Does the LIFEGUARD mark need saving?

By Seth Chadab

              Lifeguard Licensing Corp., owner of federally registered trademarks for LIFEGUARD and LIFE GUARD, is suing Polo Ralph Lauren in federal court for trademark infringement and unfair competition, and deceptive trade acts and practices under New York law.  The complaint, filed in the United States District Court for the Southern District  of New York (S.D.N.Y.) on August 12, 2009, alleges that Lifeguard’s President, Mr. Ruben Azrak, discovered the Polo-branded clothing while shopping in Macy’s this past June.  Polo’s clothing line includes shirts and sweatshirts featuring “Life Guard,” as well as a red-cross design. 

             Lifeguard claims that they have continuously used and licensed their marks for swim trunks as far back as 1937, and since 1993 for other clothing.  The company alleges that Polo’s merchandise undermines the value of Lifeguard’s “lucrative licensing agreements” with clothing distributors, Warnaco and Popularity Products.  The website for Popularity Products lists an extensive line of t-shirts and other clothing for sale that commonly serves as uniforms for lifeguards. 

             While it appears that Lifeguard may have a legitimate claim of infringement, Polo will undoubtedly challenge to the validity of Lifeguard’s marks for genericness.  This “defense” will be particularly appealing to Polo because it is available to a party beyond the five-year cancellation period. As Justice Brandeis wrote in Kellogg Co. v. National Biscuit Co. 305 U.S. 111 (1938), the owner of the challenged mark “…must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.“  This leaves Lifeguard Licensing Corp. in a tricky situation:  either drop the complaint against Polo and possibly lose control over their marks (including licenses), or be prepared to defend their marks’ validity against a genericide attack.  Neither prospect is particularly appealing to a company who simply is seeking to protect their registered marks and the value of their licenses to third-party vendors.

Federal Circuit Clarifies Fraud Standard in PTO Applications

Today, August 31, 2009, the Federal Circuit determined that the Medinol standard regarding fraudulent statements in trademark applications is wrong.  Under Medinol v. Neuro Vasx, 67 USPQ2d 1205 (TTAB 2003), the Board indicated that fraud was committed in a PTO application when an applicant made material representations it knew or should have known to be false or misleading. 

In Medinol, a Statement of Use stated that the Registrant had used its mark for stents and catheters, but later evidence showed that the mark was not actually used in connection wtih stents.  For that reason, the TTAB stated that even though the Applicant indicated it had made an honest mistake, objectively, that misrepresentation was material and false, and therefore, fraudulent.  The result was cancellation of the registration based on fraud.

After Medinol, trademark applicants and practitioners had to become much more aware of the goods and services identified in their applcations, because under the Medinol standard, there was no room for error.  The TTAB had ruled that a registration could be cancelled for honest misrepresentations if the Applicant/Registrant should have known that these statements were false.

Under today’s ruling in In re Bose Corporation, the Federal Circuit stated that the Trademark Trial and Appeal Board lessened the standard for fraud to be simple or gross negligence, where there should be a heavy burden to show fraud in a cancellation proceeding with no room for speculation.  As clearly as it could say it,  the Court stated that “the Board erroneously lowered the fraud standard to a simple negligence standard.”

http://www.cafc.uscourts.gov/opinions/06-1173.pdf

What does this mean?

Essentially, Medinol was a wake up call to applicants who used a laundry list of goods and/or services in their description of goods with little intent to check whether those products or services will actually be available.  Under Medinol,  it would have been possible to cancel a registration where one of those products was not actually available, even after a mark had become incontestable (That was the beauty of Medinol for petitioners — an incontestable mark is generally immune from challenge, except for some limited grounds, one of which is fraud.  With a negligence standard for fraud, it was much easier to attempt to cancel registrations, or at least threaten to cancel).

Now, although it is advisable to make sure a trademark application is as accurate as possible, it would appear that challengers will no longer be able to cancel a viable registration under negligent mistakes made during the application process. 

Of course, the Board will rule on a post Bose fraud case in the near future, but it is more than likely that there will be some clarification of the fraud standard in a future Trademark Manual of Examining Procedure and PTO policy going forward. 

 

HAIL TO THE ____________! by Seth Chadab

One of trademark law’s most infamous cases may soon be headed back to the headlines. A petition to cancel six of the Washington Redskins’ trademarks (including the ‘Redskinettes’), filed in 2006 by a new group of six plaintiffs, has been on hold pending final word from the Court of Appeals for the District of Columbia.

This past May, the Court ruled (Harjo IV) that the defense of laches was valid and a seven-plus-year delay in filing for cancellation upon reaching the age majority was deemed an unreasonable burden to Pro-Football, Inc., the corporate entity of the Washington Redskins. The Court of Appeals ruling finally puts Harjo to bed, but it does not resolve the major issue in this dispute, whether Redskins’ marks are disparaging and in violation of Section 2(a) of the Lanham Act.

The ultimate resolution of this issue could be major news for the nation’s most popular professional sport, potentially forcing a re-branding of one the oldest pro football teams, established in 1932 and Washington’s own since 1937. Susan Harjo, along with six other Native American petitioners, sought to cancel the Redskins’ marks which have been registered with the United States Patent and Trademark Office since 1967.

The Trademark Trial and Appeal Board (TTAB) ruled in 1994 in favor of Harjo, finding that based on the evidence submitted, “…a trial might show that respondents [Redskins’] marks hold a substantial segment of the population up to public ridicule.” The TTAB also found that the Redskins were not entitled to the defense of laches. Since the TTAB decision in 1994, the District Court and Court of Appeals have gone back and forth solely on the issue of laches, in favor of the Redskins each time.

 The District Court, in the original Harjo decision, overruled the TTAB’s finding of disparagement and found that the TTAB’s decision was “not supported by substantial evidence.” Now that the laches issue has been put aside, many believe that the District Court will soon have to revisit the disparagement issue. The current cancellation petitioners, all aged between 18 and 24, should be able to avoid Pro-Football’s laches defense, having initiated the cancellation proceeding shortly upon reaching the age of majority. These new petitioners, led by Amanda Blackhorse, should be optimistic for a favorable TTAB ruling on disparagement. Since the Harjo ruling, Native American advocacy groups have been successful in persuading organizations and institutions to re-brand and adopt new names or mascots.

Most notably, in 2005 the NCAA banned nicknames and mascots that were “hostile and abusive,” targeting 18 universities throughout the United States. Exceptions were granted by the NCAA in some cases (e.g., Florida State Seminoles), but many schools chose to comply and re-brand. These examples will be cited by the petitioners once the TTAB resumes the Blackhorse proceeding. It remains unclear whether it will be enough to persuade the District Court and Court of Appeals, and a lengthy appeal process is expected. If Daniel Snyder, owner of the Redskins, ultimately loses, more than just loss of control over use of the trademarks is at stake. A suit seeking an injunction against the Redskins name would also be likely.

 The original attorney for Harjo and other petitioners, Steve Baird, recommends that the Redskins re-brand, citing the Washington pro basketball team’s decision to drop the Bullets in favor of the Wizards in 1997. I’m, however, not so convinced Steve’s arguments would be able to persuade many in Washington to voluntarily adopt a new name for their beloved Redskins.

Call Failed – Trademark Dispute Further Delays launch of iPhone in China by Seth Chadab

While a distribution agreement for the iPhone is still pending for the world’s most explosive market, Apple is facing another setback that will further delay the introduction of the iPhone in China.  It appears that Apple inexplicitly failed to register “iPhone” with the Trademark Office of the State Administration for Industry and Commerce of China in the category for mobile and video phones.  Having only applied for computer hardware and software in its otherwise timely 2002 application, Apple neglected to include the mobile and video phone product category.  Hanwang Technology, perhaps the first company to realize this mistake, applied two years later and secured a registration for “i-phone” with the Trademark Office, under the proper classification.  Despite objections by Apple during the opposition period (similar to U.S. Trademark law), the trademark committee granted Hanwang Technology the exclusive right over the mark, thereby forcing Apple to either rebrand the iPhone in China or negotiate an agreement with Hanwang for permission to use the mark.  This trademark dispute, in addition to other setbacks to the iPhone introduction in China, have many speculating that an exclusive deal with a Chinese cell carrier is not likely to be anytime soon. 

 The Chinese market, however, has proven that the demand for an iPhone is very strong among mobile users.  As a result, a “clone” market has emerged that has hardware manufacturers competing to see who can make the most authentic iPhone knock-off.  The most recent addition, the “iPhome 3G,” joins the already popular “HiPhone” and “SciPhone,” as a cheap substitute that duplicates the iPhone’s stylish exterior and boasts a near-flawless OS X-based operating system.  Apple will have to clear the market of these counterfeits in order to gain the market share that many had expected from the popularity of the iPhone in the western countries. 

 Apple’s folly in China thus far is in stark contrast to its reputation in the United States for vigorously enforcing its trademarks and other IP rights.  To meet expectations in China, Apple will have to negotiate permissions with Hanwang for the iPhone trademark (lets face it – Apple would be crazy to rename the iPhone for the Chinese market) and then accomplish the more difficult task of taking on the cheap counterfeiters that have dominated the Chinese market without impunity.

The issue with Netbook by Seth Chadab

Psion’s latest battle against Intel and Dell to maintain exclusive rights in ‘netbook’ will be their final salvo in the war to prevent the genericide of their registrations. The Canadian-based hardware manufacturer announced last week they reached an agreement with Intel and Dell and will withdraw their latest ‘netbook’ applications with the Patent and Trademark office. Intel and Psion have battled publically since December 2008 over the use of the term ‘netbook,’ the industry-adopted term for a popular new technology in the consumer gadget industry which has spurred some tough competition.

Psion originally filed an application to register ‘netbook’ trademark in 1996 and introduced their line of mini-PCs shortly thereafter, but only finding minimal success in the market. Psion, however, sold only one line of computers under the ‘Netbook’ name (which was incidentally discontinued in 2003). In 2008, the demand for small laptops predominantly used for web-based applications exploded, prompting larger hardware manufacturers to flood the market. Netbook was widely used by Psion’s competitors to describe the genus of this new tech. Psion responded aggressively to the competition and chose to send out numerous cease and desist letters to these manufacturers and anyone else who had used netbook generically.

Psion’s threats backfired, prompting Dell and Intel to petition the PTO for cancellation of Psion’s registrations. Incidentally, Intel joined the suit in February 2009, despite neither manufacturing netbook computers nor selling any hardware under the ‘netbook’ name. Psion countered with a claim of more than $1 billion in damages. In the end, Dell and Intel successfully hammered Psion for failing to police the mark effectively and even cited to many generic uses of netbook by Psion in their own releases. It is uncertain what will happen to Psion’s current registrations, but it is clear that Psion will no longer protest the use of netbook.

While many predicted that Psion would ultimately lose this fight, the lesson learned by Psion and other hardware manufacturers is to be less descriptive in choosing the name for new products. The more functional and familiar the word is in the larger industry, the more likely that it become generic. Add netbook to the ever-expanding list of words returned to public, which includes PC, notebook, laptop, zip drive, and many more.