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July 18, 2014

Couture v. Playdom, Inc.

Case No. 2014-1480
Federal Circuit Judges: Dyk, Moore, and O’Malley
Decided: March 2, 2015
Appeal from the Trademark Trial and Appeal Board: Playdom, Inc. v. Couture, Cancellation No. 92051115 (February 3, 2014)

In a precedential opinion decided on March 2, 2015, the U.S.  Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s (TTAB’s) decision sustaining a cancellation action against Appellant’s trademark registration for PLAYDOM.  For the first time the Federal Circuit directly addressed whether the offering of a service, without the actual provision of the service, is sufficient to constitute “use in commerce” under the Lanham Act § 45.  Under the Lanham Act, a service mark is “used in commerce” when:

“(1) it is used or displayed in the sale or advertising of services and (2) the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.” 15 U.S.C. § 1127

On May 30, 2008, the Appellant David Couture filed a use-based service mark application for the mark PLAYDOM covering a variety of entertainment-related services.  On that same day Appellant created a website consisting of a single page, which stated, “Welcome to PlaydomInc.com.  We are proud to offer writing and production services for motion picture film, television, and news media. Please feel free to contact us if you are interested: playdominc@gmail.com”.  The web page also included the notice: “Website Under Construction.”  Appellant submitted a screen shot of the web page as evidence of use, and the PLAYDOM mark registered on January 13, 2009.  Appellant did not actually provide any services under the mark until 2010.

Appellee Playdom, Inc. subsequently filed an application to register the identical mark.  After being refused registration based upon Appellant’s registered mark, Appellee petitioned to cancel the cited registration.  Appellee argued that Appellant’s proffered use of its mark did not give rise to “use in commerce” under the Lanham Act as of the May 30, 2008 application filing date and, therefore, the underlying application was void ab initio.    

The TTAB granted the cancellation petition, noting that the Appellant “had not rendered his services as of the filing date of his application” because Appellant “merely posted a website advertising his readiness, willingness and ability to render said services.”  As a result the TTAB held that the application was void ab initio, and the resulting registration should be cancelled.  Appellant appealed the TTAB decision to the Federal Circuit.

Reviewing the TTAB’s legal conclusions de novo, and factual findings for substantial evidence, the Federal Circuit affirmed the decision.  After considering the evidence of record, the Federal Circuit noted the Lanham Act’s clear language in stating that “a mark for services is used in commerce only when both (1) ‘it is used or displayed in the sale or advertising of services and (2) the services are rendered….’” (citing 15 U.S.C. §  1127).  Because there was no evidence in the record indicating that Appellant actually rendered services to any customer before 2010, the Federal Circuit determined that the mark was not in use in commerce as of the May 30, 2008 filing date and, consequently, the registration is void.  In so holding, the Federal Circuit adopted the views of several other circuits, such as the Second, Fourth and Eighth Circuits, that have similarly interpreted Lanham Act § 45 as requiring the actual provision of services.  Thus, merely advertising or publicizing a service that an applicant intends to perform at some point in the future will not support a use-based registration. 

The opinion can be found here.
 


 IN RE NORDIC NATURALS, INC.

Case No. 2013-1492
Federal Circuit Judges: Reyna, Wallach, and Taranto
Decided: June 23, 2014
Appeal from the Trademark Trial and Appeal Board: In re Nordic Naturals, Inc., 2013 TTAB LEXIS 167 (TTAB March 27, 2013)

On June 23, 2014, the Federal Circuit affirmed the Trademark Trial and Appeal Board’s determination that the USPTO had correctly refused registration of the mark CHILDREN’S DHA for use in connection with “nutritional supplements containing DHA” as generic.

The Court explained, “[a] mark is generic if the relevant public primarily uses or understands the mark to refer to the category or class of goods in question,” and whether a mark is generic is a question of fact that must be proven by “clear evidence of generic use.” On appeal, the Federal Circuit “must determine whether the Board’s factual finding is supported by substantial evidence, taking into account the clear evidence standard.”

The TTAB had held that the goods in question were properly defined by Nordic’s recitation of goods, “nutritional supplements containing DHA” and that the relevant public consisted of parents and other adults shopping for nutritional supplements containing DHA for children. In reliance upon dictionary definitions of “child” and “DHA” (docosahexaenoic acid, an omega-3 fatty acid that aids in brain development), and third-party uses of “children’s DHA” the TTAB held that CHILDREN’S DHA “is the generic name for nutritional supplements containing DHA inasmuch as this wording encompasses nutritional supplements containing DHA formulated for children.” The TTAB also concluded that the mark had not acquired distinctiveness.

On appeal, Nordic did not challenge the TTAB’s determinations regarding the goods at issue or its definition of the relevant public. Nordic, instead, asserted that it was the first to use the phrase CHILDREN’S DHA, that it invested substantial resources into marketing the product under the mark and that third parties recognize CHILDREN’S DHA as Nordic’s mark. Nordic specifically argued that the evidence established a “mixture of uses” and the Board could not meet its burden of proof that there is clear evidence of generic use when there is a mixture of uses, citing to In re Merrill Lynch, Pierce, Fenner, & Smith, Inc., 828 F.2d 1567, 1571 (Fed. Cir. 1987).

The Federal Circuit distinguished Nordic’s situation from Merrill Lynch where the Court, in reversing the TTAB, found that CASH MANAGEMENT SERVICES was not generic based on several third-party references explicitly referring to Merrill Lynch as the source of the mark. The Court noted that Nordic’s evidence fell short of the evidence submitted in Merrill Lynch, partly because there were no unambiguous third party references to CHILDREN’S DHA as a source identifier, there were no unsolicited references to Nordic as the source of CHILDREN’S DHA, and because supporting declarations were generally prepared by Nordic and submitted by Nordic’s retailers, not “parents and other adults seeking nutritional supplements containing DHA for children.”

 The opinion can be found here.
 


 IN RE PAMELA GELLER and ROBERT B. SPENCER

 Case No. 2013-1412
Decided: May 13, 2014
110 U.S.P.Q.2d 1867
Appeal from the Trademark Trial and Appeal Board: In Re Geller, 2013 TTAB LEXIS 67 (TTAB Feb 27, 2014)
Federal Circuit Judges: Newman, O’Malley, and Wallach

On May 13, 2014, the Federal Circuit affirmed the Trademark Trial and Appeal Board’s refusal to register the mark STOP THE ISLAMISATION OF AMERICA for use in connection with “providing information regarding understanding and preventing terrorism” as disparaging under Section 2(a) of the Lanham Act. Section 2(a) provides that the USPTO may refuse to register a trademark if it “[c]onsists or comprises….matter which may disparage…persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” 15 U.S.C. Section 1052(a).

The Court’s analysis centered on the two-part inquiry previously set forth by the Board in In re Lebanese Arak Corp for the Section 2(a) disparagement analysis:

(1) What is the likely meaning of the matter in question, taking into account not only dictionary definitions, but also the relationship of the matter to the other elements in the mark, the nature of the goods or services, and the manner in which the mark is used in the marketplace in connection with the goods or services; and
(2) If that meaning is found to refer to identifiable persons, institutions, beliefs or national symbols, whether that meaning may be disparaging to a substantial composite of the referenced group.

Under the first prong, the likely meaning of the matter in question, the TTAB had found that ISLAMISATION has two meanings: a religious meaning and a political meaning. The “religious meaning” is the “conversion of conformance to Islam” and the “political meaning” is “a sectarianization of a political society through efforts to ‘make [it] subject to Islamic Law.’”

On appeal, the Applicants conceded that the mark would be disparaging under the religious meaning and argued that only the political meaning applies to the term Islamisation. The Federal Circuit dispensed with this argument by citing to evidence in the record supporting the religious meaning of ISLAMISATION. The Court noted that support for the political meaning was “less widely available and not necessarily reflective of the general public’s understanding of the meaning of applicant’s mark,” when compared with the evidentiary support for the religious meaning of Islamisation.

In reviewing the Board’s handling of the second prong, the Court found that substantial evidence supported the Board’s conclusion that Appellant’s mark may be disparaging to Muslims under the political meaning. Further noting that nothing in the political meaning of Islamisation promotes violence, the Court upheld the Board’s conclusion that the political meaning of the word with terrorism and violence creates an improper disparaging connection between Muslims and Islamisation.

Although the Federal Circuit’s affirmance did not comment on First Amendment issues, the Board’s decision explained that “[o]ur decision does not impact [applicants’] rights under the First Amendment,” “[t]he Refusal to register Applicants’ mark does not impede their right to use the mark. As such it imposes no restraint or limit on their ability to communicate ideas or express points of view.” Accordingly, although applicants were denied registration, they may use the phrase as a mark in commerce.

The opinion can be found here.
 


 Stone Lion Capital Partners, L.P. v. Lion Capital, LLP

Case No. 2013-1353
Federal Circuit Judges: Radar, Reyna, and Wallach
Decided: March 26, 2014
746 F.3d 1317
Appeal from the Trademark Trial and Appeal Board: Lion Capital LLP v. Stone Lion Capital Partners L.P. 2013 TTAB LEXIS 30 (TTAB January 18, 2013)

The U.S. Court of Appeals for the Federal Circuit, on March 26, 2014, affirmed the Trademark Trial and Appeal Board’s decision sustaining an opposition to an application for registration of the mark STONE LION CAPITAL due to a likelihood of confusion with Lion Capital, LLP’s registrations for LION and LION CAPITAL.

Lion Capital, LLP successfully opposed relying on its registrations for LION and LION CAPITAL reciting various financial investment services. New York based hedge fund, Stone Lion Capital Partners L.P.’s application for STONE LION CAPITAL recited “financial services, namely investment advisory services, management of investment funds, and fund investment services.”

Stone Lion appealed to the Federal Circuit contesting the Board’s finding on the first, third and fourth duPont factors. Specifically, Stone Lion argued that the Board: (1) “conducted an erroneous comparison of the marks,” (2) “erred in analyzing the purchasers and trade channels” and (3) “committed legal error in dismissing purchaser sophistication and conditions of sale.”

Comparison of the Marks

The Federal Circuit held that the Board did not err in finding STONE LION CAPITAL “similar in sight, sound, meaning and overall impression” to LION CAPITAL and LION. According to the Court, the Board properly considered the marks in their entireties while placing more weight on “LION” as the dominant element in the parties’ marks, quoting In re Nat’l Data Corp., 753 F.2d 1056, 1059 (Fed. Cir. 1985) (“there is nothing improper in stating that more or less weight has been given to a particular feature of a mark, provided the ultimate conclusion rests on consideration of the marks in their entries”). The Court was similarly unmoved by Stone Lion’s argument that the Board should have given more weight to statements made in the file histories of the Opposer’s registrations that distinguished a third party’s LION mark.

Purchasers and Trade Channels

The Federal Circuit also found no error in the Board’s analysis and comparison of the relevant trade channels. The Board had determined that there were no limitations on the trade channels or classes of purchasers in the parties’ respective recitations of services, and consequently “presume[d] that the parties’ services travel through all usual channels of trade and are offered to all normal potential purchasers.”

Stone Lion’s argument on appeal that this finding was “unsupported by substantial evidence because there is no overlap between the parties’ actual investors” was unavailing. In particular, Stone Lion contended that it provides services that are focused on investment management, while Lion Capital, in contrast, focuses primarily on investing in companies that sell consumer products. The Federal Circuit explained that “it was proper…for the Board to focus on the application and registrations rather than on real-world conditions, because ‘the question of registrability of an applicant’s mark must be decided on the basis of the identification of goods set forth in the application.” Quoting Octocom Sys., Inc., v. Houston Comp. Servs. Inc., 918 F.2d 937, 942 (Fed. Cir. 1990). Accordingly, the Board’s analysis is restricted to a comparison of the recitations of goods and services and it should not involve a comparison of the services as offered in the marketplace.

Sophistication of Purchasers

Stone Lion’s argument on appeal that significant investments are required of the sophisticated customers who use of the parties’ services and that securities laws dictate close interaction between these customers and the providers of such services also failed. Again, the Federal Circuit explained that the Board’s scope of inquiry is determined by the recitation of services in the applicant’s and the opposer’s filings. The Board must focus on the potential consumers of the services listed in the recitations of goods and services. The parties’ recited services did not include any restrictions and the real world limitations involving high-value investments and other real world considerations were outside the scope of the analysis. As stated in the trademark filings, the services could include “ordinary consumers” and ordinary consumers may exercise care when making financial decisions, but they can be confused when similar marks are used in connection with related services.

This decision serves as a reminder that the Board’s likelihood of confusion analysis centers on the services recited in the competing trademark filings and the Board will not consider the scope of the services as provided in commerce. The Federal Circuit specifically cautioned that, if an applicant adopts a recitation of services that is broader in scope than the services the applicant actually provides, they will be “held to the broader scope of the application.”

The opinion can be found here.