Thursday, May 22, 2014

Taylor Swift Trademark Infringement Lawsuit with Lucky 13

The clothing and apparel company, Blue Sphere Inc. doing business as Lucky 13, and Robert A. Kloetzly filed a complaint against Taylor Swift and her business entities. In the complaint, BLUE SPHERE, INC. et al. v. SWIFT, et al. CASE NO.: 8:14-cv-00782, Swift is accused of allegedly infringing on Blue Sphere’s federally protected trademarks by selling merchandise using the phrase “Lucky 13” without Blue Sphere Inc.’s authorization. The origin of the action is simple. “Lucky 13” is a clothing and apparel company that has federally protected trademarks using the phrase “Lucky 13” on clothing and their merchandise. However, Swift happens to also sell merchandise that uses the phrase “Lucky 13,” without the company’s authorization.

In the first cause of action, Plaintiff alleges that Swift’s use of “Lucky 13” on the clothing and apparel creates a likelihood of confusion that the goods are authorized, sponsored, or controlled by the Plaintiff, in violation of § 32 of The Lanham Act.

In the second cause of action, Plaintiff alleges that the infringing action confused the public similar to above, in violation of § 43(a) of the Lanham Act, False Designation of Origin and Unfair Competition

The third cause of action, Plaintiff alleges dilution by tarnishment or blurring, where the infringing items diminish quality and goodwill of Plaintiff’s product.

The fourth and fifth causes of action are for Unfair Business Competition under the California Business Code, and Common Law Misappropriation. These re-allege the same allegations as the first three.

E Online reported that Swift once explained her personal connection to the number 13 to MTV News: “I was born on the 13th. I turned 13 on Friday the 13th. My first album went gold in 13 weeks. My first No. 1 song had a 13-second intro. Every time I’ve won an award I’ve been seated in either the 13th seat, the 13th row, the 13th section or row M, which is the 13th letter.”

The Ninth Circuit will use their 8-factor likelihood of confusion test to determine whether Swift violated the Lanham act; which are the following:

1. The strength of the mark

2. Similarity of the mark

3. Proof of actual confusion

4. Defendant’s intent

5. Proximity of the two marks in the stream of commerce

6. The marketing channels used

7. The type of goods

8. The likelihood of expansion of the product line.

This will be an interesting case to follow, as it appears that Plaintiff has a strong argument. There is lot of money at stake, as well as the ownership of the phrase “Lucky 13.”

Thursday, May 8, 2014

U.S. Supreme Court Cracks Down on Patent Trolls

The Supreme Court last week struck a blow to patent owners who made a living off threatening others with frivolous litigation by loosening the standard for the prevailing party to collect legal fees. Patent owners that do not sell products or services, but earn or try to earn the majority of their income by enforcing their patents through frivolous litigation are commonly known as “Non-practicing entities” (NPEs) or “Patent Trolls.” For years, some NPEs would buy patents for the sole purpose of using their new ownership rights against corporations by demanding licensing fees, or litigation. The cost of paying a licensing fee frequently outweighed the cost of litigation because Federal Courts rarely allowed the prevailing party to recoup expensive legal fees. Under 35 U.S.C. § 285, “the court in exceptional cases may award reasonable attorney fees to the prevailing party.” (Emphasis added). The test for exceptional cases, outlined in Brooks Furniture Manufacturing, Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005), required the prevailing party to prove that both (1) the litigation was brought in subjective bad faith, and (2) the litigation was objectively baseless. This was so rigid that many chose to pay licensing fees, rather than prevail in litigation but still pay more in legal fees.

Last week, the Supreme Court ruled on two cases that loosened the “exceptional cases” test: Octane Fitness, LLC v. Icon Health & Fitness, Inc., and Highmark Inc. v. Allcare Health Management System, Inc. In Octane Fitness, Justice Sotomayor threw out the Brooks Furniture 2-part test, by holding “nothing in [section] 285 justifies such a high standard of proof. Section 285 demands a simple discretionary inquiry; it imposes no specific evidentiary burden, much less such a high one.” Furthermore, the Court strengthened it’s new stance on §285 by throwing out the Brooks Furniture test again in Highmark Inc. “Our opinion…rejects the Brooks Furniture framework as unduly rigid and inconsistent with the text of §285.” In Highmark Inc., the court held that since “exceptional” is in the judgment of the District Court, the decision on appeal may only be reviewed for abuse of discretion.

Since the Supreme Court’s reinterpretation of section 285 allows the sitting judge more flexibility to determine “exceptional cases,” newly empowered patent owners may be able to fight back against frivolous litigation. Interestingly, approximately 200 patent infringement cases were filed around the time of these decisions. This is a definite upswing in the volume that is normally filed. It’s possible that the increase is due to adverse ruling for patent trolls and the accompanying legislation in congress taking place to curb NPEs. One NPE in particular filed 87 lawsuits in April in Texas.