A “Huge” Ruling on Registrability of Surnames as Trademarks
The U.S. Supreme Court recently upheld the long-standing statutory prohibition of registering trademarks consisting of surnames without consent, regardless of whether the individual is famous, well-known or a public persona. In Vidal v. Elster, No. 22-704 (June 13, 2024), the Supreme Court unanimously ruled that the U.S. Patent and Trademark Office did not violate applicant Steve Elster’s First Amendment rights when it denied federal trademark registration for the mark “TRUMP TOO SMALL.” This decision is yet another ruling by the Supreme Court on the intersection of federal trademark law (the Lanham Act) and first amendment rights. The justices based their decision on a long-standing Lanham Act provision prohibiting trademark registrations including a living person’s name, without their consent. In this case, ex-President Trump’s name was used in the trademark, a coy reference to Sen. Marco Rubio (R-Fla) mocking the size of Trump’s hands during the 2016 Republican Presidential debate. Applicant Elster posited that the trademark was political commentary about the smallness of Donald Trump’s overall approach to governing as president of the United States and the smallness of his approach to specific issues as president and argued that the inability to register the proposed mark violated his first amendment rights and unfairly denied him the benefits that come with federal trademark registration. The Court found the arguments unpersuasive, finding no valid distinction between the prohibition of using a political figure’s name and any other name. The Court concluded “that a tradition of restricting the trademarking of names has coexisted with the First Amendment, and the names clause fits within that tradition” and that refusal to register a trademark containing Trump’s name without the ex-president’s consent did not violate any First Amendment right.
This decision marks a slight deviation from recent SCOTUS decisions at the crossroads of the Lanham Act and the First Amendment. In two recent cases, the Court invalidated Lanham Act provisions prohibiting federal registration of disparaging marks (Matal v. Tam, 582 U.S. 218 (2017)) and “immoral or scandalous” marks (Iancu v. Brunetti, 139 S. Ct. 2294 (2019)). In Tam and Brunetti, the Lanham Act provisions at issue were found by the Court to discriminate against particular viewpoints. In contrast, the Court in Elster found the provision prohibiting trademark registrations, including a living person’s name without consent, viewpoint neutral. While the prohibition on federal registration of names without consent is not new, this decision clarifies that it holds even for well-known political figures. This ruling underscores that no surname will be permitted to be registered as a trademark without consent of the name holder, regardless of fame or renown.
Diluted Spirits – The Importance of Dilution in Trade Dress Actions
In a case that could have lasting implications regarding trade dress, trademark dilution and what constitutes famous marks, Diageo N. Am., Inc. v. W.J. Deutsch & Sons Ltd., No. 22-2106, 2024 U.S. App. LEXIS 12684* (2d Cir. May 28, 2024), the Second Circuit affirmed a jury verdict finding (1) no infringement of Plaintiff-Appellee Diageo North America, Inc.’s (“Diageo”) Bulleit whiskey bottle trade dress by Defendant-Appellants W.J. Deutsch & Sons Ltd.’s (“Deutsch”) Redemption whiskey bottle design but (2) dilution of the same trade dress under federal and New York State law.
The case involved a trademark dispute between two companies that sell whiskey, Diageo and Deutsch. Diageo has used its Bulleit Packaging Design Trademark and Trade Dress (the “Bulleit Packaging Design”) for its Bulleit American whiskey products since 1999. Deutsch launched its Redemption packaging design in November 2016 (the “Redemption Packaging Design”). In 2017, Diageo filed suit against Deutsch on the basis that the Redemption Packaging Design allegedly infringed upon, and diluted, the Bulleit Packaging Design pursuant to the Lanham Act, 15 U.S.C. § 1051 et seq., and the New York General Business Law. After a jury trial, a mixed verdict was returned, dismissing Diageo's infringement claims but ruling in favor of Diageo on its federal and state dilution claims. Diageo successfully moved for a permanent injunction based on the dilution verdicts.
According to the Second Circuit’s decision, particularly relevant to the fame inquiry was that the jury was presented with evidence that: Diageo had marketed its design since 1999; Diageo spent millions on advertising and promotion featuring the design; the design was featured in numerous television shows, movies, and magazines; Diageo successfully sold Bulleit and surpassed $220 million in sales of Bulleit in the fiscal year that the Redemption Packaging Design was released; market research showed that Bulleit was mentioned in the same category as Jack Daniels and Jim Beam; and the Bulleit Packaging Design was registered with the Patent and Trademark Office in 2006. Relevant to the question of similarity between the designs was evidence presented to the jury of the Bulleit Packaging Design and the Redemption Packaging Design side-by-side on store shelves and evidence that that Deutsch revised its “design brief” with directions to propose a new bottle shape similar to the Bulleit Packaging Design. The outcome in this case was curious in that that although there was no consumer confusion between the two bottle designs to support an infringement claim, the designs were “sufficiently similar” to support a dilution claim, since the two bottles had a similar “look and feel.” The ruling could impact how trademark practitioners value potential dilution claims when enforcing their trade dress rights.
High Fashion Re-sellers Must Re-Think Current Practices
Earlier this year, international fashion powerhouse Chanel won an important trademark infringement case, potentially impacting how luxury re-sellers may market their goods. In Chanel, Inc. v. What Comes Around Goes Around LLC et al., No. 1:18-cv-02253 (S.D.N.Y. Feb. 6, 2024), a jury in the Southern District of New York returned a unanimous verdict awarding $4 million in statutory damages from luxury reseller What Goes Around Comes Around (WGACA) to Chanel after a six-year lawsuit.
Chanel alleged that WGACA sold counterfeit goods, infringed its trademark, engaged in false advertising and unfair competition, and falsely suggested its endorsement. An important factor in the case was WGACA’s representations of authenticity of re-sold Chanel products.
Chanel products are manufactured on a “to order” basis with select factories in France, Italy, and Spain, and are tracked using an internal system with assigned Chanel-specific serial numbers. Despite robust security measures, 30,000 Chanel labels, stickers, and authenticity cards with Chanel serial numbers were stolen from the Renato Corti factory in Italy in 2012.
Chanel alleged that WGACA sold numerous non-genuine and counterfeit Chanel bags. Some of the bags were marked with the stolen serial numbers, voided during inventory audits, or not assigned to one of Chanel’s serial numbers. Other counterfeit products offered for sale, such as trays and mirrors, were not authorized for sale by Chanel.
Chanel also alleged that WGACA impermissibly used the Chanel trademark and brand in advertising and promotions, even though WGACA is not an authorized Chanel retailer or otherwise a Chanel affiliate. For example, WGACA used a giant Chanel No. 5 bottle and a Chanel-branded cake in advertisements. On its social media, WGACA used the hashtag #WGACACHANEL and pictures of Chanel-branded items, including pictures from previous Chanel advertisements. Chanel alleged that such uses went well beyond nominative fair use and unfairly implied an affiliation with or authorization by the brand when none existed.
WGACA also guaranteed authenticity on its website and provided letters of authenticity for each item, despite the fact that Chanel never inspected or authenticated WGACA Chanel inventory.
WGACA’s unauthorized use of Chanel trademarks to sell counterfeit goods, advertise, and guarantee authenticity resulted in a jury verdict in favor of Chanel. This verdict emphasizes that resellers, especially of luxury brands, should ensure careful advertising and authentication to protect product integrity.
Currently before the Southern District of New York is Chanel’s motion for permanent injunction, which seeks to prevent WGACA from using Chanel trademarks in advertising Chanel-branded items not authorized for sale and to require WGACA to take additional measures with Chanel products it offers for sale.
Common Law Trademark Abandonment Test Clarified
In a ruling that helps clarify the test for trademark abandonment for unregistered trademarks, the 4th Circuit held that the statutory test in the Lanham Act should apply (Simply Wireless, Inc. v. T-Mobile United States, Inc., 115 F.4th 266, 274 (4th Cir. 2024)). Under Section 1127 of the Lanham Act, a rebuttable presumption of abandonment is established through evidence of (1) the lack of use of a valid trademark by the putative owner for three consecutive years, and (2) that such intention was formed during the three-year presumption period. In the case at hand, the core question became whether the Lanham Act abandonment test is applicable to common law trademarks, and whether the evidence provided by Simply Wireless was sufficient to rebut the presumption
Simply Wireless, Inc., a Viginia telecommunications company in operation for about 27 years used several unregistered trademarks including SIMPLY PREPAID in connection with their prepaid airtime products. Simply Wireless sued T-Mobile in Eastern District of Virgina for trademark infringement of its common law mark, SIMPLY PREPAID. T-Mobile refuted these allegations, arguing that due to lack of continuous and exclusive use, Simply Wireless had abandoned the mark and thus had been divested of the common law ownership rights in the mark.
In determining whether the mark was abandoned, the district court applied the § 1127 statutory abandonment test, and in ruling for summary judgment in favor of T-Mobile, opined that T-Mobile provided sufficient evidence of abandonment under the statutory test and that Simply Wireless’s evidence of airtime products negotiations was not enough to rebut the presumption. On appeal, the Fourth Circuit Court of Appeals, bound by precedent, affirmed that the statutory abandonment test applies to common law trademarks, joining at least two of its sister circuits and the applicable Restatement (Third) of Unfair Competition. Noting that Simply Wireless’s evidence was “specific and predicated on personal knowledge” of the CEO, the Fourth Circuit ultimately decided that the district court erred in ruling that the evidence was overly “vague and indefinite” and failed to show intend to resume use, and remanded the case to the district court for determination of the abandonment issue.
The case is important because it provides clarity to practitioners regarding the proper test for determining abandonment of unregistered marks.
Written by: Jason Kasner, Daniela Caro-Esposito, Niki Camateros-Mann, Olivia Huey