Tag Archives: Unauthorized Retailers

Domain names and fair use

Gerald M. Levine

Domain Man

The continuum of defenses to claims sounding in trademark that runs from free speech, through fair use to nominative fair use is a longtime topic of interest around here, from the beginning of this humble endeavor through right about still.  Luckily, when it comes to domain names, Gerald Levine continues to give it away for free.  Now the author of the gospel for domain name law, Domain Name Arbitration, hasposted a great piece on his blog called, “Noncommercial and Fair Use in Rebutting Claims for Abusive Registration of Domain Names.

I dropped “noncommercial use,” as distinct from fair use, from the title of this post for snappiness purposes only [Update:] — and because I will be dealing with the protected speech part in a subsequent post, please God.

As Gerry points out, this piece extends an earlier treatment of his on the same topic but focusing on judicial, not UDRP arbitration decisions.  You need both.  From the introductory section:

The UDRP lists three nonexclusive circumstances for rebutting lack of rights or legitimate interests in domain names, which if successful also concludes the issue of abusive registration in respondent’s favor. The third circumstance is “you are making a legitimate noncommercial or fair use of the domain name without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.” Noticeably, 1) what is legitimate is expressed in the disjunctive (it is either one or the other); and 2) the “without intent” clause is not “without intent for commercial gain” but “without intent for commercial gain to misleadingly divert consumers.”  In other words, there can be commercial gain as long as there is no intent “to misleadingly divert consumers.”  The term “fair use” is generally associated with protected speech; the right to express opinions in the form of commentary or criticism, but nominative fair use which fails under “noncommercial” (because it is definitely not that) qualifies under “fair use.”

How panelists construe these very different “fair use” circumstances open a window into the assessment process and of the determining factors for proving or rebutting legitimacy. In both nominative use and protected speech legitimacy rests on answering the “why?” question. Incorporating trademarks is intended to achieve particular and lawful ends which in either instance is beneficial to consumers even if intolerable to owners.

Why can't UDRP parties just get along like these cute Swarovski bunnies?

Why can’t UDRP adversaries just get along like these cute Swarovski bunnies?

Or perhaps, even if it seems intolerable to owners.  It’s really almost always quite tolerable.  I particularly appreciate Gerry’s formulation:  “In both nominative use and protected speech legitimacy rests on answering the ‘why?’ question.”  Why, that is, are you using that particular trademark?  Good excerpt here that provides great “takeaway” on nominative fair use in the UDRP context:

Over time the right has expanded from dealing in owners’ products (authorized in the case of Okidata but now including unauthorized resellers, service providers, and distributors) to include what is now also permitted under U.S. law, namely using domain names descriptively for goods or services identifiable to consumers from the trademarks but not in competition with the owner. . . .

While Respondents in Oki Data and Jaguar Land Rover passed their tests (authorized dealer of OKIDATA products and offering a service different from and noncompetitive with trademark owner) the Respondent in Swarovski Aktiengesellschaft v. Registration Private, Domains By Proxy, LLC, DomainsByProxy.com / Steve Hosie, CJ, LLC, D2015-2351 (WIPO March 7, 2016) () did not. The Respondent contended that “(i) the disputed domain name was purchased legally and within the legal fair use laws concerning domain names, and is being used by the Respondent under ‘Nominative Fair Use.’” The Respondent continued with a list of other reasons the registration was lawful.  However, the three-member Panel in Swarovski was not impressed: Read More…

Legal in Phoenix, liable in Central Islip

Originally posted 2014-12-31 08:20:34. Republished by Blog Post Promoter

Sandra Day O'Connor courthouse in her glory

Sandra Day O’Connor Federal Courthouse, Phoenix, Arizona

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.

My 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…

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

Originally posted 2009-01-08 21:34:29. Republished by Blog Post Promoter

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!

Aw, shucks

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! 😉

Biting the hand that feeds you

The Trademark Troll, a blog written by former Harley Davidson IP counsel Dick Troll, comments on the S&L Vitamins case:

Almost every case involving the sale of unauthorized but genuine goods is a case where a brand owner is asking the courts to become an enforcer for the brand owner – against the brand owner’s own customers!!…

If the Internet retailer is success full then SOMEBODY is ordering more tanning lotion from Australian Gold. So what does Australian Gold do? Dig deeply into the ordering patterns of its distributors to find anomalies? Or book the orders. That is, until retailer and distributors who are not part of the informal distribution channel start to complain.

Nice perspective.

UPDATE: “Suing your customers and dismantling your marketing network.”

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

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…

Fat lady sings: Findings of Facts and Conclusions of Law in Designer Skin v S & L Vitamins

The District of Arizona ruled today in a case we defended through trial and have reported on here extensively.  The decision is here; the minute entry on the electronic docket reads as follows:

FINDINGS OF FACT AND CONCLUSIONS OF LAW – that S & L Vitamins has infringed Designer Skin’s copyrights in the electronic renderings of the 42 products styled [by various brand names] and that Designer Skin is entitled to a permanent injunction enjoining S & L Vitamins from any such future infringement of these copyrights;

FURTHER ORDERED that S & L Vitamins has not infringed Designer Skin’s copyrights in the electronic renderings of the 12 products styled [by various brand names];

FURTHER ORDERED that each party shall bear its own costs in this matter.

Signed by Judge James A Teilborg

No attorneys’ fees for either side.  The injunction reads as follows (per the minute entry); prefatory language is omitted and emphasis is added:

FINAL JUDGMENT AND PERMANENT INJUNCTION in favor of Designer Skin, LLC against S&L Vitamins, Inc. . . . S & L Vitamins . . . are hereby immediately and permanently ENJOINED from publicly displaying, using, copying, or otherwise infringing Designer Skin’s copyrights in these electronic renderings for any purpose whatsoever. Nothing herein, however, shall be construed to enjoin S & L Vitamins from taking, using, or displaying original photographs of the physical Products themselves in connection with S & L Vitamins’ sale of the Products on the internet.

Signed by Judge James A Teilborg

Interested persons may wish to ponder how, and to what extent, the Court addressed the issues framed by the counsel for the respective parties, including identification of what indeed are “Designer Skin’s copyrights in [its] electronic renderings,” by considering the proposed findings and facts and conclusions of law submitted by the plaintiffs, and by the defendants, respectively.

For practitioners interested in the law of injunctions, the most interesting part of the decision concerns the court’s application of the rule in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) that there is no automatic entitlement to an injunction upon a finding of infringement to a copyright infringement case.  We have made a separate post addressing that part of the decision.

S&L’s website is here, by the way.  Buy Designer Skin lotion from S&L!  It’s the way both sides pay their lawyers!

Designer Skin v. S&L Vitamins trial update

The remaining issues in the case, you may recall, were copyright infringement and Arizona unfair competition. Here is the status per this morning’s minute entry in the court’s electronic case filing docket:

Minute Entry. Proceedings held before Judge James A Teilborg on 7/16/2008: Jury Trial – Day 2 held. Plaintiff’s case continues. Evidence and testimony presented. Plaintiff rests. Defendant rests. The Court grants defendant’s oral Rule 50 Motion as to statutory damages, actual damages and unfair competition claim. The Court grants defendant’s oral Rule 50 motion to dismiss defendant Lawrence Sagarin as a defendant. The remaining issue in the case is the injunction issue. Closing arguments. Jury deliberations. Jury to return at 9:00 a.m. 7/17/2008 to resume deliberations. (Court Reporter David German.) (TLB )

A tad terse and bloodless — quite unlike how trial has gone.  Not terse or bloodless at all.  [UPDATE:  Here’s the transcript.  Dismissal of the damages claims were stipulated; see the ruling from the bench at page 124 of the PDF for the ruling as to Sagarin.]

“The Court grants defendant’s oral Rule 50 Motion as to statutory damages, actual damages and unfair competition claim” means “The Court grants defendant’s’ oral motion to dismiss Designer Skin’s claims for statutory damages, actual damages and unfair competition. (Earlier on the court declined to take our “suggestion” of a lack of copyright jurisdiction.)

So, so far: No damages, no plaintiff attorneys’ fees in play. Jury (advisory per Rule 39(c) of the Federal Rules of Civil Procedure; injunction against further use of Designer Skin’s “electronic renderings” is not a jury issue, but they are charged with deciding whether there was copyright infringement) is out; they return this morning, Phoenix time, at 9.

We will update and backfill…

UPDATE: The jury returned a verdict of infringement on 42 of the 54 copyrights. In post-verdict interviews, interestingly, the jurors reported they would have awarded no damages, or nominal damages, had the judge permitted them to consider damages. (Per the above the damages claims were dismissed.) The jurors rejected the idea that a manufacturer is entitled to damages in connection with the sale by third parties of merchandise the manufacturer already sold once before, regardless of the legal theory. This came as quite a surprise to the plaintiff’s legal team, whereas the advisory verdict of infringement (which the court indicated he would adopt) was not particularly surprising to us… considering.

RELATED POST: Two Cities.

Best of 2013: Kirtsaeng and Copyright: First sale means first sale

Rotunda area, Newark historic courthouseThe Supreme Court handed down a huge decision in copyright law today, ruling in Kirtsaeng v. John Wiley & Sons, Inc. that the first sale doctrine, which allows for legally acquired copyright-protected works (or, in trademark, goods bearing a trademark) to be resold by their owners, applies to works made overseas — notwithstanding language in the Copyright Act that many courts had held suggested otherwise.

My first involvement in litigation centered on this question was in a case called Pearson v. Textbook Discounters in the Southern District of New York.  It is one of many such cases that had been brought by textbook publishers against resellers of “foreign editions” of American textbooks.  At the time, despite some questioning in a number of decisions, the overwhelming trend (especially in that District) was in favor of the publishers’ efforts to utilize a provision of the Copyright Act to control prices charged to American students for their college textbooks by forbidding the domestic sale of cheaper — but materially identical — versions for the overseas market.  Eric Goldman explains well in this 2009 post about another case Pearson and other publishers brought at the same time, Pearson Education, Inc. v. Liu, 2009 WL 3064779 (S.D.N.Y. Sept. 25, 2009):

Defendants are book resellers participating on various websites under the alias “JMBooks.” They purchase legitimate copies of cheaper international editions of textbooks, ship them to the US, and then resell them online to US students in competition with the US editions of the same textbooks. The court describes the differences between the international and US editions:

The textbooks plaintiffs publish are customized for the geographical markets in which they are sold. Editions authorized for sale in the United States are of the highest quality, and are printed with strong, hard-cover bindings with glossy protective coatings. Sometimes, plaintiffs include academic supplements, such as CD-ROMs or passwords to restricted websites, with these books. Editions authorized for sale outside of the United States, by contrast, have thinner paper, different bindings, different cover and jacket designs, fewer ink colors, and lower-quality photographs and graphics. These foreign editions are not bundled with academic supplements such as CD-ROMs. The cover of a foreign edition may include a legend indicating that the book is a “Low Price Edition” or only authorized for sale in a particular country or geographic region.  The foreign editions are uniformly manufactured outside the United States.

Students usually purchase a textbook only because the instructor required it, and even then they expect to “enjoy” the textbook for only [one] quarter or semester. So many students may not care about the lower quality printing or absence of various supplements, in which case the international editions could serve as a viable and cost-effective substitute for the US editions. Accordingly, Internet resale of the international editions creates a major channel conflict for the publishers and destroys their efforts to price discriminate by geography.

To block this substitution (in technical speak, to stop the parallel importation of the grey market goods), the publishers invoke the importation right in copyright law (17 USC 602). The defendants respond that the importation right, like the distribution right in 106(3), is subject to the First Sale limitations in Sec. 109(a). If so, the defendants hoped to take advantage of the fact that they bought legitimate copies of the international editions to allow them to freely resell those copies to US buyers.

That hope wasn’t working out so well.   Read More…

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

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.)

Fortunately 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…