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.

Fakes in transit: the Belgian question

On Tuesday," in "Breaking News -- Nokia Customs Seizure Case for ECJ" (here), the IPKat breathlessly reported on the decision of the Court of Appeal for England and Wales to refer some questions -- as yet probably unformulated and certainly unavailable to the public -- to the Court of Justice of the European Communities on a preliminary ruling concerning the interpretation of EU customs seizure rules which appear not to permit the seizure of counterfeits in transit across the European Union if they've not been put on to the market there. This item mentioned a similar reference for a preliminary ruling from Belgium.

Many readers have since emailed the IPKat for further details of the Belgian reference which, he is pleased to say, he now has. The details are as follows: the decision is NV Koninklijke Philips Electronics v Far East Sourcing Limited AR No 02/7600/A, 4 November 2009, brought before the Court of First Instance, Antwerp District. The question asked in this reference actually relates to the Regulation 3295/94, the predecessor of Regulation 1383/2003:

Is Article 6.2(b) of Council Regulation 3295/94 of 22 December 1994 (the old Customs Regulation) a rule of standardised Community law that must be observed by the Court of the Member State that has been applied to by the holder of that right in accordance with Article 7 of the Regulation, and does that rule mean that the court, in making its assessment, may not take into account the temporary storage status /the transit status and must apply the legal fiction that the goods were manufactured in that same Member State, and must subsequently decide, while applying the law of that same Member State, whether such goods infringe the intellectual right in question?

Says the IPKat, given the nature of the questions and the closeness of time, it would be silly for the ECJ not to join the two cases, wouldn't it? Merpel says, silliness has nothing to do with it: have you forgotten how the same court managed not to join all the Fixtures Marketing database right cases only a few short years ago?

Breaking news: Nokia customs seizure case for ECJ

The IPKat has just received a message from Hayley Hill (Rouse) which is of great excitement to him. It reads as follows:

"On 9 November 2009 the Court of Appeal decided to refer questions to the ECJ following Nokia’s challenge to Customs’ policy of not targeting or detaining suspect counterfeit goods travelling in transit through the UK from one non-EU country to another non-EU country without evidence of likely diversion on to the EU market.

Pursuant to the policy, HMRC had decided not to continue to detain a consignment of fake NOKIA-branded handsets which were in transit in the UK from Hong Kong to Colombia. Nokia’s challenge was dismissed by Kitchin J in the Court below [see the IPKat's earlier comment here] although Kitchin J recognised that the result of his decision was not satisfactory.

While the Court of Appeal found Kitchin J’s judgment to be persuasive, it felt that the issue warranted a reference to the ECJ in light of another reference by the Belgian court on 4 November 2009 on a similar point in a copyright and designs case , and that a highly respected judge in the Dutch Court had come to a view effectively contrary to the position adopted in the UK by Kitchin J.

The precise form of the questions are to be agreed by the parties on Wednesday 18 November 2009. They will essentially address whether non-Community goods in transit from one non-Member State to another non-Member State are capable of constituting “counterfeit goods” within the meaning of Article 2(1)(a) of Regulation 1383/2003 if there is no evidence that they will be released into free circulation in the EU or be illicitly diverted onto the EU market.

The Court of Appeal also indicated that it will write to the President of the ECJ suggesting that its reference be conjoined with the Belgian reference.

Arty Rajendra of Rouse Legal who represented Nokia comments:
“Clearly the current position in which the national courts are adopting different interpretations of the same EU legislation is unsatisfactory. The ECJ reference presents an opportunity for all brand owners to obtain clarity on this area of law at the highest level.

It is hoped that the ECJ will give guidance which will result in robust border enforcement measures which both protect EU consumers and are effective against the international trade in fake goods.”

See also "That Nokia Case: Catching Hold of Counterfeits" here. At the time of posting, the Court of Appeal judgment has not yet been posted on BAILII.

Prediction: the IPKat thinks that, notwithstanding the excellence of Kitchin J's reasoning and the integrity of his analysis, the Court of Justice of the European Union (as it will be, by the time it gives its ruling) will have no difficulty in finding a legal interpretation which will ensure that genuine fakes can be lawfully seized, while leaving it open for goods that infringe IP rights in neither the country of origin or the country of destination will continue to be immune from seizure even when passing through EEA territory in which they infringe. Merpel says, well done, Managing Intellectual Property magazine, for getting the news out so quickly in its MIP Weekly bulletin.

Not so cuckoo: the assimilation of marks from Madrid

The third treat from the Court of Justice of the European Union this morning was a rare occurrence -- consideration by Europe's Finest of the effects of the Madrid Protocol, in Case C‑302/08, Zino Davidoff SA v Bundesfinanzdirektion Südost. This was a reference for a preliminary ruling from the Finanzgericht München (Germany) -- not one of the regular suppliers of intellectual property questions to the Court.

Right: here's a useful guide to anyone who needs to navigate Madrid

Invoking Article 5(4) of Regulation 1383/2003 -- the Regulation that lets you get suspected counterfeits and infringements suspended from free movement within the EU till you can tell if they're genuine fakes or not -- Davidoff applied to the Oberfinanzdirektion Nürnberg (Bundesfinanzdirektion Südost) for border seizure of goods suspected of infringing 12 of its internationally registered trade marks. According to its text, Article 5(4) provides that

"Where the applicant is the right-holder of a Community trade mark …, an application may, in addition to requesting action by the customs authorities of the Member State in which it is lodged, request action by the customs authorities of one or more other Member States".

This application was dismissed on the grounds that (i) Article 5(4) of Regulation 1383/2003 concerned only ‘the right-holder of a Community trade mark’ and that that regulation was not amended by the Community legislature despite the Community’s accession to the Protocol. Davidoff appealed to the Finanazgericht München which considered that, by its very wording, Article 5(4) of Regulation 1383/2003 also applies to the right-holder of an internationally registered trade mark, since such a trade mark is treated as a Community trade mark with regard to its effects in the Community. The Finanzgericht München therefore stayed the proceedings and referred the following question to the Court for a preliminary ruling:

"In the light of the accession of the Community to the [Protocol], is Article 5(4) of Regulation [No 1383/2003] to be interpreted as meaning that, despite the use of the term “Community trademark”, marks with international registrations within the meaning of Article 146 et seq. of Regulation [No 40/94], are also covered?"

The Court ruled this morning, in answer to this question:

"Article 5(4) of Council Regulation ... 1383/2003 ... is to be interpreted as allowing the holder of an internationally registered trade mark to secure action by the customs authorities of one or more other Member States, besides that of the Member State in which it is lodged, just like the proprietor of a Community trade mark".

The reasoning of the Court in this very short judgment (just 27 paragraphs, inclusive of the relavant legal texts, the active part and the costs order) runs like this:

"23 Article 5(4) of Regulation No 1383/2003 relates specifically to a procedure for the implementation in the Community of the protection of a Community trade mark, as regards its effects.

24 According to its wording, it only allows ‘the right-holder of a Community trade mark’, in the context of an application to intervene, to secure, in addition to action by the customs authorities of the Member State in which it is lodged, action by the customs authorities of one or more other Member States.

25 However, following the assimilation into Community trade marks of internationally registered trade marks, it must necessarily be accepted that, in conformity with the Community legislature’s intention in adopting Regulation No 1992/2003, the application of Article 5(4) of Regulation No 1383/2003 may also be requested by the holder of an internationally registered trade mark".

The IPKat is cheered by this ruling which, in his opinion, is unchallengeable.

Cool Water in Madrid here

UK customs procedures and the burden of proof

Via the IPKat's friend Anat Paz and her colleagues at Lovells comes the transcipt of a letter from Her Majesty's Revenue & Customs' Customs & International Supply Chain Integrity & Facilitation unit. The changes in UK Customs procedures relating to allegedly counterfeit goods can have very serious implications for rights holders. The letter, dated 22 June 2009, reads:

"Changes to the way goods suspected of infringing an Intellectual Property Right are to be dealt with at the frontier.

I am writing to inform you that with immediate effect the way we administer the intellectual property regime in respect of Trademark and Copyright infringing goods will change to comply fully with Article 13 of Council Regulation 1383/2003. We will no longer seize items based upon a witness statement alone but will detain them pending the outcome of court proceedings instituted by the right holder and only seize the goods if directed to do so by the appropriate court.

Why the change?
The UK implementation of Regulation (EC) 1383/2003 via SI 2004 No. 1473 “The Goods Infringing Intellectual Property Rights (Customs) Regulations 2004” provides for procedures similar to, but not identical with, those required under the Council Regulation. We have been advised that departure from the precise requirements of the Council Regulation is not permissible as the Regulation is directly applicable within the UK. We are therefore obliged to modify our procedures to align fully with the requirements of the Council Regulation. This change will not weaken our ability to enforce IP rights legislation at the frontier.

What does this mean for the right holder?
The change will significantly impact upon goods that may infringe either a trademark or copyright. Our practice has been to seize these items accepting a witness statement from the right holder as confirmation that the goods are infringing and therefore liable to forfeiture. Should the owner disagree with this determination they have the right to challenge this through judicial proceedings.

We now accept that the burden of proof should be upon the right holder who must confirm the infringing nature of the goods by taking legal proceedings. More pertinently any proceedings must ordinarily be instituted within ten working days but no later than twenty working days after notification of detention. Right holders must therefore be prepared to institute proceedings within the time period set out in the Regulation. Goods will be seized only if the right holder gains a successful judgement and we are directed by the court to seize the items in question.

How we will administer the regime
When goods that we believe may infringe an intellectual property right are detected we will contact the right holder or the nominated representative as set out in the IP application and detain the goods for ten working days.

At the time of contact the case officer should supply to the nominated contact all the information, as set out in Article 9 of the Council Regulation, which is required to decide whether an intellectual property right has been infringed.

To maintain the detention beyond ten working days the right holder must initiate proceedings to determine whether an intellectual property right has been infringed or reach agreement with the declarant, holder or owner of the goods to abandon the goods.

The period may, upon request, be extended by a maximum of a further ten working days so it is important that right holders keep the case officer informed of any delay. Right holders should note that the detention period cannot exceed 20 working days in the absence of court action.

In the case of perishable goods the detention period set aside within which court proceedings must be initiated shall not exceed three working days and may not be extended.

The proceedings for all IP rights are those that are set out in Regulation 9 of Statutory Instrument 2004 no 1473.

Until the adoption of a new Statutory Instrument, which will set out clearly our powers of seizure in IP cases, right holders should as part of their proceedings arrange for the disposal of any infringing goods via an order of the Court.

Will Article 11 be applied?
With the agreement of the Minister we intend to introduce legislation to implement a simplified procedure based on Article 11 of the Council Regulation, however in its absence we will apply the article in the following manner.

These arrangements apply to all IP rights covered under the Council Regulation and are not limited to trademark and copyright.

The right holder may seek the permission of the declarant, holder or owner of the goods to abandon the goods.

The agreement should be in writing and must be communicated to the case officer either by the right holder or the declarant, holder or owner of the goods.

It should be noted that the time periods set out in Article 11 and Article 13 run concurrently. The owner of the goods has the certainty that steps must be taken to establish the IP status of the goods within twenty working days at most or the detention of the goods, for IP purposes, must cease. Article 7 of Commission Regulation 1891/2004 agrees that it is reasonable to accept that first seeking disposal under a simplified procedure is justification for extending the initial ten working day period but right holders must act with alacrity as goods cannot be detained for IP purposes beyond a total of twenty working days.

Destruction will be carried out at the expense and under the responsibility of the right holder. Right holders should therefore ensure that they obtain prior permission from the person with authority to abandon the goods to the Crown.

Is there a transition period?
Suspect consignments that have already been detected and action started under the old procedure will continue to be processed under the old procedure and if appropriate goods will be seized. However right holders who seek an extension of a further ten working days will be informed that they should use that period to initiate court proceedings. In absence of a court order goods will not be seized for an intellectual property breach after Friday 3 July.

Should you have any queries arising from the changes announced above, please contact:

Ron Johnson
IP Policy Team
Tel 01702 367980
e-mail ron.johnson@hmrc.gsi.gov.uk"

The IPKat urges his British readers to take careful note of this sudden shift, for their own sakes and for the sake of their consumers. Merpel wonders why HMRC is spelling 'trade mark' as 'trademark'. Is this a major policy shift in terms of traditional British spelling, or merely the result of its eagerness to save time when sending important letters by omitting the spaces between words?