Intellectual Property Law Cases

Metallurgical Industries Inc. v. Fourtek, Inc., United States Court of Appeals for the Fifth Circuit, 790 E2d 1195 (5th Cir. 1986): Cemented tungsten carbide is made from tungsten carbide combined with metal cobalt. Metallurgical Industries processed existing cemented tungsten carbide to extract carbide for reuse. It purchased furnaces from Therm-O-Vac Engineering & Manufacturing Company through its representative Irvin Bielefeldt, and then modified the furnaces by inserting chill plates; replacing one large crucible with several smaller crucibles; replacing segmented heating elements; and installing a filter in the vacuum pumps. Metallurgical told Bielefeldt that the modifications were trade secrets. Therm-O-Vac went bankrumpt, and Bielefeldt and three other Therm-O-Vac employees formed Fourtek, Incorporated. Metallurgical sued for misappropriation of trade secrets. Were the furnace modifications a trade secret? Held Yes. To qualify as a trade secret, information must be a secret and meet other equitable considerations such as having value and incurring a cost to obtain. Here the combined information of the modifications were a secret, even though each element in the process was known in other contexts; the secret had value in reclaiming carbide; and the company "expended much time, effort, and money to make the necessary changes." Is secrecy negated by Metallurgical's sharing the information with two companies before speaking to Bielefeldt? Held No. "[S]ecrecy need not be absolute. … [A] holder may divulge his information to a limited extent without destroying its status as a trade secret." Here the revelations were not public, and were made to further Metallurgical's economic interests—to attempt to convince one company to build a furnace, and to the other company under a license agreement.
Rockwell Graphic Systems, Inc. v. DEV Industries, Inc., United States Court of Appeals for the Seventh Circuit, 925 R2d 174 (7th dr. 1991): Plaintiff Rockwell manufacturered newspaper presses, the replacement parts of which were specified by "piece part drawings." Rockwell kept these drawings in a vault in a building with restricted access. Rockwell sometimes contracted the manufacturer of parts to vendors and provided piece part drawings under a contract of confidentiality, although Rockwell did not always enforce the return of those drawings after the contract was fulfilled. Fleck left Rockwell and became defendant DEV's president, and Peloso went to DEV after being caught removing piece part drawings. Should DEV be given summary judgment against appropriation of trade secrets in that the information was not a trade secret because Rockwell did not make sufficient efforts to keep the information secret? Held No. There are two evidentiary and remedial conceptions of efforts to keep information a trade secret. The first is deterrence, and makes it more likely that the defendant obtained the information inappropriately. The second theory provides evidence that the information had value, and indicates that a remedy is appropriate to the plaintiff. Although information may have value, a plaintiff's efforts to protect that value are usually not unlimited, as stronger security creates higher costs; "only in an extreme case can what is a 'reasonable' precaution be determined on a motion for summary judgment, because the answer depends on a balancing of costs and benefits…. Here it is possible that a jury could determine that Rockwell took reasonable precautions to protect the information and that these efforts make it sufficiently likely that DEV misappropriated the information.
E. I. duPont deNemouvs & Co. v. Rolfe Christopher et al., United States Court of Appeals for the Fifth Circuit, 431 E2d 1012 (5th Cir. 1970), cert, denied, 400 U.S. 1024 (1971): DuPont had created a secret process for producing methanol, and was constructing a plant to implement the process. An unknown thrid party hired Rolfe and Gary Christopher to fly over the plant and photograph sections of the as-yet unfinished buildings which exposed enough to allow one to determine the process. For there to be misappropriation of a trade secret, must there be illegal conduct or breach of a confidential relationship? Held No. The Restatement of Torts § 757(a) (1939) allows for misappropriation if a secret is discovered by "improper means." "One may use his competitor's secret process if he discovers the process by reverse engineering applied to the finished product; one may use a competitor's process if he discovers it by his own independent research; but one may not avoid these labors by taking the process from the discoverer without his permission at a time when he is taking reasonable precautions to maintain its secrecy." Here the Christophers flew over the site in an explicit attempt to get around reasonable security precautions to discover the trade secret. "[A]n impenetrable fortress is an unreasonable requirement…. [T]hou shall not appropriate a trade secret through deviousness under circumstances in which countervailing defenses are not reasonably available."
Smith v. Dravo Corp., United States Court of Appeals for the Seventh Circuit, 203 F.2d 369 (7th Cir. 1953): Plaintiff Leathern D. Smith invented shipping containers for use on ships and railcars. The containers had a standard size; interlocking, retractable legs; and an eyehole for hoisting. Smith died in a sailing accident, and his estate decided to sell the container business to get money to pay inheritance taxes. Defendant Dravo approached Cowan, defendant's eastern representative, about buying crates. To assist with defendant's decision, Cowan sent patent applications, blueprints, a miniature container, and correspondence from possible customers. Defendant rejected the offer and started making containers based upon the information received from Cowan, although their containers had skids rather than collapsable legs. Defendant's containers were successful—so much that defendant's, which were several inches smaller than those of plaintiff's, became the de-facto standard in the industry and destroyed the market for plaintiff's contianers, leaving plaintiff unable to sell the business. Was defendant in a position of trust at the time the information was given? Held Lindley: Yes. Although there was no specific confidentiality agreement in place, the confidential purpose for the delivery of the information—in this case for evaluation of a purchase—was clear to both parties. Did defendant use the information improperly? Held Yes. Defendant did not begin to design containers until after they were in possession of plaintiff's secret plans, and used those plans in their designs.
Chicago Lock Co. v. Fanbevg, United States Court of Appeals for the Ninth Circuit, 676 E2d 400 (9th Cir. 1982): Plaintiff Chicago Lock Company sold tubular locks with keys that were hard to duplicate. Customers could replace a key by contacting the company and authenticating themselves, or by allowing a locksmith to pick the lock to find the tumbler combination—a faster but more expensive method. Defendants Morris and Victor Fanberg contacted locksmiths who had noted tumbler combinations corresponding to lock serial numbers, and compiled and sold a book allowing locksmiths or the general public to look up a serial number and find the corresponding tumbler combination for making a key. Are the defendants liable for improperly obtaining the Company's trade secrets? Held Ely: No. Trade secrets do not offer protection against "fair and honest" means of discovery such as independent invention or reverse engineering. Here the locksmiths reverse-engineered the locks to find the codes, just as defendants could have done personally. There would therefore only be liability if defendants persuades the locksmiths to reveal the secrets in the face of some duty not to reveal the secrets. Did the locksmiths have a duty to the Company via its customer not to reveal the lock codes? Held No. Although the locksmiths may have had a duty to customers not to reveal those lock codes, that duty does not extend to the customers and only results in liability if there is an actual injury by one of the customers. The customers had no liability to the Company and could have themselves reverse-engineered the locks. To hold otherwise would make the trade secret into a state-conferred monopoly and prevent the "fair and honest means" of discovery the California courts allow, and give a trade secret the strength of a patent.
Wexler v. Greenberg, Supreme Court of Pennsylvania, 399 Pa. 569,160A.2d430 (1960): Appellant Greenberg went to work for Appellee Buckingham Wax Company as head chemist, reverse engineering formulas of cleaning products of other companies and improving them. There was no employee or restrictive agreement between Greenberg and Buckingham. Greenberg was familiar with the formulas and the most efficient means of making the products. Greenberg left Buckingham and went to work for Brite, a former customer of Buckingham, and Brite began producing its own version of the products it had before purchased from Buckingham. Did Greenberg misappropriate trade secrets by violating a duty to Buckingham by virtue of his employment and position? Held No. For there to be misappropriation of a trade secret, there must be (1) a legally protectable trade secret and (2) some sort of covenant or confidential relationship. The most common form of trade secret misappropriation occurs when an employer imparts pre-existing knowledge to an employee; here, however, the employee was the source of the information which he arrived at in the course of his work. Determining whether to prohibit use of this information requires balancing the employer's competitive needs of confidentiality with the employee's freedom to independently pursue an occupation. Here the formulas and techniques were part of Greenberg's general knowledge as a chemist—Greenberg did no research and developed no new formulas—and so the balance tips towards the freedom of Greenberg. "Since there was no experimentation or research, the developments by change and modification were fruits of Greenberg's own skill as a chemist without any appreciable assistance by way of information or great expense or supervision by Buckingham…."
Warner-Lambert Pharmaceutical Co. v. John J. Reynolds, Inc., United States District Court for the Southern District of New York, 178 R Supp. 655 (S.D.N. Y 1959): Defendent Dr. J. J. Lawrence developed the secret formula for Listerine in 1880 and licensed it exclusively to Jordan W. Lambert, later Lambert Pharmacal Company, later Warner-Lambert. The agreement provided that Lambert would pay Lawrence $20 (later reduced to $6) for every gross sold as long as Lambert manufacturered the product. The trade secret became public knowledge over the next seventy-five years, payments of $22 millinon in total having been made, with current payments of more than $1.5 million annually. Several cases have held that agreements to license patents or copyright had an implied time limit of the life of the underlying intellectual property. Does the agreement between Lambert and Lawrence have an implicit limit on licensing the trade secret of the time when the trade secret becomes public knowledge? Held Bryan: No. Patents and copyright have a time limit set by Congress to fulfill a public policy of creating a temporary monopoly for the owner which will eventually give way to public ownership. There is no such public policy in regard to trade secrets, and the licensing party gives no guarantees that a trade secrent will be undiscoverable. To create a time limit here would be to change the explicit provisions of the contract. "If they desire the payments or royalties should continue only until the secret is disclosed to the public it is easy enough for them to say so."
K-2 Ski Company v. Head Ski Co., Inc., United States Court of Appeals for the Ninth Circuit, 506E2d471 (9th Cir. 1974): Defendant William Crocker worked for plaintiff K-2 Ski Company and became general superintindent of manufacturing operations, learning trade secrets in making fiberglass skis. He left and went to competitor defendant Head Ski Company, and unlawfully used a base subassembly trade secret and a surfacing veil trade secret of K-2. For how long should Head be injoined from using K-2 trade secrets? Held Wallace: The company should be enjoined for the "period of time it would have taken Head, either by reverse engineering or by independent development, to develop its ski legitimately without use of the K-2 trade secrets." In this case, the injunction should be for a year and a half. Should the preliminary 27-month injunction be taken into account in imposing the permanent injunction? Held That depends on the purpose and effect of the preliminary injunction. The case is remanded to the trial court to determine if the preliminary injunction had the same purpose as the permanent injunction and "whether it properly deprived Head of the benefits reaped by the use of the K-2 trade secrets."
Diamond v. Chakrabarty, Supreme Court of the United States, 447 U.S. 303, 206 U.S.P.Q. (BNA) 193 (1980): Respondant Chakrabarty invented and assigned to General Electric Co. a new bacteria that could break down crude oil, but the patent application was rejected. Are living things patentable subject matter under 35 U.S.C. § 101? Held Burger: Yes. Both the language and legislative history of §101, which allows for patenting a "manufacture" or "composition of matter," indicates that Congress intended patent laws to be given wide scope. Here a bacteria that not exist in nature was created. "[The] discovery is not nature's handiwork, but [Chakrabarty's] own; accordingly it is patentable subject matter under §101." Are micro-organisms unqualified for patent protection because genetic technology was unforeseen by Congress and thus Congress must first expressly authorize patents on such items? Held No. "A rule that unanticipated inventions are without protection would conflict with the core concept of the patent law that anticipation undermines patentability. … Congress employed broad general language in drafting §101 precisely because such inventions are often unforeseeable." Dissent Brennan, White, Marshall, Powell: Mr. Chakrabarty already has a patent on related processes for producing and using the organism; he doesn't need a patent on the organism itself. If §101 already covered living organisms that did not exist in nature, then why did Congress pass the Plant Patent Act in 1930 and the Plant Variety Protection Act in 1970 explicitly allowing patent protection for new asexually reproducing and sexually reproducing plants, respectively?
Parke-Davis & Co. v. H. K. Mulford Co., United States Circuit Court for the Southern District of New York, 189R 95 (C.C.S.D.N.Y. 1911): Jokichi Takamini patented a way to better isolate a medically useful substance from the suprarenal glands of animals. The assignee, Parke-Davis, sued defendant Mulford for making a product, Adrin, similar to plaintiff's product Adrenalin. Is the patent for Adrenalin invalid because, as it is merely a purer form of an existing substance, it is not a new "composition of matter?" Held Hand: No. "[W]hile it is of course possible logically to call this a purification of the principle, it became for every practical purpose a new thing commercially and therapeutically. … The line between different substances and degrees of the same substance is to be drawn rather from the common usages of men than from nice considerations of dialectic….
Brenner v. Manson, Supreme Court of the United States 383 U.S. 519 (1966): Manson created a new chemical compound and tried to patent the process for creating it. The Patent Office and its Board of Appeals denied the request because no claim of utility was given, and the Court of Customs and Patent Appeals reversed. Does the process meet the § 101 utility requirement if other chemical compounds in the same class have proven effective at in inhibiting tumors in mice? Held Fortas: No. Just because similar compounds have been proven useful does not mean that this compound will be shown to be useful. Is the process useful because it produces the compound in question, regardless of the utility of the compound itself? Held No. Granting a patent on a process to create a non-useful end product would be a way to get around the utility requirement for the end product. Should utility be found simply because the compound is being used by scientists in research? Held No. The patent system was created with commercial, not philosophical, purposes in mind. Patents grant monopolies in order to encourage creation of commercially useful inventions, and if patents were granted before commercial utility is shown it would prevent others from using the process to create something really useful. "[A] patent is not a hunting license." Concur, Dissent Harlan: The process is distinct from the product, and we've never said that a process patent need to produce something really useful to society. Chemistry is a very interrelated field, and it is important to allow patents on even processes that do not produce "useful" products so that information sharing can occur and researchers can build on others' ideas.
State Street Bank & Trust v. Signature Financial Services, United States Court of Appeals for the Federal Circuit, 149 E3d 1368 (Fed. Cir. 1998): Defendant Signature Financial Group, Inc. patented what it called a Hub and Spoke system, where mutual funds in the spokes pool their resources in the hub investement portfolio. The patent describes a computer system of quickly calculating the current values of the spokes. Plaintiff State Street negotiated to license the patent, but when talks fell through State Street sued Signature to invalidate the patent for failure to claim statutory subject matter under § 101. Does the patent cover invalid subject material because it falls under the judicially-created mathematical formula exception? Held Rich: No. Mathematical formulas are only unpatentable subject matter to the extent that they represent abstract ideas. Here "the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces 'a useful, concrete and tangible result'—a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades." Producing a useful result "renders it statutory subject matter, even if the useful result is expressed in numbers, such as price, profit, percentage, cost, or loss."
Amazon.com, Inc. v. barnesandnoble.com, inc., United States Court of Appeals for the Federal Circuit, 239 E3d 1343 (Fed. Cir. 2001): Amazon sued BN to get a preliminary injunction against BN's use of its "Express Lane" web checkout service, claiming it infringed on Amazon's one-click service. Amazon showed that it was likely that BN would be shown in violation of the patent, but the district court rejected BN's defense of prior art. Does the existence of a single-action stock order system from CompuServe before the World Wide Web prevent the preliminary injunction? Held Clevenger: Yes. To defeat a preliminary injunction, actual invalidity need not be shown, only clear and convincing evidence that the patent is vulnerable. Here the CompuServe product stored customer information and sent a purchase request after one user action, as does the Amazon patent describes. The CompuServe product was created before the Internet and the World Wide Web, but the Amazon patent doesn't even mention the World Wide Web.
Rosaire v. National Lead Co., United States Court of Appeals for the Fifth Circuit, 218 F.2d 72 (5th Cir. 1955), cert, denied, 349 U.S. 916, (1955): Rosaire and Horvitz invented and patented a method for prospecting for oil by looking for gas emanating from the underlying hydrocarbons. Defendant Rosaire sued defendant National for infringement, and National countered that the patent was invalid under 35 U.S.C.A. §102(a) because, as the plaintiff admitted, Tepliz-Gulf had used the same methods in a special test before Rosaire and Horvitz had even thought of it, although this work was not brought to the attention of the public. The trial court held that the previous attempt by Tepliz was a successful trial of the method. Must the Tepliz trial have been made public before it could have invalidated the later Rosaire/Horvitz patent? Held Tuttle: No. When there is a successful trial of a method done openly in the ordinary course of activities of a publisher, there is no requirement that the public must have knowledge of the invention for it to invalidate later patents.
In re Hall, United States Court of Appeals for the Federal Circuit, 781 E2d 897 (Fed. Cir. 1986): Hall on February 27, 1979 filed a patent that contained a dissertation by Peter Foldi, who had submitted that dissertation for a doctorate degree to a university in Germany in September 1977. In response to the PTO Scientific Library's inquiry, Dr. Will at the university indicated that, if the university's standard practices of indexing the dissertation were followed, "the dissertation most probably was available for general use toward the beginning of the month of December, 1977." Does the availability of a single publication in a library present a statutory bar to patentability based upon publication? Held Baldwin: Yes. An invention is no longer patentable after it is placed in the public domain—if it is sufficiently accessible so that one in the public interested in the art could make the invention without further experiment or research. Does the publication present a statutory bar even if there is no evidence that the publication was actually made available before the critical date? Held Yes. Routine business practice can be used to provide evidence of the performance of a specific act.
Egbert v. Lippmann, Supreme Court of the United States, 104 U.S. 333 (1881): In 1855 Barnes invented improved corset springs and gave them to Miss. Cugier to wear. By 1866, when Barnes applied for a patent on the springs, such devices were in general use in the corset industry. Can the single use of an invention constitute a public use? Held Woods: Yes. Although use by multiple people may strengthen the evidence of public use, use by only a single person can be sufficient to constitute public use. Can a use be public even though it is not known to others? Held Yes; a use can be public if used in public, even if the use is secret and known only by the user. Can a use be public even if it is hidden from visible inspection? Held Yes, if a product that uses the invention is freely used in public, that constitues a public use even if the invention is not visible. Did the use of the corset springs constitute a public use and therefore a statutory bar to a patent? Held Yes. Barnes invented the springs and then gave them to Miss. Cugier to freely wear in public not for the purpose of testing the invention aned getting feedback. "It is fair to presume that having learned from this general use that there was some value in his invention, he attempted to resume, by his application, what by his acts he had clearly dedicated to the public." Dissent Miller: A non-publicized use by one person with the inventor's consent yet out of the public's eyes doesn't sound like a public use to me.
City of Elizabeth v. Pavement Company, Supreme Court of the United States, 97 U.S. 126 (1877): Samuel Nicholson invented a "new and improved" wooden pavement and installed it on a public toll road owned by the Boston and Roxbury Mill Company, in which Nicholson was a stockholder and the treasurer. For six years Nicholson came and tested the pavement for wear and decay, and was issued a patent in 1867. Plaintiff American Nicholson Pavement Company sued defendant City of Elizabeth, N.J. for laying down the pavement in the city. Does the patent have a statutory bar because Nicholson put the pavement to public use for six years before filing for a patent? Held Bradley: No. Although in one sense the use was "public", the invention was always under the control of Nicholson and was used only for expirimental purposes, testing the durability of the pavement. He never abandoned the patent, and even filed a caveat in 1847. The unfair extra monopoly granted by previous public use is not applicable when the use is merely for necessary testing to ensure the invention is worth patenting.
Graham v. John Deere Co., Supreme Court of the United States, 383 U.S. 1 (1966): Graham modified a plow by changing the way it hinged upward against a spring when striking rocks, and filed for a patent. As the case against John Deere for infringement moved through the courts, Graham changed his argument of distinguishing prior art to the placement of the plow shank: Graham asserted that placing the shank below the spring instead of above the spring gave a longer flexing span an therefore relieved stress on the shank. Is the invention sufficiently unobvious to be patentable? Held Clark: No. § 103 of the 1952 Patent Act set forth that an invention must not be one that would have been obvious to one having ordinary skill in the art. Here, if increasing the span of shock absorbtion is so important as Graham claims (even though he didn't claim this in his original patent application), it would have been obvious to one working with plows to place the shank under the hinge.
Larami Corp. v. Amron, United States District Court for the Eastern District of Pennsylvania, 27 US.PQ.2d 1280 (E.D. Pa. 1993): Plaintiff Larami manufactured a line of patented SUPERSOAKER water guns that stored water under pressure in an external, detachable resevoir and shot water by releasing a valve. Larami sued defendants Alan Amron and Talk To Me Products, Inc., and defendants counter-sued for infringment of a patent assigned to them by Gary Esposito. Most of the claims of Esposito's patent described using electricity to produce lights and sounds in a water gun, but Claim 1 described a toy with "an elongated housing [case] having a chamber therein for a liquid [tank], a pump…for building up an appreciable amount of pressure in said chamber for ejecting a stream of liquid therefrom an appreciable distance substantially forwardly of said toy…." The Esposito patent also included Claim 10 describing an arrangement of a tank, air pump and outlet nozzle along the same axis. Does the SUPERSOAKER infringe Claim 1 of the Esposito patent? Held Reed: No. To infringe a claim of a patent the product in question must infringe all elements of the claim. Here the SUPERSOAKER's water chamber is external, which does not meet the "chamber therein" element of Claim 1. Does the SUPERSOAKER infringe Claim 10 of the Esposito patent? Held No; the SUPERSOAKER, with its external resevoir, cannot be said to contain an arrangement "along the same axis."
Warner-Jenkinson Company, Inc. v. Hilton, Davis Chemical Co., Supreme Court of the United States, 520 U.S. 17 (1997): Respondent Hilton Davis in 1985 patented a process for removing impurities in dyes through "ultrafiltration" under pressure of 200 to 400 psig. Because a previous patent covered a similar process using a pH above 9.0, the PTO required the patent be restricted to under 9.0 pH; for reasons that are unclear, Hilton Davis limited the patent to the range of 6.0 to 9.0 pH. In 1986 petitioner Warner-Jenkinson independently developed a similar process using 5.0 pH.Although there was no literal infringement, Hilton Davis urged the court to find infringement under the Graver Tank doctrine of equivalents. Because the patent contains an explicit limitation, is the reason for the limitation irrelevant? Held Thomas: No. While the PTO requires modifications for reasons of patentability, there are other reasons for modifications as well. The patent holder has the burden of showing that the added limitation was not related to patentability; here the purpose of the lower 6.0 bound is unclear, so the case is remanded for clarification. "[W]hile a lower limit of 6.0, by its mere inclusion, became a material element of the claim, that did not necessarily preclude the application of the doctrine of equivalents as to that element. Where the reason for the change was not related to avoiding the prior art, the change may introduce a new element, but it does not necessarily preclude infringement by equivalents of that element." Is there no infringement based upon equivalents because Warner-Jenkinson did not actively copy the invention? Held No. "Application of the doctrine of equivalents … is akin to determining literal infringement, and neither requires proof of intent…." Should the doctrine of equivalents be restricted to modifications that are disclosed within the patent itself, or known at the time? Held No. "[T]he proper time for evaluating equivalence and thus knowledge of interchangeability between elements is at the time of infringement, not at the time the patent was issued." Concur Ginsburg, Kennedy: Be careful of this rebuttable presumption against the patent holder regarding prosecution history estoppel; it may not give a patent holder notice of the need to ensure that the PTO fully document every non-patentability reason for requiring modification. Here it's OK to remand the case, as the patent holder has not given any reason for the addition of the lower pH limit.
Festo Corp. v. Shoketsu Kinzoku Kogyo, Kabushiki Co., Ltd., Supreme Court of the United States, _ U.S._, 122 S.Ct. 1831 (2002): Petitioner Festo Corporation patented magnetic rodless cylinders for moving objects in a conveying system, devices now used "in machinery as diverse as sewing equipment and the Thunder Mountain ride at Disney World." During the patent process, Festo modified the patents in response to the PTO's objections regarding patentability and prior art, adding a limitation that the inventions contain a pair of sealing rings with a lip on each side. Respondents SMC later began using a similar device with a two-way lip on the cylinder, putting it outside the literal claim of the Festo patents. Does modification because of patentability concerns during the patent process provide a complete bar to the patentee against claiming infringement through equivalents because of procedural history estoppel? Held Kennedy: No. Although a patentee by modifying a patent in response to patentability concerns explicitely gives up claims of equivalents in the modified material, the estoppel bar is flexible rather than rigid because there is no guarantee that the modified language is any more capable of being a complete and precise description than was the first. "After amendment, as before, language remains an imperfect fit for invention." The burden is still on the patentee to show that the equivalents are not excluded by estoppel in the modification. "The patentee must show that at the time of the amendment one skilled in the art could not reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent."
Feist Publications v. Rural Telephone Service, Supreme Court of the United States, 499 U.S. 340 (1991): Plaintiff Rural Telephone Service Company published a combined white-pages (simple alphabetical listing of subscribers) and yellow-pages (categorized business listing along with advertisements) phone book. Defendant Feist Publications, Inc. created and distributed a wide-area white-pages phone book, licensing information from other phone companies. Rural refused to license its customer data to Feist, so Feist copied the white-page information, anyway; Rural sued after finding several phony entries in the Feist phonebook, which Rural had originally inserted to detect copying. Did Feist violate Rural's copyright in the white-page customer data? Held O'Conner: No. Facts are not copyrightable, and although compilations of facts usually are copyrightable, the copyright only protects copying of the elements of the work that are original, meaning "that the work was independently created by the author…, and that it possesses at least some minimal degree of creativity. … [T]he selection and arrangement of facts cannot be so mechanical or routine as to require no creativity whatsoever. … The selection, coordination, and arrangement of Rural's white pages" in simple alphabetical order "lacks the modicum of creativity necessary to transform mere selection into copyrightable expression."
Baker v. Selden, Supreme Court of the United States, 101 U.S. 99 (1879): Plaintiff Charles Seldon wrote a book which described a condensed method of bookkeeping, reducing double-entry bookkeeping into one or two pages. Defendant Baker later published a book describing roughly the same method of accounting, except the columns and headings were slightly different. Does a copyright of a book on a unique method prevent the publication of a another book describing that unique method? Held Bradley: No. "[T]here is a clear distinction between the book, as such, and the art which it is intended to illustrate. … The description of the art in a book, though entitled to the benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is explanation; the object of the other is use. The former may be secured by copyright. The latter can only be secured, if it can be secured at all, by letters-patent…." Here the copyright of Seldon's book did not give rise to protection for the system of accounting described.
Morrissey v. Procter & Gamble, United States Court of Appeals for the First Circuit, 379 R2d 675 (1st Cir. 1967): Plaintiff Morrissey created a set of rules for a promotional sweepstakes contest, and defendant Procter & Gamble took those rules, changed a few words, and used them in their own sweepstakes. Are sweepstakes rules copyrightable subject matter? Held Aldrich: No. Although in general the exact expression of an idea is copyrightable, a subject can be so narrow that it "necessarily requires" one of a small number of forumlations to express. The expressions of such narrow subjects are not copyrightable, as they would effectively allow cornering the market on those subjects. "We cannot recognize copyright as a game of chess in which the public can be checkmated." Here sweepstakes rules can only be be described in a limited number of expressions, as is therefore not protectable by copyright.
Community for Creative Non-Violence et al. v. Reid, Supreme Court of the United States, 490 US. 730 (1989): Petitioner Community for Creative Non-Violence (CCNV) asked James Earl Reid, a sculptor in Baltimore, to create a statute named "Third World America" depicting homeless people as individuals in a nativity scene. CCNV verified Reid's sketches, indicated that reclining figures were more accurate, chose the material, and paid the agreed-upon $15,000 upon completion. After exhibition CCNV sent the statute back to Reid for repairs before taking the statute on tour. Reid filed for copyright and made plans to take the statue on his own tour. Was Reid an employee of CCNV under Section 101(1) of the Copyright Act of 1976, thereby vesting in CCNV copyright of the statue? Held Marshall: No. Although Congress didn't define "employee" and "employment" in the statute, in general and in context "employee" should take its common-law agency law meaning. If "employee" meant circumstances under which the commissioner exhibited control over creation of the work, then § 101(1) would be in effect adding to the nine categories of commissioned work enumerated in § 101(2), as the commissioner usually exhibits control over specially ordered work. Here Reid used his own tools in his own shop under his own timetable, and CCNV didn't pay his taxes. Reid was therefore an independent contractor, and a work for hire would only give the commissioner copyright if the work met the criteria of § 101(2), which the parties agree that it doesn't; the copyright therefore rests with Reid, the person who actually creatd the work.
Aalmuhammed v. Lee, United States Court of Appeals for the Ninth Circuit, 202 E3d 1227 (9th Cir. 2000): Warner Brothers contracted with Spike Lee to make a movie about Malcolm X starring Denzel Washington. Washington asked Jefri Aalmuhammed to come help him prepare for the movie, doing everything from making suggestions to doing voice-overs, directing, and even writing entire scenes. After receiving only $25,000 from Lee, Aalmuhammed sued for declaration of joint copyright ownership and corresponding payments. In the absence of a contract, is Aalmuhammed an author of a joint work under the Copyright Act? Held Kleinfeld: No. The statute requires for a "joint work" there to be (1) copyrightable work, (2) multiple "authors", and (3) an intention that the work be merged into an inseparable whole. Based upon anology with other case law, which didn't really define "author", we find an "author" as regarding a joint work only when (1) there is a contributor of copyrightable work who was the "master mind" who "superindend[ed]" the work, (2) there is an objective manifestation of a mutual intent to be coauthors, and (3) the audience appeal doesn't derive from one more than the other. Here Aalmuhammed did not supervise the entire film, and there was no objective manifestation of Aalmuhammed as a coauthor, so Aalmuhammed is not an "author" when considering whether Aalmuhammed owns copyright in a joint work.
Arnstein v. Porter, United States Court of Appeals for the Second Circuit, 154 E2d 464 (2d Cir. 1946): Plaintiff Ira Arnstein sued defendant Cole Porter, saying that Porter copied several of Arnstein's songs, one of which over a million copies had had been distributed. Parts of Arnstein's story was, in the words of the trial judge, "fantastic," including an allegation that Porter might have sent "stooges" to ransack Arnstein's room, but the songs did have pieces that sound similar. Should such a fantastic story result in summary judgment for the defendant? Held Frank: No. That a story is fantastic does not mean it cannot be true—that is an issue for a fact-finder, and that there is a question of fact means that summary judgment is incorrect. Infringement requires proof of (1) actual copying, which includes evidence of access and similarities to the work, and (2) sufficient similarities to show that the copying was illicit. These issues are distinct: the former requires experts to use "analysis" by "dissection" look at technical similarities to form a factual inference of actual copying; the latter requires a general lay person to determine if the similarities are such that they illicitly duplicate the protected expression which gives entertainment to the listener. Both are determinations of fact, and here the are enough similarities that a judge or jury could not unreasonably find that actual copying of the illicit kind had occurred. Clark The "dissection" component can go to far and "dredge up some points of similarity" that otherwise wouldn't be found. Here the only real similarity between the words is the "repetitive use of the note e…." Most of the claimed similarities consist in small fillers between the central parts of the melodies, and plaintiff's work is so "simple and trite" that finding copying based upon such dissections would be like finding infringement of a Shakespearean work because the same articles and pronouns were used.
Nichols v. Universal Pictures Corporation, United States Court of Appeals for the Second Circuit, 45E2d 119 (2d Cir. 1930): Plaintiff created a play, ""Abie's Irish Rose," about a Jewish widower who wanted his son to marry a Jewess, but who instead married an Irish Catholic. Defendant created a motion picture named, "The Cohens and The Kellys," regarding a Jewish family who inherited money and whose daughter was sought by the son of a poor Irish Catholic family. Did the defendant's motion picture infringe on the plaintiff's play? Held Hand: No. The stories are quite different, and copyright does not protect a plot from being copied. The plaintiff's play itself used existing prototypical characters. "A comedy based upon conflicts between Irish and Jews, into which the marriage of their children enters, is no more susceptible of copyright than the outline of Romeo and Juliet."
Fonovisa v. Cherry Auction, United States Court of Appeals for the Ninth Circuit, 76 E3d 259 (9th Cir. 1996): Defendant Cherry Auction operated a swap meet at which it rented booth space to vendors and charged fees to customers to shop there. The Sheriff's Department raided the swap meet and seized pirated copies of plaintiff Fonovisa's Hispanic recordings, and asked Cherry Auction to help in the investigation. Vendors continued to vend counterfeit copies. Is Cherry Auction liable for vicarious copyright infringement? Held Schroeder: Yes. Analogous to the agency principle of respondeat superior, courts have found vicarious copyright infringement when a proprietor has the ability "to cease the activity of a concessionaire," and derives "an obvious and direct financial benefit from the infringement." Here Cherry Auction controls vendors by requiring them to abide by its rules and reserves the right to remove them. Although Cherry Auction does not receive a direct benefit from each sale of a counterfeit recording, such sales "enhance the attractiveness of the venue to potential customers," therefore increasing the fees received from paying customers. Is Cherry Auction liable for contributory copyright infringement? Held Yes. Tort law find liability when "knowingly contributes to the infringing conduct of another." Here Cherry Auction knew about the copyright violations and continued to provide to the vendors such things as "space, utilities, parking, advertising, plumbing, and customers." Because the Sheriff's Office had asked Cherry Auction to provide information on the counterfeiters, the contributory conduct can be considered active conduct of "protect[ing] the identity of the infringers."
Harper & Row, Publishers, Inc., et al. v. Nation Enterprises et al., Supreme Court of the United States, 471 U.S. 539 (1985): Former U.S. President Gerald Ford had written an autobiography, A Time to Heal, and copyright holder plaintiffs Harper & Row Publishers, Inc. and Reader's Digest Association, Inc. had licensed to Time Magazine exclusive rights to public prepublication excerpts. Someone brought defendant The Nation Magazine a clandestine prepublication copy, and The Nation published an article with exerpts to scoop Time, after which Time backed out of its prepublication contract with the plaintiffs. Does the fact that a work is unpublished negate the appropriateness of a fair use defense? Held O'Conner: Yes. The fair use doctrine was originally an implied license that it was assumed a reasonable copyright holder would have granted. An author decides when and where first to publish a work, and it is assumed no author would want to give up that right to everyone. Does the First Amendment require that less protection against fair use be given to works of public importance published in a newspaper? Held No. Copyright law doesn't impede the publication of facts, just of a particular expression; The Nation could have published the ideas, but instead it published verbatim quotes. To hold otherwise would reduce the protection of all important works, the very works for which copyright law is supposed to provide creation incentives. Does the scooped publication constitute fair use? Held No. Congress identified four factors for determining fair use: "(1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the substantiality of the portion used in relation to the copyrighted work as a whole; (4) the effect on the potential market for or value of the copyrighted work." (1) Here the purpose was economic, as The Nation profited from the publication; this speaks against fair use. (2) Factual work is more likely to allow a fair use defense, but here the work was unpublished, which speaks against fair use, as mentioned. (3) Direct quotes of the book made up 13% of the article, which is substantial. (4) Publishing the excerpts before publication effectively eliminated the special first-publication market, as evidenced by Time backing out of its publishing agreement. Taking these factors together, the use was not fair.
Sony Corporation of America v. Universal City Studios, Inc., Supreme Court of the United States, 464 U.S. 417 (1984): Plaintiff Universal City Studios sued Sony because the latter sold Betamax video cassette recorders, allowing users at home to record and copy works by Universal City. Is Sony liable for contributory infringement by selling video recording and copy equipment to consumers? Held Stevens: No; Betamax is capable of a commercially significant non-infringing use: time-shifting by recording a program for viewing later. Many public domain programs, which authorize time-shifting, are broadcast. Many copyright holders no doubt want consumers to time-shift, as it generates the same or more number of advertisement impressions. Even unauthorized time-shifting in the home is not infringement because it is fair use: it is not commercial, and doesn't affect the market of the work.
American Geophysical Union, et al. v. Texaco Inc., United States Court of Appeals for the Second Circuit, 60 E3d 913 (2d Cir. 1994): Texaco would circulate scientific journals in a systematic way and allow its scientists to make photocopies of individual articles before the journals were returned to the library. The publishers sued Texaco for copyright infringement. Is making archival copies of scientific journals across an organization for future use or use in the lab fair use? Held Newman: No. (A) Purpose of copying: The articles were copied for "future retrieval and reference", not just for taking to the lab. The use at some point benefitted Texaco commercially, and was not a "transformative use" in that the copies were essentially the same as the original, with no added benefits. All this favors the publishers. (B) Nature of works: That these were factual works rather than fiction favors Texaco. (C) Amount copied: That the entire works were copied favors the publishers. (D) Effect upon potential market: There really is no market for individual articles as opposed to entire journals, but Texaco might have increased its journal subscriptions slightly. However, Texaco does subscribe to the Copyright Clearance Center Inc., which negotiates photocopy licenses with the publishers and is a legitimate market that would be affected by personal copying. This favors the publishers. Dissent Jacobs: (A) Purpose of copying: Copying journal articles by an individual scientist is a "reasonable and customary use", even if done by many individuals in an institutional setting. (D) Effect upon potential market: "The CCC scheme is neither traditional nor reasonable; and its development into a real market is subject to substantial impediments." Only a fraction of publishers use the CCC. In reality, "there is no normal market in photocopy licenses, and no real consensus among publishers that there ought to be one…."
Campbell v. Acuff-Rose Music, Inc., Supreme Court of the United States, 510 U.S. 569 (1994): The band 2 Live Crew created a parody of Roy Orbison's song "Oh, Pretty Woman," lampooning its naive view of picking up women on the street. After the copyright-holders Acuff-Rose Music refused to sell them a license, 2 Live Crew put the song on an album anyway, with credit to the authors and publishers. Does the extent of copying prevent a finding of fair use? Held Souter: No. "Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim's (or collective victims') imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing. … Parody's humor, or in any event its comment, necessarily springs from recognizable allusion to its object through distorted imitation." We remand for an evaluation of the extent of "transformative elements." Does the commercial element of the parody make the song presumptively invalid as to fair use? Held No. Parodies often criticize the original, and "there is no protectable derivative market for criticism" because publishers would hardly ever license criticisms of the original works. But parodies have other non-parodic elements which could conceivably impair the market through market substitution. Neither 2 Live Crew nor Acuff-Rose have provided evidence regarding market impairment, so the case is remanded for this "evidentiary hole [to] be plugged."
A&M Records, Inc., v. Napster, Inc., United States Court of Appeals for the Ninth Circuit, 239 E3d 1004 (9th Cir. 2001): Defendant Napster provided and operated a distributed indexing and file-sharing service on the Internet. Plaintiff recording company sued Napster because users were trading copyrighted works. Is it likely that Napster would be found liable as a contributory infringer? Held Beezer: Yes. Contributory liability requires one to know or have reason to know of the infringement, and provide a material contribution. Here Napster had both actual knowledge (evidenced by memos) and constructive knowledge (evidenced by advertisements showing copyrighted music being traded) that copyright infringement was taking place. Napster provided the system for trading the files. Does the holding in Sony Corporation of America v. Universal City Studios, Inc. that one cannot be held vicariously liable just because one's system can be used illegitamately clear Napster of infringement? Held No; the Sony decision simply said that an illegitimate use of a device would not impute knowledge to the manufacturer. Here there is evidence that Napster had both actual and constructive knowledge of the illegitimate use. Would Napster likely be found to have vicarious liability for the infringement? Held Yes. As in Fonovisa v. Cherry Auction, vicarious liability is found if the defendant has the right and ability to police infringement, as well as receives financial benefit from infringement. Here Napster receives financial benefit from the illegal content drawing new users. Napster in its agreements reserved the right to bar users; it had access to the same search functionality that users have, and at the least could have blocked songs traded using certain titles and filenames known to be for copyrighted content.
Qualitex Co. v. Jacobson Products Co., Inc., Supreme Court of the United States, 514 U.S. 159 (1995): Plaintiff Qualitex had used since the 1950s a special green-gold color on the pads it sold to dry-cleaning firms. In 1989 competitor defendant Jacobson started using the same color on its dry cleaning pads. Qualitex registered the color as a trademark in 1991 and sued Jacobson for trademark infringement. Can a color alone be tradmarked? Held Breyer: Yes. The Lanham Act allows registration as a trademark of "any word, name, symbol, or device, or any combination thereof." This is broad enough to include colors. Just like a word or symbol, a color can acquire a secondary meaning to identify a brand. A color also comports with the trademark functionality doctrine, which precludes trademark status if the mark (or here, color) is part of the functionality. Should trademark status be denied because color shades can be hard to identify and distinguish and would therefore cause confusion? Held No; words and symbols can also be vague and require interpretation when determining infringement. Should trademark status be denied to colors because color shades are in short supply, after certain colors are eliminated for practical reaons? Held No; the functionality doctrine of trademark law already prohibits trademark status if a particular mark (or here, color) is chosen because out of necessity. Should colors be prohibited as trademarks in themselves because colors can already be registered as part of symbols? Held No. One can think of instances in which a company would rather not use a word or a symbol as a mark, and a color can sometimes help a trademark holder in ways that "trade dress" cannot.
Zatarain's, Inc. v. Oak Grove Smokehouse, Inc., United States Court of Appeals for the Fifth Circuit, 698 E2d 786 (5th Cir. 1983): Plaintiff Zatarain's held a trademark for "Fish-Fri" and "Chick-Fri" batters. Oak Grove began marketing "fish fry" and "chicken fry" batters, so Zatarain's sued for trademark infringement. Does Zatarain's have a valid trademark for "Fish-Fri?" Held Goldberg: Yes. Trademarks can be classified as generic, descriptive, suggestive, or arbitrary/fanciful. "Proof of secondary meaning is an issue only with respect to descriptive marks; suggestive and arbitrary or fanciful marks are automatically protected upon registration, and generic terms are unprotectable even if they have acquired secondary meaning." Using the dictionary meaning test, "Fish-Fri" means frying fish. Under the "imagination test," "[i]t simply does not require an exercise of the imagination to deduce that 'Fish-Fri' is used to fry fish." Thirdly, such a label would likely be used by other manufacturers to describe fish-frying batters; and lastly, other manufacturers have actually used the term for some time. The term "Fish-Fri" is therefore a descriptive term and a valid trademark if the term has developed secondary meaning. Has the term "Fish-Fri" developed a secondary meaning? Held Yes. To be trademarkable a descriptive term must have a secondary meaning indicating to the public the producer of the product rather than just the product itself. "Factors such as amount and manner of advertising, volume of sales, and length and manner of use may serve as circumstantial evidence relevant to the issue of secondary meaning." Here Zatarain's has put a lot of money nto advertising and has many units of the product. As for direct evidence, polls have shown people associate the term with Zatarain's. Does Oak Grove have a fair use right to use the trademark? Held Yes. "Although the trademark is valid by virtue of having acquired a secondary meaning, only that penumbra or fringe of secondary meaning is given legal protection. Zatarain's has no legal claim to an exclusive right in the original, descriptive sense of the term; therefore, Oak Grove and Visko's are still free to use the words 'fish fry' in their ordinary, descriptive sense, so long as such use will not tend to confuse customers as to the source of the goods." Does Zatarain's have a valid trademark for "Chick-Fri?" Held No. The Chick-Fri product hasn't been around as long and Zatarain's hasn't spent as much money for advertising the product. Surveys have not shown an association in the customers' mind of "Chick-Fri" with Zatarain's, so without an established secondary meaning, the district court was correct in canceling Zatarain's registration of the term "Chick-Fri."
Two Pesos, Inc. v. Taco Cabana, Inc., Supreme Court of the United States, 505 U.S. 763 (1992): Taco Cabana had in San Antonio a chain of Mexican restaurants using distinct decorations of an indoor patio, murals, and paintings. Two Pesos opened up Mexican restaurants in Houston using similar decorations, so after Taco Cabana opened branches in Houston it sued Two Pesos for trade dress infringement. The jury found that the trade dress was not registered, not functional, was inherently distinctive, and had not yet acquired secondary meaning. As the jury instructions were that inherently distinctive trade dress or trade dress that had acquired secondary meaning would result in infringement, Two Pesos was found to have infringed the trade dress of Taco Cabana. Does unregistered trade dress that is inherently distinctive also need to have a secondary meaning before it can be protected? Held White: No. "Since §2 [of the Lanham Act] requires secondary meaning only as a condition to registering descriptive marks, there are plainly marks that are registrable without showing secondary meaning. These same marks, even if not registered, remain inherently capable of distinguishing the goods of the users of these marks." The Lanham act was created to "secure to the owner of the mark the goodwill of his business and to protect the ability of consumers to distinguish among competing producers," even if marks are not protected. There is no "textual basis in §43(a) for treating inherently distinctive verbal or symbolic trademarks differently from inherently distinctive trade dress." Therefore, if non-functional trade dress is inherently distinctive, it is protectectable even if it has not yet acquired secondary meaning with the public and even if it has not yet been registered.
Wal-Mart Stores, Inc. v. Samara Brothers, Inc., Supreme Court of the United States, 529 U.S. 205 (2000): Samara sold "one-piece seersucker outfits decorated with appliques of hearts, flowers, fruits, and the like" through stores such as JCPenney. Wal-Mart contracted with Judy-Philippine, Inc. to make a similar line to sell in Wal-Mart, and Judy-Philippine made copies of the designs from photographs. Samara sued for infringement of unregistered trade dress under the Lanham Act. Must inherent distinctiveness be shown for the trade dress designs, or is secondary meaning sufficient for showing infringable trade dress? Held Scalia: Inherent distinctiveness need not be shown to establish protectable trade dress. The text of the Lanham Act makes clear that the trade dress must be distinctive, but this can be inherent distinctiveness or a distinctiveness that has been acquired through secondary meaning. We rule, however, that design like color in Qualitex Co. v. Jacobson Products Co., Inc. is not and cannot be inherently distinctive, and therefore secondary meaning must be shown here. Courts must therefore make a distinction between product-design trade dress such as found here and product-packaging trade dress as found in Two Pesos, Inc. v. Taco Cabana, Inc.; the former, we hold, cannot be inherently distinctive.
Zazu Designs v. L'Oreal, S.A., United States Court of Appeals for the Seventh Circuit, 979 F2d 499 (7th Cir. 1992): Comair, a United States licensee of L'Oreal in France, wanted to market hair coloring products. L'Oreal hired Wordmark to come up with a name, and it suggested ZAZU. L'Oreal searched and found that Riviera Slacks, Inc. held a federal trademark registration for the name for clothing; L'Oreal paid Riviera Slacks $125,000 for a covenant not to sue if L'Oreal used the name. L'Oreal also found Zazu Hair Designs (here "ZHD"), a hair salon in Hinsdale, Illinois which had registered the trade name as a service name in Illinois. L'Oreal repeatedly called and visited to see if the salon sold hair products; ZHD stated that it did not, but intended to do so. L'Oreal applied for a federal registration on June 12, 1986 after having shipped some of its ZAZU product across state lines to be able to make the federal application. Unbeknownst to L'Oreal, ZHD had started selling some hair products to its customers in the store and had shipped some samples to friends in Texas and Florida. Do ZHD's sale of hair products under the ZAZU name before L'Oreal's registration give it national trademark rights? Held Easterbrook: No. "Only active use allows consumers to associate a mark with particular goods and notifies other firms that the mark is so associated. … But use sufficient to register a mark that soon is widely distributed is not necessarily enough to acquire rights in the absence of registration. The Lanham Act allows only trademarks 'used in commerce' to be registered. 15 U.S.C. §1051(a)." Here selling a few products to friends in other states was not enough to provide national trademark protection absent registration. Does L'Oreal's knowledge of ZHD's intention to create hair products prevent it from using the ZAZU name? Held No; to hold otherwise would penalize entities for gathering knowledge and "ignorance would be rewarded." Intent establishes no right to a mark; only use does. "Because the mark was not registered for use in conjunction with hair products, any knowledge L'Oreal may have had of ZHD's plans is irrelevant." Dissent Cudahay: By ordering lots of bottles and making sales to customers, many of whom came from out of state, ZHD had more than de minimis use. L'Oreal knew of ZHD's intent, so it acted out of bad faith—it paid Riviera Slacks to preclude its acting on its intention, after all, and clothing is a lot farther from hair products than is a hair salon. "A service mark can be infringed by its use on a closely related product."
In re Nantucket, Inc., United States Court of Customs and Patent Appeals, 677 E2d 95 (C. C.PJL 1982): North Carolina company Nantucket, Inc. tried to register a trademark NANTUCKET for men's shirts. The Trademark Trial and Appeal Board refused the registration under §2(e)(2) of the Lanham Act, 15 U.S.C. §1052(e)(2) which allows rejection of marks if they are "primarily geographically deceptively misdescriptive." The board determined that, as Nantucket is a place and the shirts don't come from Nantucket, the trademark can be denied. Must the public's association of the geographical designation with the products in question be considered when determining the prescription of the Lanham Act? Held Markey: Yes. The board ignored the Lanham Act's designation of "deceptively misdescriptive," for if the public does not associate a product with a geographical designation, the "misdescriptive" phrase is not "deceptive." Here the public does not associate shirts with Nantucket (i.e. Nantucket is not particularly known for producing shirts), and hence the mark is not deceptively misdescriptive.
Park 'N Fly, Inc. v. Dollar Park and Fly Inc., Supreme Court of the United States, 469 U.S. 189 (1985): Park 'N Fly in 1969 applied for a trademark, and one was issued in 1971. Over six years later, it applied under the Lanham Act § 15 for incontestable status, which was granted. The company sued an Oregan company, "Dollar Park and Fly," for infringement in 1978. Is "Park 'N Fly" an unenforceable mark because it is merely descriptive? Held O'Conner: No. Regardless of whether the mark should have been registered in the first place, the text of the Lanham Act does not provide a defense of a mark being descriptive against a trademark with incontestable status. Congress considered such a defense and rejected it. Dissent Stevens: "Incontestable" is a bit of misnomer, because there are many ways an "incontestable" trademark can be contested. The Lanham Act does not allow descriptive terms to be registered without proof of acquired secondary meaning; here "Park 'N Fly" is at best descriptive, and no proof of secondary meaning was submitted, so registration of the mark was in violation of the Lanham Act—how can a mark in violation of the Act gain incontestable status? "Incontestable" is never defined, but from the legislative history it seems that it was meant to prevent contests over similar marks, not to give trademark status to marks that should not have been registered in the first place. Although the majority use analogies of incontestability with queiting title, such a concept cannot create the underlying property and cannot make an invalid mark a valid one.
AMF Incorporated v. Sleekcraft Boats, United States Court of Appeals for the Ninth Circuit, 599 R2d 341, 204 U.S.P.Q. 808 (9th Cir. 1979): AMF's predecessor used the name Slickcraft for recreational boats, registering the trademark in 1969. Nescher independently adopted the name Sleekcraft for his line of recreational boats targeted to a separate submarket. Does the name "Sleekcraft" infringe on the trademark "Slickcraft"? Held Anderson: Yes. When goods are related, infringement depends on likelihood of confusion based on several factors including: 1) strength of the mark ("Slickcraft" is suggestive and therefore gives weak protection); 2) proximity of the goods ("Although these product lines are non-competing, they are extremely close in use and function."); 3) similarity of the marks: sight/sound/meaning (the marks here look, sound, and mean almost the same); 4) evidence of actual confusion (evidence presented showed little or no past confusion); 5) marketing channels ("Although different submarkets are involved, the general class of boat purchasers exposed to the products overlap."); 6) type of goods and purchaser care (customer usually take time and think about purchasing these expensive products, so confusion is less likely); and 7) intent (here Nescher didn't know about Slickcraft when choosing the name "Sleekcraft", and afterwards modified the logo to try to prefent confusion).
Moseley v. V Secret Catalogue, Inc., Supreme Court of the United States, 537 U.S. 418 (2003): A store in Elizabeth town, Kentucky named "Victor's Secret" sold adult novelties. An army officer saw a Valentine's Day advertisement and, angry that the store was playing off the name of one of his wife's favorite stores, Victoria's Secret, notified the latter company. Victoria's Secret asked Victor's Secret to change its name; it changed to Victor's Little Secret. Victoria's Secret sued the company. The District Court found no evidence of actual confusion, but gave summary judgment for dilution under the Federal Trademark Dilution Act (FTDA) because of likelihood of confusion. Is "objective proof of actual injury to the economic value of a famous mark" required before dilution can be found? Held Stevens: Yes. Textually, the state and federal trademark dilution statues differ in that the FTDA refers only to "blurring," not to both "blurring" and "tarnishment," and requires evidence of actual dilution of a trademark's value, not just a "likelihood." Here no actual blurring has been shown. Does mental association of a mark with another imply a lowering of the latter's value to identify the company? Held No. "[M]ental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement for dilution under the FTDA." Here the reaction of the army officer shows that, although the company's name reminded him of Victoria's Secret, he did not confuse the two. Concur Kennedy: Let's not ignore the word "capacity," which indicates that a potential lowering of the mark's ability to identify can satisfy the elements of the statue.
Playboy Enterprises, Inc. v. Netscape Communications Corp., United States Court of Appeals for the Ninth Circuit, 354 E3d 1020 (9th Cir. 2004): Netscape and Excite allowed search terms "playboy" and "playmate", trademarks of plaintiff Playboy Enterprises, Inc. (PEI), to bring up unlabeled banner ads for adult products which, when clicked, would take a user to non-PEI Internet sites. Some banner ads included the words, "click here", and there was no indication before going to the site that the sites were not PEI. Is the use of the search terms "playboy" and "playmate" create a likelihood of confusion sufficient to prevent summary judgment? Held Nelson: Yes. Analogous to the metadata tags in Brookfield Communications v. West Coast Entertainment Corp., 174 R3d 1036 (9th Cir. 1999), the search terms here could create initial interest confusion. Applying the AMF Incorporated v. Sleekcraft Boats factors: 1) strength of the mark: these marks use a secondary meaning for "playboy" and "playmate", resulting in strong marks and favoring PEI; 2) proximity of the goods: these "goods" are both Internet web sites, favoring PEI; 3) similarity of the marks: the marks used are identical; 4) evidence of actual confusion: PEI showed expert testimony that a survey indicated customers were confused as to whether the sites were of or sponsored by PEI; 5) marketing channels used: any company can use the Internet for advertising, so this factor isn't helpful here; 6) type of goods and degree of customer care expected: customers are likely to be easily sidetracked if a graphic site is shown to them in their search for a PEI site, so this favors PEI; 7) defendants' intent in selecting the mark: this is ambiguous, but in the least defendants did not attempt to alleviate the mark by removing the relevant search terms, favoring PEI; 8) likelihood of expansion of product lines: as it has already been determined that the products are related, this factor is irrelevant. Is this a nominal use of the marks? Held No. The appropriate three-pronged test is 1) the product or service in question is not readily identifiable without using the mark, 2) the mark can only be used as is necesary to identify the product or service, and 3) there is no suggestion of sponsorship by the mark owner. Here defendants violate the first prong, as the sites can be identified other than by "playboy" and "playmate" search terms. Is there a material issue of fact to preclude summary judgment as to mark dilution? Held Yes. There has been contested evidence that the mark is famous, not used by third parties. Evidence has been given that blurring is occurring because users believe the sites in question are affiliated with PEI. Tarnishment could also be found if the sites in question are of inferior quality to those of PEI. Concur Berzon: The correct decision was reached here based upon precedent, but it worries me that Brookfield seems to apply also to search links properly labeled as not relating to plaintiff, and I believe that holding was too broad. If PEI tries on remand to address properly-labeled links returned from "playboy" and "playmate" search terms, I would come to a different conclusion, just as I think that it's fine for Macy's, if I ask on which floor I can find Calvin Klein products, places other products more prominently but properly labeled on that floor.
Johnson & Johnson * Merck Consumer Pharmaceuticals Co. v. Smithkline Beecham Corp., United States Court of Appeals for the Second Circuit 960 F.2d 294 (2d Cir. 1992): Defendants Smithkline Beecham Corporation ("Smithkline") and Jordan, McGrath, Case & Taylor, Inc. ("Jordan") created a TV commercial about its calcium carbonate based antacid TUMS compared to ROLAIDS, MAALOX, and the J&J*Merck antacid MYLANTA, the latter of which contains aluminum hydroxide and magnesium hydroxide. The commercial stressed that TUMS does not contain aluminum, but contains calcium needed by the body. After complaints, defendants changed the commercial to state only that TUMS contains calcium. J&J*Merck sued for violation of §43(a) of the Lanham Act, 15 U.S.C §1125(a) for false advertising by implying that the aluminum in MYLANTA is bad for one's health. Does the commercial violate the Lanham Act by preying on public fears that aluminum might be linked to Alzheimers? Held Walker: No. For damages or equitable relief for false advertising under the Lanham Act, the plaintiff must show either that the advertisement 1) is literally false or 2) is literally true yet likely to mislead or confuse consumers. "[T]he success of a plaintiff's implied falsity claim usually turns on the persuasiveness of a consumer survey." The district court found that there was no survey successfully indicating public misperception from the advertisement, and that factual finding is not clearly erroneous. Should the district court have also considered the commercial context, prior advertising history, and sophistication of the advertising audience? Held No. These factors come into play to determine if the advertisement contributed to the perceived message only if it is first determined that the audience indeed perceived an incorrect message from the advertisement. Should evidence of bad intent have resulted in a finding of false advertising? Held No; while an intent to deceive can create a presumption of incorrect public perception, the evidence of intent presented was related to the original advertisement, which was withdrawn and is not on trial. Doesn't the survey by Bruno and Ridgway Research Associates show public perception from the advertisement that other antacids should not be purchased because they contain aluminum and that aluminum is bad for one's health and causes Alzheimers? Held No; defendants' expert testified that the survey consisted of leading questions and did not have a control group to indicate whether the perceived message came from the advertisement or was an existing belief brought to the survey by the participants.
Dastar Corp. v. Twentieth Century Fox Film Corp., Supreme Court of the United States, 539 US. 23 (2003): Doubleday published a book, Crusade in Europe, of Eisenhower's campaign in Europe during World War II. Doubleday granted television rights to Fox, who asked Time to produce a television series that was made into a video. Fox didn't renew the copyright of the video, so it went into the public domain; Doubleday renewed the copyright of the book. Dastart took the public domain video, modified it, and sold it as its own on the 50th anniversary of the war. Did Dastart violdate §43(a) of the Lanham Act by reverse-passing off goods of someone elese as its own? Held Scalia: No. The Lanham Act §43(a), 15 U.S.C. § 1125(a), as originally enacted prohibited "a false designation of origin, or any false description or representation" in connection with "any goods or services." In the Lanham Act "origin" does not refer to the the originator of the embedded ideas. When a consumer purchases an item, he/she is interested in whether the product itself was created by the manufacturer; he/she does not look to the trademark to verify who originated the creative content of the product. In fact, here that would encompass, not Fox, but Time, who created the series, and those who originally shot the video during World War II. The phrase "origin … of goods" "refers to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. … To hold otherwise would be akin to finding that § 43(a) created a species of perpetual patent and copyright, which Congress may not do." The video is now in the public domain, and allowing the Lanham Act to control copying of the video would "create a species of mutant copyright law." Fox could have renewed its copyright in the video if it wanted protection, and Doubleday may have an action for violation of the underlying copyright of the book, although that issue is not before the Court here.

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