Tag Archives: New Sunshine

Online use of trademarks and copyrights by “unauthorized distributors”

Originally posted 2007-10-06 20:57:56. Republished by Blog Post Promoter

LIKELIHOOD OF CONFUSION does not generally comment about active cases in which we are directly involved. But a very important and detailed (61 pages!) summary judgment decision came down in the U.S. District Court for the Eastern District of New York last week, in the case of S & L Vitamins, Inc. v. Australian Gold, Inc., 2:05-cv-1217 in which I represent the plaintiff. And while we will not comment on the decision, for obvious reasons, any reader of this blog involved in trademarks and the Internet will want to read it. So here it is. Credit to David Nieporent, co-author on the plaintiff’s brief!

UPDATE: Cogent commentary from Eric Goldman and Matthew Sag; now comes Rebecca Tushnet.

U.S. District of Arizona: “No automatic injunction upon a finding of copyright infringement”

Originally posted 2008-09-05 17:38:37. Republished by Blog Post Promoter

Not that the plaintiffs in the Designer Skin case didn’t get an injunction:  They did (here it is); a narrow one utilizing proposed language by defendants explicitly permitting S&L to use its own photographs of Designer Skin merchandise on its website (see the prior post).  But the Court ruled that they were not entitled to it merely by virtue of proving copyright infringement.  Here’s an excerpt from the opinion, discussing the point:

The parties dispute the law governing the issuance of a permanent injunction in a copyright-infringement case. Relying on MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 520 (9th Cir. 1993), Designer Skin argues that “a permanent injunction [should] be granted in a copyright infringement case when liability has been established and there is a threat of continuing violations.”  Conversely, S & L Vitamins argues that the MAI rule has been overruled by the recent Supreme Court opinion in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), and that the traditional four-factor test reaffirmed by eBay applies.

MAI’s general rule may accurately describe the result of applying the four-factor test to a copyright-infringement case in which liability has been established and there is a threat of continuing violations. Nevertheless, as Judge Wilson persuasively demonstrated in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1209-10 (C.D. Cal. 2007), this general rule, as a rule, is clearly inconsistent with the Supreme Court’s decision in eBay. Thus, for the reasons given by Judge White in Grokster, Designer Skin’s reliance on this pre-eBay rule is unavailing, and the Court will apply the traditional four-factor test. . . .

This is an important holding, making the District of Arizona among the handful of earliest courts to apply the rule of eBay to copyright infringement.  After the jump, you can see how the court did apply it to one particular factor of interest, the need for a plaintiff seeking an injunction to prove irreparable harm.  The court agreed with S&L that past infringement does not lead to a presumption of future infringement. Unfortunately, to our client’s (nominal) detriment, and despite our argument that, seeing as how Designer Skin enunciated no coherent description of harm it suffered by the infringement — and that, in fact, it probably benefited from it — an injunction should not issue, the court found that there was irreparable harm, for reasons best expressed in its own words. Read More…

Legal in Phoenix, liable in Central Islip

Originally posted 2009-01-21 18:24:42. Republished by Blog Post Promoter

UPDATE: All the below is still very relevant, very important and very significant — except as to the final judgment, which has been vacated by consent and replaced with this Agreed Injunction and Order.

D'Amato Federal courthouse EDNYMy client S&L Vitamins and I just suffered a devastating loss in its Eastern District of New York litigation against Australian Gold (now owned by a holding company called New Sunshine, LLC) after a five-day jury trial on claims by AG for tortious interference with contract and trademark infringement.  I posted both sides’ trial briefs here.  The jury instructions in the Australian Gold case are here.  I will post more documents later.

Before sharing the verdict and recounting some extraordinary highlights of the trial, here’s some background.  I am focusing on the contrast between this outcome and the mirror-image rulings on virtually identical operative facts in the Designer Skin case, discussed below, also involving my client — not because it must be the case that the court in Designer Skin was right and the court in Australian Gold was wrong, but to point out the utter inconsistency of these rulings and the impossibility of doing business in such a legal environment: Read More…

Designer Skin v. S&L continued: “S&L had a perfect right to sell this product”

Originally posted 2008-07-18 13:50:34. Republished by Blog Post Promoter

Unfortunately for future defendants in the position of our client, Internet retailer S&L, U.S. District Judge James Teilborg’s decision from the bench in the District of Arizona dismissing the damages claims of suntan lotion manufacturer Designer Skin will not be officially published, being an oral opinion. Well, it will not be published unless and until it is quoted and affirmed by the Ninth Circuit, which a Designer Skin lawyer has promised will happen soon — though not exactly in those words. (Earlier post here.)

Bronze AnarchyFortunately we can mitigate some of the sting of the lack of officially published precedent, for now, and on our electronic mimeograph machine “publish” that opinion. The ruling is below; an example of the subject “electronic renderings” is at left; the transcript of the entire colloquy, including the striking of the would-be “damages” testimony of the company’s president, Beth Romero, and the argument of counsel can be downloaded here.

Disclosure: Neither counsel nor court had prepared particularly thoroughly for these oral motions or the ruling from the bench, which came up earlier in the proceedings than had been anticipated for reasons we will discuss next week. Therefore, in contrast to a situation where one can read each side’s thoroughly researched and argued written briefs and then a meticulously sourced judicial opinion, the oratorical edges in the transcript linked to above as well as the opinion also set forth below may appear somewhat rough all around. Be kind to all of us as you consider them.

The Court has, obviously, heard the evidence and heard the arguments of counsel and I have previously granted the motion to strike certain of the damage evidence from Miss Romero and set forth my reasons why. The Court has now granted the unopposed motion to dismiss the claim for statutory damages. I now grant the Rule 50 motion with respect to actual damages on the bases that there has been no showing of actual damages suffered as a result of the alleged copyright infringement.

As I pointed out earlier, there has been a witting or unwitting conflation between the alleged lifting of the electronic image from Designer’s website and pasting it on the S & L website, and yet we’ve heard virtually all the evidence, in fact, I think it’s fair to say all the so-called damage evidence, directed at product. In other words, the difference here is between the alleged copyright infringement in connection with the image and the product distribution issues.

It is clear that the beef, if you may, on the part of the plaintiffs is the selling of product by S & L, and we’ve heard evidence in terms of how much money Designer has spent in their product development, how much they’ve spent in their product image, the money they’ve spent in their diversion program, and it would appear that is all directed at seeking out product distributors such as S & L.

But even if one could assume that somehow it is to seek out and take action against a copyright infringement of its images, there is no basis for this jury or any reasonable jury to attempt to connect how much of those expenditures are connected to the images themselves as opposed to the product distribution issues. Read More…

Aw, shucks

Originally posted 2008-06-12 12:50:01. Republished by Blog Post Promoter

We already covered the Designer Skin v. S&L Vitamins summary judgment decision, and linked to commentators Greg Beck, Bill Patry, Rebecca Tushnet, Eric Goldman and Jason Lee Miller.

But it’s positively nerve-wracking reading the commentary of someone like Evan Brown! ;-)

The second time as farce

Originally posted 2009-01-12 23:45:25. Republished by Blog Post Promoter

On the occasion of the S&L Vitamins v. Australian Gold trial, I reposted what I wrote here six months earlier about the first of these these jointly evil twin litigation matters, conducted in appropriately welcoming environs, in which our client is entwined:

O’Connor federal courthouse

Originally uploaded by Ron Coleman

Yesterday I was here, in the stupidestly-designed courthouse on God’s brutally-baked brown desert earth — the Sandra Day O’Connor Courthouse in sunny Phoenix, Arizona. It is truly a marvel of architectural arrogance: Imagine being so utterly uninterested in anything besides how you’d like your box of Erector Set pieces to look like at the award ceremony that you design a massive building, notionally meant for human habitation, that is actually a gigantic greenhouse that grabs scorching-hot sunbeams from one of the hottest atmospheres on the continent and just plays them across a massive, uncoolable interior atrium.

This monster has an evil twin in my own neighborhood, named after the entirely more prosaic former U.S. Senator and ur-fixer Alfonse D’Amato, in his home turf in Long Island. The “other” U.S. Courthouse for the Eastern District of New York (its better-known and far-better-loved older sibling overlooks the Brooklyn Bridge) is every bit as soulless and unconnected to how people use built space. Like the Arizona torture chamber, this one features cold, ornament-free, angular hard white spaces, a soaring atrium and a complete denial of the human spirit. Both feature vast plazas requiring five minutes of walking from the curb to the front door that, when shown on the architect’s drawings, must have depicted lunchtime building workers gaily eating their lunches, taking in the sun, flirting and strumming guitars — a true communitarian dream in federal jurisprudential space, and far enough from any possible truck bomb to make those shared moments entirely carefree.

But no has ever relaxed in either one of these plazas. The one in D'Amato Federal courthouse EDNYCentral Islip is too windblown to hang out in almost any weather.  The D’Amato tower truly epitomizes the concept of a white elephant; it is the only building of its scale for what must be 20 miles all around — a largely empty monument to federally funded megalomania. On almost any day the sun beats off the bright white surfaces so intensely that polarized lenses are de rigeur and blinded lawyers quickly scurry across the plaza through the revolving-door entrance and into the heartless, icy lobby.

But this same formula truly amounts to a miniature Judicial Conference death valley when applies in sunny Phoenix.  (Read more…)

Can you ring the unrung bell? (Updated)

Originally posted 2008-07-14 14:02:35. Republished by Blog Post Promoter

UPDATE and preface:  Almost everyone who has written on the “jurisdiction” issue decided in Reed Elsevier, Inc. v. Muchnick, 130 S.Ct. 1237, in which the Supreme Court ruled that while a copyright registration was a statutory prerequisite to initiation of a copyright infringement lawsuit, it was not a “jurisdictional prerequisite,” has noted that the ruling would have little practical effect on litigation.  (Here are some fine blogs that have addressed the case, which I should have done here, too.  Then again, they did it quite well.)

This post is about a case where this distinction would have made a difference, at least in theory.

I blogged about the legal issue that arose concerning a last-minute “suggestion of lack of jurisdiction,” effectively an attempt to dismiss a copyright claim for lack of subject matter jurisdiction, on the eve of trial.  It was originally posted during the pendency of LOC® readers’ favorite case.  The motion was based on the then-pertinent concept that absent the allegation of a copyright registration or even an application for one at the time the complaint was filed, and absent as well any amended or supplemented complaint that alleged the same, the court lacked subject matter jurisdiction.  Hence dismissal was proper, indeed required, at any time pursuant to Fed. R. Civ. P. 12(h)(3).

LIKELIHOOD OF CONFUSION® has recently run up against the following issue in litigation and welcomes views from the house. We think we’re on the right side of it, but there’s no question some courts have waved it away, though not usually with a lot of analytical rigor:

It is known to be a common practice for plaintiffs to file copyright claims for unregistered works, file an expedited application for registration and amend the complaint to recite or incorporate the registration before anyone calls them on it. Frequently this is not too offensive because the copyright claim is one of a number of otherwise unproblematic counts. Some courts affirmatively bless this practice; others even sua sponte “deem” a complaint amended or supplemented if somehow the record reflects the subsequent registration. But others are not so lackadaisical about operating as time machines.

Because the Copyright Act (17 USCS § 411) explicitly requires that a copyright holder own a registration to “institute” a claim for infringement — because it is a jurisdictional requisite ][UPDATE: Not quite; see above] — there is an increasingly authoritative body of authority that even where an amendment to the pleadings may be appropriate under the usual (liberal) standard, amendment may not create jurisdiction retroactively. This appears to run contrary to earlier trends among the cases that allowed a retroactive cure in the spirit of the axiom that amendment of pleadings is to be permitted liberally.

Courts are increasingly questioning whether that kind of time travel works. In Harris v. Garner, 216 F.3d 970 (11th Cir. 2000), a case involving a statutory predicate for immigration appeals, the Eleventh Circuit held, very stridently — and over the objections of an equally assertive dissent — that where a statutory requirement for jurisdiction is not met at the time of filing, even if it is met until later an amended complaint cannot create jurisdiction retroactively. The Circuit Court discussed the application of the rule to an earlier copyright decision that suggested otherwise, and in dictum, rejected that analysis.

“When Plaintiffs initiated this action the Court,” the District of New Jersey ruled earlier this year, “was without subject matter jurisdiction to hear Plaintiffs’ copyright claims.” There was no registration. Continued the court:

As such, 28 U.S.C. § 1653, which provides ‘that ‘[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts,’ does not apply to help Plaintiffs here. Section 1653 ‘addresses only incorrect statements about jurisdiction that actually exists, and not defects in the jurisdictional facts themselves.’

Wellness Publ. v. Barefoot, 2008 U.S. Dist. LEXIS 1514 at *32 (D.N.J. Jan. 8, 2008), citing Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989). Also this year, in Walton v. United States, 80 Fed. Cl. 251, 264 (Fed. Cl. 2008), the Federal Circuit permitted retention of jurisdiction where an amended / supplemented complaint had been filed, but did not allow relation back to the original date of the complaint. The court wrote, “it appears that binding Federal Circuit case law has not departed from the established rule that jurisdiction is determined on the basis of the facts that exist at the time the complaint was filed.”

All things considered, it would seem to be a good idea for a copyright plaintiff under such circumstances to amend as early as possible and avoid objections of prejudice or undue delay — factors that can militate even against the routine grant of motions to amend. Liberality is one thing, but jurisdiction is bigger that than that, and in contrast a lack of subject matter jurisdiction can be raised substantively at any time, even on appeal. It cannot be waived; it’s constitutional; it’s existential: Federal Rule 12(h)(3) provides, “Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.”

That’s “whenever.”

Here are the papers.  Whatever.

UDPDATE continued:  The District of Arizona disagreed with our argument, as set out in the transcript appended to the embedded PDF, which starts with our “suggestion of lack of jurisdiction,” below.  That denial was one issue we were prepared to pursue as a cross-appeal in the Designer Skin case.  That appeal never happened due to a global settlement with indoor tanning lotion monopolist and gelded litigation bully New Sunshine LLC.

And now it turns out now to be a non-issue, because while dismissal on this ground would have been available under Rule 12(b)(6), that Rule does not have the broad, and arguably constitutional, power of the Rule 12(h)(3)’s “Whenever,” which our client needed to call on because of the unusual procedural aspects of this litigation.

Whatever.

UPDATE:  The U.S. Supreme Court negates this entire post, ruling that while a copyright registration is indeed a prerequisite to initiating a lawsuit to enforce a copyright, this is a statutory requirement and not, technically, a “jurisdictional” requirement.  See the box at the top.

“Infinity Dollars” — IP damages and the jury, Part 2

(Part 1 is here.)

So.  In light of the decision in the Thomas-Rasset case, which I first rounded up in part 1 of this first-ever two-part LIKELIHOOD OF CONFUSION® odyssey, now I ask:  How does a jury of supposedly ordinary and sensible people becomes twelve angry persons and so profoundly abandon common sense in IP cases (even if it the whole thing looks really hilarious to some folks)?  How do they allow themselves to buy into these never-never-land valuations of damages, whether statutory or otherwise?Judge Harris Rm 301

I don’t know.  But as what was a grueling week melts away, it is time to relax a little, and do what litigators love to do best:  Tell “war stories.”

Now, I’ve picked juries in many kinds of cases, from wrongful termination and commercial to copyright and trademark cases.  I may not have always chosen wisely, but my record is not too shabby, overall.  Frankly I believe my jurors were pretty darned reasonable and intelligent people, quite to the contrary of all the cynicism, and not just because of the outcomes I’ve gotten — mostly.   I never demonstrate a lack of respect to jurors such as by praising their patriotism or, more to the point, lying toMosaic Law mural, Queens Supreme court them, regarding which so many of my colleagues have no such scruples.  And that is because, besides the fact that I aspire to practice in an ethical manner, I do respect the jury.

This includes the one jury I truly “lost,” namely the one I had in Central Islip, New York, last January, which I discuss in greater detail below.  They seemed to me, when we completed voir dire, to be a perfectly fine bunch, and maybe even a little better for my side than my adversary’s.  What happened to them along the way I still don’t understand.  But in the succeeding months I have had to admit that jurors’ willingness to treat other peoples’ lives with what can only be described as disdain, and other peoples’ life’s savings as Monopoly money, raises serious questions about the jury system.

D'Amato Federal courthouse EDNY

Central Islip

Noodling about juries is certainly common, but usually focuses on areas such as personal injury and productsliability law, where big, bad corporate America is footing the bill for arbitrary impositions of an ugly form of wealth expropriation via class warfare and political expediency.  In fact, a very similar thing may be happening in intellectual property law.  Except that here, as a general rule, the class warfare aspect of the game is trending in favor of the Haves, which are finding trademark and copyright to be usually very decent substitutes for the laborious and expensive effort of reconsidering obsolete business models.  Both trends are bad news for free enterprise and economic growth.

Now, on the one hand, I was very impressed when we spoke with the jury in Phoenix after the Designer Skin v. S & L Vitamins case. This bit of denouement is a practice that varies from court to court; some resolutely forbid this debriefing, but lawyers love them. The District of Arizona jury returned a verdict of copyright infringement for my client’s use of what were claimed to be original images of the Designer Skin tanning lotion company on my client’s “unauthorized” tanning lotion reseller website. This verdict appeared eminently reasonable to me notwithstanding my advocacy to the contrary, given the evidence and the rulings. Read More…

S&L v. Australian Gold: You, the Jury

Its all about the coin.

It's all about the coin.

Here’s S&L Vitamin’s Trial Brief for the trial scheduled for next week in the above-entitled cause.  (Or you can read it at the bottom of the post).  We pick a jury on Monday, and after a day “off” for stuff I don’t even want to mention, opening statements are Wednesday morning.

Oh, all right.  Here’s Australian Gold’s trial brief.  I’m sure our distinguished adversaries are at least as proud of this work product as we are of ours.

I will not comment on the prospect of this trial, of course, at least not at this juncture.

But others have, more or less. And now, you can too!

Best of 2008: “Designer Skin v. S&L Continued: ‘S&L had a perfect right to sell this product’” (July)

This was first posted on July 18th:

Unfortunately for future defendants in the position of our client, Internet retailer S&L, U.S. District Judge James Teilborg’s decision from the bench in the District of Arizona dismissing the damages claims of suntan lotion manufacturer Designer Skin will not be officially published, being an oral opinion. Well, it will not be published unless and until it is quoted and affirmed by the Ninth Circuit, which a Designer Skin lawyer has promised will happen soon — though not exactly in those words. (Earlier post here.)

Bronze AnarchyFortunately we can mitigate some of the sting of the lack of officially published precedent, for now, and on our electronic mimeograph machine “publish” that opinion. The ruling is below; an example of the subject “electronic renderings” is at left; the transcript of the entire colloquy, including the striking of the would-be “damages” testimony of the company’s president, Beth Romero, and the argument of counsel can be downloaded here.

Disclosure: Neither counsel nor court had prepared particularly thoroughly for these oral motions or the ruling from the bench, which came up earlier in the proceedings than had been anticipated for reasons we will discuss next week. Read More…

Online retailing and initial interest confusion

We reported earlier on a related case in this area implicating the use of trademarks to sell merchandise online via “unauthorized distributors.” A new decision in this area was issued yesterday in the U.S. District Court for the District of Arizona. We represented the defendants and, again, got key help from David Marc Nieporent. Excerpt:

In contrast to the deceptive conduct that forms the basis of a finding of initial interest confusion, S & L Vitamins uses Designer Skin’s marks to truthfully inform internet searchers where they can find Designer Skin’s products. Rather than deceive customers into visiting their websites, this use truthfully informs customers of the contents of those sites. Indeed, in practical effect S & L Vitamins invites Designer Skin’s customers to purchase Designer Skin’s products. The fact that these customers will have the opportunity to purchase competing products when they arrive at S & L Vitamins’ sites is irrelevant. The customers searching for Designer Skin’s products find exactly what they are looking for when they arrive at these sites. S & L Vitamins is not deceiving consumers in any way. Thus, its use of the marks does not cause initial interest confusion./fn7

The Court recognizes that this holding is at odds with the Tenth Circuit’s decision in Australian Gold, Inc. v. Hatfield, 436 F.3d 1228 (10th Cir. 2006). There, under facts virtually identical to those in this case, the Tenth Circuit held that the defendant’s use of the trademarks caused initial interest confusion because it “used the goodwill associated with Plaintiffs’ trademarks in such a way that consumers might be lured to the lotions from Plaintiffs’ competitors.” Id. at 1239. With all due respect to the Tenth Circuit, this Court does not find Hatfield persuasive. In this Court’s view, there is a meaningful distinction between (1) using a mark to attract potential customers to a website that only offers products of the mark holder’s competitors and (2) using a mark to attract potential customers to a website that offers the mark holder’s genuine products as well as the products of competitors. As discussed above, in the latter situation no “bait and switch” occurs.

In sum, S & L Vitamins’ use of Designer Skin’s trademarks to accurately describe the contents of its websites does not cause initial interest confusion.


/fn7 If it were otherwise, if this guileless, informative use of trademarks in metatags and as search-engine keywords constitutes initial interest confusion, then trademark law would be (to the extent it is not already) in the unenviable position of stymying access to the world of goods and services lawfully available on the internet. Unless it is accurately “mapped,” the internet is just a vast expanse of uncharted (virtual) territory. . . .

There’s more. The decision is here. Reconsider these words: “if this guileless, informative use of trademarks in metatags and as search-engine keywords constitutes initial interest confusion, then trademark law would be (to the extent it is not already) in the unenviable position of stymying access to the world of goods and services lawfully available on the internet.”

The idea of trademarks is, of course, to make goods and services identifiable, findable — to enhance commerce. Imagine having to explain why forbidding their accurate use is not only bad trademark law, but antithetical to the entire concept of a trademark! Yet that is exactly what defendants in cases such as these have to do, at considerable expense. Most just fold up their tents and go home instead.

UPDATE: Comment from Greg Beck, Bill Patry (on the copyright piece of the decision) and Rebecca Tushnet (who addresses the curious retention of the state “unfair competition” claim based solely on copyright).

UPDATE: Eric Goldman weighs in, and WebProNews is right behind. Says Jason Lee Miller:

The outcome of this case will be used as a precedent when deciding others and will bolster the argument that use of keywords in metatags and bidding on trademarked [sic] terms for search purposes is a legitimate practice. Fairly often, plaintiffs are more concerned about control of channels and control of competition than they are about trademark infringement.