. They can even be ornamental designs, colors, sounds, and even scents. But one thing a trademark cannot most assuredly be is generic. Why not? Well, a trademark is an exclusive right to use a word or symbol in connection with a specific good or service, where the trademark is shown to have source-identifying capabilities. Generic words have descriptive characteristics. They are used as product category identifiers, almost like little tags on the sides of a good telling people what the good is. To allow a generic word such as "car" or "smartphone" to be registered for goods which are widely associated with the particular word would rob others of the opportunity to use the word in describing their products, and the purchasing experience would be infinitely more complicated for consumers (who would be flummoxed by a word such as "aerodynamically-designed occupiable transportation instrument" for an automobile).

As a business owner who is concerned about developing a business, anything that concerns any potentially revenue-bearing aspect of a name or symbol product/service will probably include some facet related to trademark law. So if your prized name was in danger of becoming generic or was incapable of being a trademark because somebody else was using it, you might be slightly interested. This blog is written to help you conceptualize these conflicts and help you tackle some of the legal mumbo-jumbo. It will feature musings on interesting cases, trademark application drafting and enforcement tips, and commentary on other interesting trademark issues that typically confront businesses.

This blog is also about copyright law, but more generally the other kinds of I.P. not related to 35 U.S.C. §§ 1 - 376. Er, that's the patent act for all those who are not I.P. nerds and who don't write this kind of stuff on the back of notecards because they didn't have to and/or want to during law school (no concealed biterness, I swear!). Because I love to delve into the intricacies of the U.S. Copyright Act, I will occasionally post items of interest concerning this area of law as well. So if you are an author, artist, songwriter, computer programmer, sculpter, or pantomime organizer, you may find these posts relevant to your interests.