Letter from AmeriKat: No Trade Mark Infringement, No Defendant , No Problem!

Due to technical difficulties experienced earlier in the week the Letter from AmeriKat has been unduly delayed. The AmeriKat's laptop is on holiday at the moment and will hopefully be back in time for Sunday's usual letter.

After a period of chaotic and busy days that had defined the first part of the AmeriKat's year the legal seas have thankfully been pacified. For the next few weeks the AmeriKat has a happy reprieve for the world of law firms. No longer part of the school of suits swimming throughout the Underground and Central London in the daily commute, she is now playing the role of the American tourist (minus the cargo shorts and "I heart London" sweatshirt). The American accent (albeit in "meowing" form) and her tabby stripes allow the AmeriKat to transform herself into an anonymous tourist in a city that she already calls home. Being virtually unidentifiable as a "Londoner" has its perks. (picture, left - the AmeriKat blending into her background this week) The AmeriKat can, without a great risk of liability, partake in those annoying tourists habits that Londoners (myself included) despise; inexplicably stopping in the middle of the sidewalk, talking really loudly on the Tube, and taking photographs of everything in her sight. Such are the luxuries anonymity can afford one...

No Claim, No Defendant, No Evidence - No Problem!

Such luxuries no longer appear to be afforded to potential trade mark defendants in Colorado. As any lawyer knows, before you march off to court to issue a complaint on the behalf of your client you generally need four things: A claimant, at least one defendant, a cause of action and evidence is also quite nice. But strange things have been going on in Colorado's District Court when two weeks ago a complaint was filed on 9 August 2010 that only identified the complainant and little else. The AmeriKat is sure, like herself, you are scratching your head right now asking : "Who would file such a complaint?"

The plaintiff, AEG Live - Rocky Mountain, promotes a music festival known as the Mile High Music Festival. The Mile High Music Festival, so called because it takes place in Denver, Colorado which is a mile above sea-level, is in its third year and attracts around 90,000 people each year. This year's line up includes the Dave Matthews Band, Keane, Phoenix, and the AmeriKat's personal favorite - My Morning Jacket. AEG is also the proprietor of a US registered trade mark for MILE HIGH MUSIC FESTIVAL in connection with merchandise and entertainment services. AEG manufactures and has the exclusive right to sell trade marked merchandise at the festival, including T-shirts, posters, sweatshirts and other apparel. This merchandise is also sold through other sources in the U.S. The complaint claims that the sale of such merchandise is in the hundreds of thousands, but in keeping with the complaint's theme of "unidentifiability" - no specific number is given in the complaint.

That is the Claimant, but who are the Defendants? The AmeriKat generally paraphrases the description of a defendant in a complaint, but on this occasion it is best that it comes out of the horse's (i.e., the complaint's) mouth:

"3. Defendants John Does 1-100, Jane Does 1-100 and XYZ Company who are sued herein under fictitious names because their true names and capacities are unknown at this time. This complaint will be amended when their true names and capacities are ascertained."

Yes, you did read that correctly. But it continues:

"4. Upon information and belief, the individual defendants will be present in and about the District of Colorado, Denver in connection with the claims asserted below and are or will be subject to the jurisdiction of this Court.

5. On information and belief, defendant XYZ Company through its agents, servants and employees, is or will be present in and about the District of Colorado, Denver and is or will be subject to the jurisdiction of this Court. "

So, to recap, the complainant does not know who the defendants are, nor are they certain whether the defendants are actually in the jurisdiction at the time, just that they will be at some point when they figure out who they are. Right....

The AmeriKat asks you to just keep that at the back of your mind while she serves you the next platter of complaint absurdity relating to the unlawful conduct complained of:

"15. On information and belief, Defendants will sell and distribute unauthorized T-shirts, jerseys and other merchandise bearing any or all of the Festival Trademarks in the vicinity of the Festival before, during and after the performances.

16. The Unauthorized Merchandise is of the same general appearance as Plantiff's Festival Merchandise and is likely to cause confusion among prospective purchasers...

17. The Unauthorized Merchandise sold by Defendants is generally of inferior quality. The sale of such merchandise has injured and is likely to injure the reputation of the Plaintiff which has developed by virtue of their reputation for high quality associated with the Plaintiff."

The unlawful action complained of, namely the trade mark infringement, has not even occurred. None of these mythical defendants have actually sold or distributed anything. And since no action has occurred, and assuming no infringing product has thus been obtained, one wonders how the complaint can then even speak to the quality and characteristics of the merchandise. Further, the relief sought not only includes the standard damages and injunction, but also an order for the seizure of the goods within the vicinity of the festival by law enforcement officials under Section 1116 (d) of the Lanham Act . [Someone please define "vicinity" for the AmeriKat]

A further memorandum was filed by AEG relating to the reasons why the injunction should be granted. The reasons being that "there is no defense to the claims brought" and that "it has demonstrated a substantial likelihood that it will succeed on the merits." ["What merits!", hisses the Amerikat, "how are there merits when you don't even have a case?!"]

But the complaint, which emanates from the law firm of Hicks, Mims, Kaplan & Burns based in Santa Monica, California, is not the first of its kind. As reported by the Hollywood Reporter, such pre-infringement complaints are part of a growing trend by rights owners and in fact have been used for many years for one-of events such as concerts.

Earlier this summer, the marketing division of Universal Music Group (UMG) - Bravado International Group - filed a similar lawsuit prior to a series of concerts to be held at Madison Square Garden by Lady Gaga. This complaint emanated from the New York law offices of Wolf & Samson and is in similar form to that of the AEG complaint. This time it was the LADY GAGA mark, her image, likeness and merchandise that was the subject matter of the complaint.(picture, left - USTPO certificate of the Lady Gaga trade mark) The complaint states that the identity of the defendants "are not presently known" and also requests the authorization of the US Court Marshall and other law enforcement agents for seizure of counterfeit products.

It seems that off the back of the Bravado lawsuit other concert promoters, like AEG and LiveNation, are getting into the mix this summer. But how can one's lawsuit not be successful if no one shows up to contest the complaint? And how can anyone show up if they don't even know who they are or indeed have yet to do anything wrong?

Some trade mark lawyers may be thinking that there is nothing wrong with with this. Criminal law in fact empowers the seizure of counterfeit goods and other similar remedies as temporary measures. And in reality who is really prejudiced - the counterfeit bootleggers whose goods are seized are in fact infringing and are often without a realistic defence and the claimant's objective is immediately achieved without the hassle of having to later track the "nomadic" bootleggers after the event of infringement. Such anticipatory trade mark infringement claims may even save the Court's time, it is argued.

The AmeriKat can see the attractiveness of these arguments and complaints as being in the interests of the claimant but there is something very unattractive about this trend. Not only does she have issues with the fact that no cause of action has actually occurred, but she is unsettled by the nature of the remedies sought. Of course there are several instances where a court allows injunctions prior to the occurrence of a cause of action, but interim injunctions and search orders (like the Anton Piller order in the UK) demand that the claimant show that there is an extremely strong prima facie case against the defendant. Further, will the seizure remedy sought only ever be limited to the vicinity of the concert ground or stadium? Could a wider seizure area be granted in the future? What are the restraints placed on such complaints?

Practice it may be for now, but this is a practice that is far from perfect and seemingly prone to abuse.

If any of our readers have experience with these types of complaints and can share their thoughts on the practice please let the IPKat know. The AmeriKat would like to thank Mark Summerfield of Watermark for bringing this story to her attention.

Net profit saved though springboard loses its spring?

A few short but busy weeks have passed since the IPKat first received word of Vestergaard Frandsen A/S and others v Bestnet Europe Ltd and others [2009] EWHC 657 (Ch) and its sequel at [2009] EWHC 1456 (Ch), these being Chancery Division for England and Wales judgments of Mr Justice Arnold. Now he has the time to deal with them.

The dispute in question related to technical information concerning mosquito nets which was contained in a database. The action was brought by the Vestergaard group of companies against a variety of defendants, including two ex-employees. The judge found that a consultant, who was initially engaged by Vestergaard but then worked with the defendants in developing their own competing mosquito net, had been bound by both express and implied obligations of confidence. He also found that the information in the database constituted trade secrets that belonged to Vestergaard.

Holding that the obligation of confidentiality continued even after the consultant's relationship with Vestergaard had ended, Arnold J rules that his use of recipes and test results contained in the database, in order to devise the initial recipes for the defendants' competing product, amounted to a misuse of confidential information for which all the defendants were liable.

In a complex and long judgment, Arnold J the factors to apply when determining whether there has been a misuse of confidential information consisting of technical information. Both he and the parties accepted that the consultant's position was analogous to that of an employee, which meant that the Court of Appeal's well-established guidance relating to the position of employees, laid down in Faccenda Chicken Ltd v Fowler [1987] Ch 177, could be deployed when determining whether the consultant could use the information once his relationship with Vestergaard was over.

Having held in favour of Vestergaard, the next issue for Arnold J to determine was whether injunctive relief was appropriate, given that Vestergaard's secret information wasn't quite so secret any more. On this issue the judge picked his way carefully through a minefield of conflicting (or complementary) principles and case law. Granting injunctive relief (though not as much as Vestergaard had hoped for), he held as follows:

* In the absence of specific discretionary reasons for the refusal of an injunction, where a claimant establishes that a defendant has breached an equitable obligation of confidence and that there is a sufficient risk of repetition, an injunction will be granted unless there are exceptional circumstances;

* There had never been any sound authority for the proposition that an injunction could be granted to restrain continued misuse of confidential information even once the information had ceased to be confidential. Neither Terrapin v Builders Supply Co (Hayes) [1967] RPC 375 nor Cranleigh Precision Engineering Ltd v Bryant [1965] 1 WLR 1293 QBD was authority for that proposition [If Kats could blush, this one would be pretty pink -- he's sure he has persuaded a generation of students of the opposite, confident that Speed Seal Products Ltd v Paddington [1985] 1 WLR 1327 CA said this was the case];

* There was strong authority for the proposition that publication of confidential information brought the obligation of confidence to an end, regardless of whether the information was published by the confider, a stranger or by the confidant himself. This being so, no injunction could be granted to restrain continued misuse of confidential information once the information had ceased to be confidential;

* If the "springboard" doctrine was understood to mean that an injunction could be granted to restrain continued misuse of confidential information once the information had ceased to be confidential, then it should now be regarded as having been laid to rest [if you listen very quietly you can probably hear the sound of the IPKat's lecture notes being gently shredded ...];

* As the law stood, it was not clear whether an injunction could be granted to prevent a defendant from benefiting from past misuse, and in general the remedy for past misuse of confidential information was a financial one. .

* On the facts, Vestergaard had established misuse of their trade secrets. There remained a clear risk of further use or disclosure if an injunction were not granted, in which case neither damages nor equitable compensation would be an adequate remedy.

The IPKat is still taking this all in. Merpel's quite positive about it though. She points out that Arnold J offered two other possible interpretations of the springboard doctrine: (i) information might still be worth protecting if it had a limited degree of confidentiality even though it could be ascertained from public domain sources;(ii) an injunction could be granted to prevent a defendant benefiting from a past misuse of confidential information even if it was no longer confidential.

Mosquito nets here

Springboards here

Mosquito cat association here
Rusty Springboard here

Open source licence enforced under copyright law

The IPKat has a bit of a thing for US copyright law today. He has learnt from that the Federal Circuit Court of Appeals has held in Jacobsen v Katzer that an open source copyright licence can be enforced under copyright law, rather than merely under contract law. The claimant made software available for decoders for model railways from his website. The defendant used and modified the software but failed to comply with the licence in the following ways:

His software did not include

(1) the authors’ names,

(2) the claimant’s copyright notices,

(3) references to the COPYING file,

(4) an identification of the claimant as the original source of the definition files, and

(5) a description of how the files or computer code had been changed from the original source code.

The District Court held that this was a breach of contract, which did not give rise to a right to an injunction.

The CAFC recognised:

The lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration, however. There are substantial benefits, including economic benefits, to the creation and distribution of copyrighted works under public licenses that range far beyond traditional license royalties.

The terms of the licence were classed as ‘conditions’ on the scope of the licence rather than ‘covenants’, which meant they were governed by copyright law, and enforceable as such. On its literal wording, the licence referred to ‘conditions’. Moreover, the fact that money didn’t change hands in return for being allowed to use the copyright work didn’t mean that the restrictions weren’t copyright restrictions. According to the court:

Copyright licenses are designed to support the right to exclude; money damages alone do not support or enforce that right. The choice to exact consideration in the form of compliance with the open source requirements of disclosure and explanation of changes, rather than as a dollar-denominated fee, is entitled to no less legal recognition. Indeed, because a calculation of damages is inherently speculative, these types of license restrictions might well be rendered meaningless absent the ability to enforce through injunctive relief.

The IPKat welcomes this case, as it should make authors more likely to make their work available to the public if they know that it will be protected copyright, and not just contract. He notes that the same distinction may be relevant in the UK, where there are also differences in the remedies available between the two causes of action.