On May 2, 2019, the United States Patent and Trademark Office issued an examination guide in an effort to clarify the procedure for examining marks for cannabis and cannabis-derived goods and related services following the 2018 Farm Bill.
The 2018 Farm Bill, formally known as the Agricultural Improvement Act of 2018, removed industrial hemp from the Controlled Substances Act’s definition of marijuana and permits the cultivation of industrial hemp (with the requisite permits and licenses) so long as such plants contain no more than 0.3% delta-9 tetrahydrocannabinol (“THC”) concentration on a dry weight basis. This means that hemp and hemp-derived cannabidiol (CBD) products are no longer controlled substances under the CSA. However, among other restrictions, the 2018 Farm Bill expressly preserved the Food and Drug Administration’s (“FDA”) authority to regulate and provide guidelines for the use of cannabis and cannabis-derived (i.e., CBD) products in food and dietary supplements under the Food Drug and Cosmetic Act (“FDCA”). Under the FDCA, it remains unlawful to use CBD in foods or dietary supplements without approval from the FDA because CBD is an active ingredient in FDA-approved drugs and is undergoing clinical investigations.
In light of the intersections between the CSA, the Farm Bill (AIA), and the FDCA, the USPTO’s examination guide is a welcomed bit of clarification on how the office will proceed with what we understand to be a backlog of cannabis-related trademark applications.
Historically, the USPTO has rejected applications for registration of cannabis or cannabis derived-CBD goods and services, including both marijuana and hemp. Now that hemp has been removed from the CSA, the USPTO will begin accepting hemp-related marks. For applications filed on or after December 20, 2018, the application must specify that the goods identified contain less than .3% THC on a dry weight basis. Similarly, for service-related marks, the application must specify that services involve hemp containing .3% or less THC. For applications filed before December 20, 2018, applicants will be permitted to either amend the filing date or abandon the application and file a new application.
Given that marijuana and its derivatives are still controlled substances, any applications for marks for marijuana or marijuana derived-CBD goods or services involving marijuana-related activities will continue to be rejected as unlawful under federal law. This includes marks used in commerce in states which have legalized medical and adult-use marijuana. Further, even if your desired mark is hemp-related, it may still be rejected by the USPTO, if the related goods violate the FDCA.
As with many areas related to this industry, protecting your intellectual property continues to be a complex and evolving process.
Amber L. Reiner Skovdal has handled diverse matters involving complex commercial and business litigation, insurance and bad faith, products liability defense, employment disputes, and intellectual property litigation including trade secret disputes as well as patent and trademark infringement litigation. She can be reached at firstname.lastname@example.org or 412-288-4016
Posted onMay 20, 2019byHenry Sneath|Comments Off on SCOTUS Landmark Trademark Licensing Decision: Mission Product Holdings, Inc. v. Tempnology, LLC, NKA Old Cold LLC No. 17-1657
Has “the most significant unresolved legal issue in trademark licensing” finally found some closure? Circuit courts have long been split over whether bankrupt trademark owners could revoke a license and on what the effect is, generally, of a rejection of an executory contract. On Monday May 20th, 2019 the U.S. Supreme Court ruled that defunct brand owners (as debtors in Chapter 11) cannot use bankruptcy law to unilaterally revoke (reject) a trademark license agreement. The court held that bankruptcy “rejection” of an executory contract trademark license (a contract that neither party has finished performing) under Section 365 was akin to a breach of contract outside of bankruptcy. Per Justice Kagan: “A rejection (of any executory contract) breaches a contract but does not rescind it.” The licensee should not lose its right to use the debtor’s trademark under license. [Kagan] “Such an act cannot rescind rights that the contract previously granted.” Read here for the entire SCOTUS decision in Mission Product Holdings, Inc. vs. Tempnology, LLC. or here for a quick summary of the decision from Law360.
Posted by Henry M. Sneath, Esquire Co-Chair Litigation Practice Group and Chair of the IP Practice Group: Houston Harbaugh, P.C.401 Liberty Avenue, Pittsburgh, Pa. 15222. Sneath is also an Adjunct Professor of Law teaching two courses; Trade Secret Law and the Law of Trademarks and Unfair Competition at Duquesne University School of Law. Please contact Mr. Sneath at 412-288-4013 or email@example.com.
When someone mentions Play-Doh, what is the first thing you think of? Is it those flexible yellow containers? Perhaps it is the smooth and squishy texture of the putty? More likely though, you are probably thinking, nay, smelling, Play-Doh’s unmistakable scent. Play-Doh describes its scent best as “the combination of a sweet, slightly musky, vanilla-like fragrance, with slight overtones of cherry, and the natural smell of salted, wheat-based dough.” If you still can’t imagine its scent, put down your device, go find the closest toy store and pop open a tub of Play-Doh. We’ll wait.
In short, Play-Doh arguably has one of the most recognizable scents and n
ow Hasbro (Play-Doh’s owner), is seeking to trademark its distinct scent. Sound simple? Not quite.
The U.S. Patent and Trademark Office defines a trademark or service mark as “any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.” Think Google’s logo or the golden arches of McDonalds. More often than not, trademarks are tangible words or symbols branding a product or service. It gets a bit more complicated when you attempt to protect something intangible, like a scent.
There are two types of registrations: Principal and Supplemental. A Principal Registration is what Play-Doh has applied for and affords the most protection for a mark, including presumption of ownership in the event of litigation and the right to exclusive use of the mark. To qualify for the Principal Register, the mark must have achieved “secondary meaning.” That is, consumers must associate the mark with the particular product or service. So, again, think about the McDonalds arches. However, it is hard to deny that Play-Doh’s scent achieves similar distinctive brand recognition.
A Supplemental Registration, on the other hand, functions more as a holding place for a mark while it gains distinctiveness. Although it does not provide the same security as Principal Registration, the Supplemental Register is helpful in preventing others from registering their mark on either the principal or supplemental registers and is inherently easier to accomplish because, unlike the Principal Register, there is no opposition phase for others to attempt to block the mark.
Only a handful of other scent-based registrations exist. The first scent-based trademark was issued in 1991 for the scent of a line of embroidery thread and yarn. That’s right – yarn. In 2013, Verizon Wireless attempted to trademark the perfume it s
prays in its stores; however, it was unsuccessful in achieving principal registration because many other companies similarly use scents to create a general ambiance in stores. Ultimately, Verizon was able to achieve a downgraded registration onto the Supplemental Register.
Others have attempted to trademark their scents with limited success, largely because it is difficult for scents to pass the “functionality test.” Put simply, a mark must not serve any practical function of the product or service other than to identify and distinguish it. That is why perfumes and air fresheners often fail to receive principal registration because the product is inherently designed for the functional purpose of smelling.
Whether Play-Doh will be successful in achieving its registration is to be determined. Nevertheless, as markets become increasingly more crowded, we will likely see more companies turning to scents as a method of branding and distinguishing their products.
In Juice Generation, Inc. v. GS Enterprises, LLC (Case No. 2014-1853), the Federal Circuit reversed a decision by the Trademark Trial and Appeal Board (No. 91206450) that sustained an opposition brought by GS Enterprises against Juice Generation’s attempt to register the mark “PEACE LOVE AND JUICE.” The Federal Circuit remanded for further consideration, finding that the TTAB “did not adequately address the weakness of GS’s marks and did not properly consider the three-word combination of Juice Generation’s mark as a whole in comparing it to the two-word combination in GS’s marks.”
Juice Generation operates a chain of juice bars in New York City. It attempted to register the mark “PEACE LOVE AND JUICE” with the USPTO in connection with juice bar services (disclaiming “juice”).
GS Enterprises has four registered trademarks in the restaurant services class that incorporate the words Peace and Love–“P & L PEACE & LOVE,” “ALL YOU NEED IS PEACE & LOVE,” “PEACE & LOVE,” and “P & L PEACE & LOVE NEW YORK.” Examples of two of its marks are shown below:
GS Enterprises filed an opposition to Juice Generation’s application, arguing that the “PEACE LOVE AND JUICE” mark created a likelihood of confusion.
The TTAB considered the 13 DuPont factors in analyzing the likelihood of confusion. It first found that Juice Generation had been using its mark for years without evidence of actual confusion, but it discounted this factor because it did not think that there had been “meaningful opportunities” for actual confusion to occur given the parties’ use of their marks.
The Board next looked to the dominant feature of Juice Generation’s mark (PEACE LOVE) and found it was virtually identical to GS Enterprise’s “PEACE & LOVE” mark.
The Board also looked to at least 26 examples of 3rd parties using similar combinations of Peace and Love in their marks–e.g., “PEACE LOVE AND PIZZA,” “PEACE LOVE YOGURT,” and “PEACE, LOVE & BEER,” but did not find that there was sufficient evidence to show that consumers recognized that other entities were using similar terms in their marks.
On balancing this evidence, the TTAB concluded the there was a likelihood of confusion with consumers and sustained GS Enterprises’ opposition.
The Federal Circuit Vacates and REmands
The Federal Circuit was clearly troubled by the conclusions the TTAB reached. It first noted that likelihood of confusion is a legal conclusion that it reviews de novo, and that it is to be analyzed using the 13 DuPont factors.
The Federal Circuit was concerned by the TTAB’s failure to place much weight in the numerous examples of other marks that used the words “PEACE” and “LOVE” together with other terms. The Court found these examples to be “powerful” evidence that GS Enterprises’ marks were not strong on their face. With so many similar marks, there was substantial prima facie evidence that GS Enterprises marks were not strong. As a result, the Federal Circuit remanded the case to the TTAB to conduct a more thorough analysis of the strength of GS Enterprises’ mark in light of these numerous similar marks.
The Federal Circuit finally noted that the TTAB improperly considered just a portion of Juice Generation’s mark–the PEACE LOVE part–without considering whether the mark as a whole might convey a meaning distinct from GS Enterprises’ marks. As a result, the Federal Circuit also remanded for the TTAB to provide a more thorough analysis of the mark as a whole.
The Supreme Court handed down a decision today in B&B Hardware, Inc. v. Hargis Industries, Inc. (No. 13-352), in which it reversed an Eighth Circuit ruling regarding whether a decision by the Trademark Trial and Appeal Board (TTAB) during an opposition proceeding that there was a likelihood of confusion between two marks could have a preclusive effect in a subsequent trademark infringement lawsuit in a district court. In a 7-2 decision, authored by Justice Alito, the Supreme Court held that in certain circumstances, final decisions by the TTAB can preclude re-litigation of those issues in later forums. Justices Thomas and Scalia dissented, stating that they did not think that TTAB decisions should have preclusive effects.
B&B Hardware registered its trademark “SEALTIGHT” with the USPTO in 1993, which was used with threaded and unthreaded metal fasteners and other related hardware. In 1996, Hargis sought to register its own mark, “SEALTITE” for self-piercing and self-drilling metal screws. B&B Hardware opposed the registration, contending that the marks were confusingly similar.
Although not described in detail, the Court noted that the parties had been involved in disputes before the USPTO and courts in the Eighth Circuit for the last twenty years, including three trips to the Eighth Circuit and two jury verdicts in infringement actions.
Relevant to this case, the parties were before the TTAB on an opposition proceeding brought by B&B Hardware. B&B Hardware successfully argued to the TTAB that the USPTO should not register the SEALTITE mark because it was confusingly similar to its SEALTIGHT mark. While the Lanham Act provides that a decision of the TTAB can be appealed to either a district court or the Federal Circuit, Hargis declined to seek any judicial review, and the decision of the TTAB to not allow registration of the SEALTITE mark became final.
While the opposition proceeding was occurring, B&B Hardware brought a trademark infringement action against Hargis in district court. Once the TTAB decision became final, B&B Hardware argued before the district court that Hargis could no longer contest the issue of likelihood of confusion based on the doctrine of issue preclusion. The district court disagreed, and a jury ultimately concluded that there was no likelihood of confusion. The Eighth Circuit affirmed.
The Supreme Court ultimately reversed both the Eighth Circuit and the district court.
The Supreme Court’s Decision
Issue preclusion is a doctrine that prohibits the redetermination of issues in a later action that have been finally decided in a prior action. In general, it applies “[w]hen an issue of law or fact is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.”
In deciding whether issue preclusion could apply to a TTAB decision, the Court first concluded that issue preclusion is not limited to proceedings involving two courts. It is possible that agency decisions (such as a TTAB decision) can be given preclusive effects unless Congress clearly indicates otherwise. In this case, the Court found that Congress did not indicate in the Lanham Act that TTAB decisions should not be given preclusive effect, so it concluded that issue preclusion is potentially available.
Next, the Court considered whether the TTAB and the district court were, in fact, deciding the same issue in order for issue preclusion to be available. It reviewed the standards applied by both tribunals and concluded that the same likelihood-of-confusion standard applies to both the registration of marks and the question of infringement.
Hargis argued that issue preclusion should not apply because the TTAB considers whether the marks “resemble” each other, while the district court considers how the marks are used in commerce, and that these are different tests. The Court rejected that argument, stating that while the two tribunals may not consider the same usage of the marks, that did not mean that they applied different standards to the usage. It is at this point that the Court noted some important limitations on whether a TTAB decision could be given preclusive effect:
If a mark owner uses its mark in ways that are materially the same as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation. By contrast, if a mark owner uses its mark in ways that are materially unlike the usages in its application, then the TTAB is not deciding the same issue. Thus, if the TTAB does not consider the marketplace usage of the parties’ marks, the TTAB’s decision should “have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue.” 6 McCarthy §32:101, at 32–246.
In addition, the Court reiterated that if the TTAB considers a different mark than is at issue in the litigation or has decided a different issue than is before the district court, there can be no issue preclusion.
Because Hargis decided not to appeal the TTAB decision, it was a final judgment. And, because the likelihood of confusion issue was the same in both tribunals, the Court concluded that issue preclusion applied. Thus, the Court reversed the Eighth Circuit and remanded the case.
Issues not decided by the Supreme court
There were a couple of issues that the Court touched on, but did not rule because either the parties had not preserved the issues or they had not been adequately presented. In both instances, the majority noted that the constitutional issues were not before it, but it seems unlikely from what was said that they would have been successful even if they had been.
For instance, the Court noted that it has never had the occasion to determine whether issue preclusion from an agency decision violates the separation of powers in Article II and III of Constitution. In addition, the Court indicated that Hargis failed to preserve a Seventh Amendment challenge that giving preclusive effect to an non-jury, agency decision denied it a right to a jury.
It will be interesting to see if those challenges are raised with more care in future cases before the Court.
As seems to be typical in intellectual property cases before the Supreme Court, the Court did not set down a bright-line rule. The Court held that in some appropriate circumstances, decisions by the TTAB can be given preclusive effect in subsequent litigation in Article III courts. The Court caveated its determination, though, so litigants in the TTAB will need to carefully consider what the risks might be if they do not seek judicial review of a TTAB decision in either a district court or before the Federal Circuit. This uncertainty will likely give rise to more challenges to TTAB decisions, especially where there is a risk that those decisions have aspects that are similar to issues being raised in court (such as likelihood of confusion).
For further discussion of this case, the Likelihood of Confusion blog has some good coverage.
When applying to register a trademark or service mark, one of the key requirements is that the applicant has used or intends to use the mark in commerce. The Federal Circuit recently considered what is sufficient “use in commerce” for purposes of obtaining a service mark in Couture v. Playdom, Inc.,No. 2014-1480 (March 2, 2015).
Playdom filed an application to register the service mark PLAYDOM on May 30, 2008 and submitted a specimen that purported to demonstrate that the mark had actually been used in commerce. Specifically, Playdom submitted a screen shot of the only page on its website (www.playdominc.com), which stated “[w]elcome to PlaydomInc.com. We are proud to offer writing and production services for motion picture film, television, and new media. Please feel free to contact us if you are interested.” The webpage also indicated that it was still under construction. The USPTO registered the mark on January 13, 2009. However, Playdom did not actually provide any services under the mark until 2010.
On February 9, 2009, Couture filed his own application to register the identical mark—PLAYDOM. Not surprisingly, the examining attorney rejected Couture’s mark based on Playdom’s mark. In response, Couture filed a petition to cancel Playdom’s mark, arguing that Playdom had not actually used the mark in commerce when it said it did.
The Board granted the petition, finding that Playdom had not provided services as of the filing date of the application because it had only indicated that it was willing to provide services then, not that it actually had provided services.
The Federal Circuit affirmed the cancellation on the same grounds.
Under the Lanham Act, a service mark is used in commerce when it (1) is used or displayed in the sale or advertising of services and (2) the services are rendered in commerce. 15 U.S.C. § 1051(a)(1). And, when claiming that the mark has been used in commerce, it must have actually been used in commerce as of the application’s filing date.
In analyzing this provision, the Federal Circuit noted that “used in commerce” means actual use, and not preparations. If an applicant submits advertising relating to the services as proof of use, the advertising must relate to existing services that have already been offered to the public, and not services that the applicant intends to perform in the future.
Because there was no evidence in the record that Playdom actually rendered any services before 2010, the Board correctly cancelled Playdom’s 2008 registration.
Small things can make a difference when applying to register trademarks and service marks. Counsel and applicants need to be aware of these requirements and accurately complete the applications. In circumstances like these, applicants can indicate on the application that they have a bona fide intent to use the mark in the future, which allows for the application to proceed.
This week the United States Supreme Court determined that a jury should decide the issue of whether “tacking” can be used by a trademark holder to assert a priority position.
In Hana Financial, Inc. v. Hana Bank, No. 13-1211 (decided January 21, 2015), Hana Financial sued Hana Bank for trademark infringement. Hana Bank asserted the doctrine of tacking as a defense, claiming that its mark came first. This argument is relevant because under trademark law, rights in a trademark are determined by the date of the mark’s first use in commerce. In other words, the party who uses a mark in commerce first is given priority over other users. The doctrine of tacking arose from courts’ recognition that trademark users ought to be able to modify their marks over time without losing priority (for instance, think of the Aunt Jemima mark: The mark dates to 1893 but Aunt Jemima has changed her appearance over the years. Thanks to the tacking doctrine, the owner of the mark, currently Quaker Oats Company, keeps that 1893 priority date. Fun Fact: The Aunt Jemima mark actually changed trademark law in the United States. (See this article for details.) A trademark holder may use “tacking” when the original and revised trademarks are “legal equivalents” in that they create the same, continuing commercial impression. In short, tacking applies when a consumer considers both marks to be the same despite a modification.
The Supreme Court, in an opinion delivered by Justice Sotomayor, concluded that because the tacking inquiry operates from the perspective of an ordinary purchaser or consumer, a jury should make the determination of whether the modified mark creates the same, continuing commercial impression. Prior to this ruling, there had been a split in the federal circuit courts as to whether tacking was a question for the jury or the court. The Supreme Court has now decided the issue. Note, that the Supreme Court did acknowledge that the issue of tacking could still be decided by a judge on a motion for judgment as a matter of law or on a motion summary judgment under the right set of facts.
So which bank won? Hana Bank. Hana Bank convinced a jury that the doctrine of tacking applied to its mark such that it had priority over Hana Financial. Based on the Supreme Court’s ruling, the jury verdict will stand.
You might wonder what could cause people to take to social media to rail against a trademark suit. It turns out one thing is beer: IPAs to be more exact.
(Image from CNBC: http://www.cnbc.com/id/102341790)
Law360 and CNBC reported this week about the social media backlash that occurred when Lagunitas Brewing Co. brought a trademark suit against Sierra Nevada Brewing Co. over the use of “IPA” on labels for India Pale Ale. The backlash was so great that Lagunitas moved to dismiss its lawsuit just two days after it filed the suit.
For those of you who practice in the area of trademark law, you might quickly jump to the conclusion that the suit was a weak one given that the term IPA sounds very “descriptive” or “generic” at first glance. However, the suit wasn’t that simple. Lagunitas didn’t just oppose the use of “IPA” on the label, and in fact there are a lot of beers out there with “IPA” on the label (yes, I’ll admit I’m pretty well aware of these other beers having tried a few myself). Lagunitas’ objection was the way in which Sierra Nevada designed its logo, which allegedly looked very similar to Lagunitas’.
Whether Lagunitas would have ultimately prevailed in a court of law is up for debate. However, Lagunitas appeared to be losing in the court of public opinion and that was enough to push it to withdraw the suit. This is an interesting issue for IP practitioners to keep in mind in those cases where a client’s business is dependent upon favorable public opinion.
On March 20, 2014, the USPTO rejected an application for the “Johnny Football” trademark on the grounds that the applied-for-mark consists of a name, portrait or signature identifying a particular living individual whose written consent to register the mark is not of record. On November 1, 2012, Kenneth R. Reynolds Family Investments, an investment firm based in College Station, Texas, filed for the trademark “Johnny Football” as Johnny Manziel began his ascent to fame as Texas A&M’s quarterback. Johnny Manziel, through his organization JMAN2 Enterprises, filed for the same trademark three months later. The investment firm now has six months to request that the USPTO reconsider its decision or to file an appeal. The application filed by Manziel’s organization has been stayed pending the outcome of the investment firm’s application.
As part of our “What is . . . ?” series, it’s time to find out just what is a trademark / service mark.
A trademark / service mark is a word, phrase, symbol or design, or a combination thereof, that identifies and distinguishes the goods or services from those manufactured or sold by others and to indicate the source of goods or services, even if that source is unknown. There are five categories of marks: fanciful, arbitrary, suggestive, descriptive and generic. A fanciful mark comprises a term that has been invented for the sole purpose of functioning as a trademark or service mark. These words are either unknown in the language or are completely out of common usage. Examples of fanciful marks include PEPSI and KODAK. An arbitrary mark comprises words that are common in language but, when used to identify particular goods or services, do not suggest or describe a significant ingredient, quality or characteristic of the goods or services. An example of an arbitrary mark is APPLE for computers. A suggestive mark comprises words that, when applied to the goods or services at issue, require imagination, thought or perception to reach a conclusion as to the nature of those goods or services. A descriptive mark comprises words that merely describe an ingredient, quality, characteristic, function, feature, purpose or use of the specified goods or services. Finally, a generic mark comprises words that the relevant purchasing public understands primarily as the common or class name for the goods or services.
Now that you have an understanding of what is a trademark / service mark, the next step is to determine whether you can and should obtain a mark. An important issue to determine is whether a mark is registrable. One of the most common grounds for refusal of a registration is that the potential mark causes a likelihood of confusion with an existing mark. In particular, a likelihood of confusion exists when the marks are similar and the goods or services relate in a way that such consumers would mistakenly believe they come from the same source. Other grounds for refusal exist as well. The other important issue to determine is whether the mark is enforceable based on the strength of the mark. The strongest mark, and thus, the easiest to enforce, is a fanciful mark, and next in line would be an arbitrary mark followed by a suggestive mark.
If you are interested in obtaining a trademark / service mark, you should consult a trademark attorney to advise and to assist you with the federal registration process. Continue reading →
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Contact our Pittsburgh Intellectual Property, Data Security, Trade Secret, DTSA and Technology Attorneys at Houston Harbaugh, P.C. through IP Section Chair Henry M. Sneath at 412-288-4013 or firstname.lastname@example.org. Some posts herein were published by the law firm Picadio Sneath Miller & Norton, P.C. (PSMN®) which has merged with HoustonHarbaugh, P.C. and are used by permission. DTSALaw® is a federally registered trademark. See Firm Website at: www.hh-law.com