Intellectual Property Newsletter, Spring 2008

Intellectual Propery Update

Spring 2008

About our Intellectual Property Practice Group

Karaoke Device Manufacturer Not Entitled to Print or Display Song Lyrics in Real Time with Song Recordings by Virtue of Acquiring Compulsory Mechanical License for Copyrighted Musical Compositions

Our Intellectual Property Practice Group counsels clients on matters related to the protection of copyrights, trademarks, and trade secrets, including preparation and processing of trademark and copyright applications, consultation regarding infringement, preparation of licensing agreements, and related matters. Our services include: •

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Protecting creative and literary works, pictorial and graphic works, designs, trade and service marks and other creations, both in the United States and in foreign countries; Consulting with regard to the preparation of derivative and collective works, protection of unpublished works, proper publication notice, and creation of “works made for hire”; Counseling regarding innocent infringement of copyrights and trademarks; Counseling with respect to rights to re-sell, structuring of assignments, licenses and sub-licenses, and recording of transfers; Obtaining and interpreting trademark searches and assisting clients in creating trademark rights through first use and registration; Dealing with trademark oppositions, petitions to cancel registrations, abandonment, likelihood of confusion, and quality control; Counseling on antitrust problems, unfair competition and other matters related to intellectual property law; and Helping clients develop ways to protect against disclosure of trade secrets, including confidentiality agreements with employees and others.

If you would like further information about any of the topics mentioned in this publication, please contact James F. Gossett at 312.876.7833 or [email protected]. © 2008 Arnstein & Lehr llp

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he U.S. Court of Appeals for the Ninth Circuit has held that a karaoke device manufacturer was not entitled to print or display song lyrics in real time with song recordings on the basis of its having acquired a compulsory mechanical license to copyrighted musical compositions under Section 115 of the federal Copyright Act. The ruling came in a declaratory judgment suit filed by the manufacturer, who had obtained a compulsory mechanical license from defendant BMG Music Publishing, through its licensing agent, but who was denied the right to include BMG’s copyrighted musical compositions in its karaoke devices unless it also paid a “lyric reprint” fee and a “synchronization fee” to BMG. Plaintiff Leadsinger, Inc. sought a declaration that it was entitled to print or display song lyrics in real time with song recordings in its karaoke device as long as it obtained the compulsory mechanical license, or, in the alternative, that it was entitled to do so under the fair use doctrine. A federal district court dismissed Leadsinger’s complaint for failure to state a claim, and, on appeal, the Ninth Circuit affirmed. Considering Leadsinger’s argument with regard to the compulsory mechanical license, the Ninth Circuit affirmed because it found that Section 115 of the Copyright Act exclusively does not apply to sounds “accompanying a motion picture or other audio visual work.” The Court of Appeals reasoned that devices displaying song lyrics in real time with song recordings constituted “audio visual works,” which meant that Section 115 did not apply to the plaintiff’s device so as to prevent the defendant from charging Leadsinger synchronization fees and lyric reprint fees in addition to the mechanical license fee provided for in that section of the Copyright Act. As for Leadsinger’s “fair use” argument, the Court of Appeals found that the purpose and character of Leadsinger’s use in this case was commercial, the song lyrics displayed by the plaintiff’s karaoke machine fell within the core of copyright protection, and Leadsinger used song lyrics in their entirety. For those reasons, the Court of Appeals affirmed the district court’s dismissal of Leadsinger’s request for a declaratory judgment based on the fair use doctrine, rejecting Leadsinger’s argument that it was entitled to a fair use defense because karaoke machines could be used for “teaching,” namely, instruction on singing, which the Ninth Circuit said could not be reasonably inferred to have been the actual purpose of Leadsinger’s use of copyrighted lyrics in its karaoke machine. Likewise, the Court of Appeals rejected Leadsinger’s argument that it was entitled to a fair use defense because its use of lyrics helped consumers to understand the words to a song, facilitating “parental control over objectionable song words.” Source: Leadsinger, Inc. v. BMG Music Publishing, U.S. Court of Appeals for the Ninth Circuit, No. 06-55102, January 2, 2008.

Amended Complaint Treated as De Facto Supplemental Complaint Allows Copyright Infringement Plaintiff to Continue Suit When Registration Obtained After Filing of Initial Complaint The U.S. Court of Federal Claims has held that a federal inmate was not precluded from

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suing the United States for copyright infringement, even though he had not obtained a copyright registration when his initial complaint was filed, because he had filed an amended complaint after registration that was properly treated as a supplemental complaint the court could consider after its filing. However, the court dismissed the suit in the case at bar because the court found that it lacked jurisdiction over the plaintiff’s copyright infringement claim pursuant to 28 U.S.C. Section 1498(b), which states that the Copyright Act does not confer a right of action on any copyright owner with respect to a copyrighted work prepared by the plaintiff while in the employment or service of the United States. The rulings came in a suit filed by a federal inmate who had been involuntarily assigned to design and produce a calendar for the federal General Services Administration under the auspices of a UNICOR/Federal Prison Industries, Inc. work program. Plaintiff alleged that the government never compensated him for its use of the calendar he designed and thus infringed his copyrights in that item. Furthermore, the plaintiff alleged that the government was engaged in ongoing infringement. When the plaintiff filed his original complaint, he had applied for copyright registration with respect to the calendar, but it had not yet been granted. However, the case was transferred from one federal court to another, and, by the time it reached the Court of Federal Claims, the Copyright Office had granted the plaintiff’s copyright registration for the calendar allegedly used by the government. Consequently, an attorney for the plaintiff filed an amended complaint that alleged the registration. An attorney for the U.S. Department of Justice moved to dismiss the complaint, arguing that a plaintiff’s failure to obtain registration of copyrights prior to bringing suit was a jurisdictional defect in the original complaint that could not be cured by the filing of an amended complaint after the registration took place. The Court of Federal Claims, however, disagreed with this argument for dismissal advanced by the defendant’s attorney, finding that, while the amended complaint did not cure the jurisdictional defect in the original complaint arising from the fact that registration had not been obtained when that complaint was filed, the amended complaint was properly treated as a de facto supplemental pleading that could establish jurisdiction in the court to hear the plaintiff’s case as of the date of its filing, assuming no statute of limitations problems had arisen. In this case, the court said it did not have to deal with the application of the statute of limitations because the court found that it was required to consider other potential jurisdictional impediments to the suit. It then found such an impediment in 28 U.S.C. Section 1498(b). Addressing that statute, the Department of Justice argued that the plaintiff was an employee of the United States when he created the calendar. But the court rejected that argument, finding that the statute could not be read to include a prisoner-custodian relationship within its concept of “employment” by the United States. The plaintiff nonetheless found his suit dismissed because the court 2

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ruled that, while serving in the federal government work program, the inmate was working for a government agency and a corporation wholly owned by the government, he supplied the government with the output of his efforts, and he used government time, material and facilities to create the calendar in question. These considerations led the court to conclude that the plaintiff was in the “service” of the United States when the calendar was prepared. Source: Walton v. United States, U.S. Court of Federal Claims, No. 04-1277 C, January 23, 2008.

Contractor Hired to Photograph Other Copyrighted Works Could Not Acquire Copyrights in Photos Without Authorization from Owner of Copyrights in Other Works The U.S. District Court for the Northern District of Illinois has held that a photographer could not sue for infringement of his copyrights in photographs of a copyrightable object, namely, toys, where the photographer had not obtained authorization from the owner of copyrights in the toys before acquiring copyrights in the photos. The ruling came in a suit by the photographer against a toy distributor that had hired the plaintiff to take photos of its toys for marketing purposes. A contract between the photographer and the toy distributor gave the distributor a two-year license to use copyrighted photos taken by the plaintiff. But the defendant continued to use photographs after the two-year license period, prompting the suit. On a motion for summary judgment by the defendant, the district court ruled that the plaintiff could not bring an infringement action based on copyrights in the photos because the plaintiff did not hold a valid copyright in the photographs. The court found that, because the photographs were of a copyrightable object, the photos were derivative works, and the plaintiff required authorization from the defendant, which owned copyrights in the toys, before acquiring copyrights in the photos. Since that authorization had never been granted, the plaintiff did not hold a valid copyright upon which to base his claim. Source: Schrock v. Learning Curve International, Inc., U.S. District Court for the Northern District of Illinois, No. 04 C 6927, January 29, 2008.

Mandatory Victims Restitution Act Does Not Allow Award in Excess of Actual Losses in Misdemeanor Copyright Infringement Case The U.S. Court of Appeals for the Eighth Circuit has held that the federal Mandatory Victims Restitution Act did not allow a producer of undeliverable CDs and DVDs to recover proceeds from sale of the discs by someone who took them from post office trash. BMG Columbia House sought such restitution from James Chalupnik, who pleaded guilty to misdemeanor copyright infringement for taking the discs. A federal district court sentenced Chalupnik to pay BMG the amount he derived from selling the discs, but that award was vacated by the Court of Appeals, which found that the Act gave BMG

no right to obtain such restitution in this case. The Eighth Circuit found that, as BMG had planned on destroying the discs and was not required to make any royalty payments to copyright holders because of Chalupnik’s criminal conduct, BMG had not suffered any actual loss because of Chalupnik’s activities, and the Act allowed restitution only for actual loss suffered by a victim. Source: United States v. Chalupnik, U.S. Court of Appeals for the Eighth Circuit, No. 07-1355, February 1, 2008.

Business Consultant’s Use of Slogan in Proposal to Potential Clients Does Not Constitute Trademark Use of Slogan or Activities Analogous to Trademark Use Where Slogan Was Only Intended to Be Used by Clients and Public Would Not Identify Slogan with Consultant’s Services The U.S. Court of Appeals for the Second Circuit has held that a business consultant could not sue American Express for infringing his alleged trademark rights in the slogan MY LIFE. MY CARD. because the consultant had not made trademark use of the slogan or engaged in activities analogous to trademark use simply by including the slogan in advertising campaign proposals submitted to various credit card companies. The ruling came in a dispute arising after the inclusion of a virtually identical slogan in a sales pitch Steven Goetz made to credit card companies, suggesting that they personalize credit cards by reproducing photographs selected by cardholders on the face of their cards. Goetz sent his idea to the credit card companies, including American Express, with a proposal for use of the catchphrase MY LIFE, MY CARD. American Express never replied to Goetz, but later began its own advertising campaign using MY LIFE. MY CARD., which prompted Goetz to demand that American Express cease and desist from using “his” slogan. American Express then commenced a declaratory judgment action in the United States District Court for the Southern District of New York, seeking a declaration that it had not misappropriated the slogan and that Goetz lacked a viable claim for trademark infringement. On appeal of a district court judgment for American Express, dismissing Goetz’s counterclaims for misappropriation and trademark infringement, the Court of Appeals affirmed the lower court judgment that American Express had not infringed any trademark rights owned by Goetz. The Court of Appeals held that Goetz could not prevail in a trademark infringement suit because Goetz had never made actual trademark use of the slogan in which he claimed rights, and his activities were not analogous to trademark use. Citing previous decisions by the Patent and Trademark Office refusing to register slogans as marks owned by advertising agencies, even if they would be subject to registration by the agency’s prospective clients, the Court of Appeals said that Goetz’s use of the slogan at issue in this case was likewise undeserving of protection under the trademark laws. According to the Court of Appeals, Goetz’s usage of the slogan did not amount to trademark use because the slogan did not designate the origin of any goods or services he offered,

as he did not sell credit cards and never displayed the slogan to card consumers. Rather, he offered the slogan as a complement to the card personalization concept he proposed to sell and, in this respect, his claim was no better than that of an advertising agency that offers its clients a marketing concept to enhance their sales. Goetz had argued that, if he did not actually use the slogan as a trademark, his activities were analogous to trademark use, and he cited some decisions by the District Court for the Southern District of New York in support of the assertion that “analogous use” is sufficient to establish trademark rights in the absence of actual use. But the Court of Appeals held that Goetz’s use of the slogan in this case did not qualify as “analogous use,” because, at the very least, “analogous use” must be of such a nature and extent that the mark has become popularized in the public mind so that the relevant segment of the public identifies certain goods or services with the claimed owner of the mark. In contrast, there was no public exposure of the slogan by Goetz in this case, since his communications of his idea were only with a few commercial actors within the credit card industry, and, therefore, the slogan could never have come to be associated with Goetz in the public mind. Moreover, the Court of Appeals found that Goetz’s reliance upon “analogous use” as supporting his trademark infringement claim was misplaced because, according to the Second Circuit, prior court decisions had never stretched the “analogous use” doctrine so far as to preclude any necessity for a trademark infringement plaintiff to make some eventual actual use of a mark in support of his claim. The Court of Appeals held that it could not rely on the “analogous use” doctrine as the sole source of trademark rights, as suggested by the plaintiff in this case, because prior case law in the circuit clearly showed that promotional activities “must be within a commercially reasonable time prior to actual use” for them to be considered analogous trademark uses. Source: American Express Co. v. Goetz, U.S. Court of Appeals for the Second Circuit, No. 06-2184-cv, February 4, 2008.

When Copyright Infringement Suit Is Dismissed Voluntarily by Plaintiff, Defendant May Be Entitled to Award of Attorney’s Fees as “Prevailing Party” The U.S. Court of Appeals for the Seventh Circuit has held that, when a copyright infringement suit is dismissed voluntarily by the plaintiff, the defendant is a “prevailing party” that may be entitled to an award of attorney’s fees under 17 U.S.C. § 505. That section authorizes a federal district court to “award a reasonable attorney’s fee to the prevailing party as part of the costs” in a suit filed under the federal Copyright Act. In this case, plaintiffs had contended that the defendants’ videopoker game infringed the plaintiffs’ source code. After the case had been pending for more than a year, plaintiffs filed a motion to dismiss, hoping to acquire better evidence in the future, and they asked the district judge to dismiss without prejudice. The district judge dismissed the case, but with prejudice. The defendants then applied for attorney’s fees under 17 U.S.C. § Spring 2008 Intellectual Property Update

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505. The district court denied that request, ruling that the defendants were not the “prevailing party” in the suit because the district court had not passed on the merits of the litigation. But, on appeal of that decision, the Seventh Circuit reversed and remanded the case for an award of reasonable attorney’s fees to the defendants. Explaining its decision, the Seventh Circuit found that an award on the merits was not necessary to confer “prevailing party” status on a defendant in a copyright infringement suit. The defendants were the prevailing party, said the Court of Appeals, because they obtained a favorable judgment, and the fact that this came about when the plaintiffs “threw in the towel” did not make the defendants any less the victor than if the district court judge had granted summary judgment or a jury had returned a verdict in the defendants’ favor. According to the Seventh Circuit, the plaintiffs sued; the defendants won; no more was required. Though the defendants were the “prevailing party,” the Court of Appeals also had to consider the question of whether this case was an appropriate occasion for an award of attorney’s fees, since 17 U.S.C. § 505 merely authorizes, and does not direct, a district court to award attorney’s fees to the prevailing party in a copyright infringement suit. The district court had observed that there were several reasons why the defendants might not be entitled to attorney’s fees in this case, including the fact that the judge had denied the defendants’ motion to dismiss the complaint before it was voluntarily dismissed, a decision by the defendants to reject an attempt at mediation in the case, and the defendants’ delay in responding to the plaintiffs’ discovery requests. But the Court of Appeals found that refusing to award attorney’s fees in this case was not an appropriate response to these developments, though the district court judge would have been within his rights to reduce the defendants’ award of attorney’s fees by any amount of fees incurred to frustrate or drag out discovery. In fact, the Seventh Circuit saw this case as being an especially good candidate for an award of attorney’s fees to the defendants because the plaintiffs, in settling another lawsuit between the parties previously filed by the plaintiffs based on the same alleged copyright violations, had agreed to submit similar future claims to alternative dispute resolution. By filing another suit, the plaintiffs had forced the defendants to bear the very expenses that the parties had agreed to avoid through alternative dispute resolution, and the Seventh Circuit ruled that the party responsible for creating such excessive legal costs should bear them itself in the end. Thus, the Seventh Circuit directed that the district court enter an award of reasonable attorney’s fees to the defendants, including legal fees incurred by the defendants in vindicating their rights on appeal. Source: Riviera Distributors, Inc. v. Jones, U.S. Court of Appeals for the Seventh Circuit, Nos. 06-2043 and 06-3692, February 20, 2008.

Section 43(a) of Lanham Act Applies to Company’s Deceptive Use of Franchisor’s Brand Name in Order to Position Itself As Middleman Between Suppliers and Franchisees The U.S. Court of Appeals for the Fifth Circuit has affirmed a

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lower court’s decision in favor of restaurant franchisor Schlotzsky’s, Ltd. on claims it brought against Sterling Purchasing and National Distribution Co., Inc. under Section 43(a) of the federal Lanham Act, based on allegations that Sterling made misleading representations to Schlotzsky’s suppliers and franchisees in order to position itself as a middleman between them, including the representation that Sterling had been designated by Schlotzsky’s as its exclusive supply chain manager. Schlotzsky’s argued that Sterling was never more than a non-exclusive supply chain manager. On appeal of a district court decision that enjoined Sterling from making continued misrepresentations and awarded attorney’s fees to Schlotzsky’s, Sterling contended that the district court rulings should be overturned because Section 43(a) did not apply to Sterling’s alleged conduct, as it did not involve trademark infringement. Sterling argued that the Lanham Act related only to trademarks, not to all commercial activities, and Sterling cited pronouncements by the Supreme Court of the United States indicating that the Lanham Act “should not be stretched to cover matters that are typically of no consequence to purchasers.” Analyzing the claims made by Schlotzsky’s, however, the Court of Appeals concluded that the reach of Section 43(a) was sufficient to encompass Sterling’s alleged deceptions, as Section 43(a) should be broadly construed to extend beyond mere trademark protection. In this case, the Schlotzsky’s claim was that Sterling damaged its goodwill and profited by deceptively claiming that it was solely authorized to act on behalf of Schlotzsky’s as a middleman between Schlotzsky’s franchisees and suppliers, thereby threatening the goodwill of the Schlotzsky’s brand with the plaintiff’s suppliers and causing confusion among Schlotzsky’s franchisees concerning the details of the association Sterling had with Schlotzsky’s. This deceptive use of the Schlotzsky’s brand name in an effort to further Sterling’s position in the marketplace violated the Section 43(a) prohibition against representations of fact that are “likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another….” Source: Schlotzsky’s, Ltd. v. Sterling Purchasing and National Distribution Co., Inc., U.S. Court of Appeals for the Fifth Circuit, No. 06-50720, March 5, 2008.

Award of Attorney’s Fees to Defendants in Trademark Infringement Suit Ruled Proper When Plaintiff Has Pursued Infringement Claims After Actual Notice That Such Claims Were Barred by Decision of U.S. Supreme Court in Dastar The U.S. District Court for the Southern District of New York has awarded attorney’s fees to the defendants in a trademark infringement suit based on the plaintiff’s continuing to pursue an infringement claim after a district court judge refused the plaintiff a preliminary injunction and found that the plaintiff’s trademark claim was not cognizable under the Lanham Act pursuant to the decision of the Supreme Court of the United States in Dastar Corp. v. Twentieth Century Fox Film Corp. The plaintiff was required to pay the defendants’ attorney’s fees incurred after the district court judge’s ruling on plaintiff’s motion for a preliminary injunction, which gave the plaintiff actual notice that its trademark infringe-

ment claim was without merit. In this case, plaintiff Contractual Obligations Productions, LLC sued defendants Cable Vision Systems Corporation and Rainbow Media Holdings, Inc., among others, alleging trademark infringement and other violations of the law arising from a decision by the defendants to produce a television series allegedly based on material the plaintiff had created as an independent contractor. The district court refused preliminary injunctive relief to the plaintiff, finding that the plaintiff’s trademark infringement claim was foreclosed by the ruling of the Supreme Court of the United States in Dastar. But the plaintiff continued to pursue its trademark infringement claim, along with other claims, in its suit against the defendants, prompting Cable Vision and Rainbow to move the district court for an order directing the plaintiff to pay the attorney’s fees incurred by the defendants in defending against plaintiff’s infringement claim. In the Dastar case, the Supreme Court of the United States held that the Lanham Act does not apply to claims arising out of a failure to attribute or credit the originator of a creative work. The district court in the suit filed by Contractual Obligations Productions, LLC found that this was essentially the nature of the trademark infringement claim pursued by the plaintiff. Furthermore, the district court held that the plaintiff’s continued pursuing of the infringement claim after the ruling on the motion for a preliminary injunction evidenced the type of bad faith that would support an award of attorney’s fees to the defendants. The district court, however, noted that there was no evidence of bad faith by the plaintiff in pursuing its trademark infringement claim prior to the decision by the district court on the motion for a preliminary injunction. Consequently, the plaintiff was held liable for the reasonable attorney’s fees incurred by the defendants in defending against the plaintiff’s trademark infringement claim after the ruling on the motion for a preliminary injunction, but not for the defendants’ attorney’s fees incurred in defending against the trademark infringement claim prior to that ruling. Source: Contractual Obligation Productions, LLC v. AMC Networks, Inc., U.S. District Court for the Southern District of New York, 04 Civ. 2867, March 25, 2008.

Prior Version of Product Can Be Considered as “Counterfeit” of Successor Product Under Lanham Act The U.S. District Court for the Eastern District of New York has held that a prior version of a product can be considered a “counterfeit” of its successor under the Lanham Act. The ruling came in a suit prosecuted by Johnson & Johnson Consumer Companies, Inc. against a group of companies that allegedly sold, distributed, and/ or marketed in the United States counterfeit skin bleaching products that resembled a line of products sold by the plaintiff under the “AMBI” trademark. When the suit was filed, the plaintiff’s AMBI products were manufactured in the United States for export to other countries. Prior versions of the plaintiff’s AMBI products, however, had been man-

ufactured in Jamaica until the Jamaican factory closed in 1997. Some of the defendants in this case argued that they could not be guilty of counterfeiting under the federal Lanham Act because the products they were selling were genuine AMBI products, albeit prior versions of current AMBI products that had been manufactured in Jamaica and acquired by the defendants. The district court, though, analogized this case to previously decided cases involving “gray market goods” and held that a prior version of the products could be considered a “counterfeit” of its successor if the successor was not intended to be sold in the United States and the prior version differed materially from the successor product. In this case, it was undisputed that the plaintiff and predecessors in interest never intended to sell the allegedly counterfeited AMBI products in the United States, although a predecessor in interest had sold other AMBI products there. Furthermore, while the defendants’ allegedly counterfeit products, to the untrained eye, were nearly identical to the products currently exported by the plaintiff, several differences in the packaging and composition of the allegedly counterfeit products, as compared to the plaintiff’s current products, were apparent upon closer examination. In determining whether the allegedly counterfeit versions of the plaintiff’s AMBI products differed materially from the actual, current versions of those products, the district court said that a material difference would be one that consumers would likely consider to be relevant when purchasing a product. Here, the allegedly counterfeit products contained only trace amounts of the active skin bleaching ingredient in the plaintiff’s products, as compared with a two percent level of that ingredient in the plaintiff’s goods. Furthermore, the packaging of the plaintiff’s products, but not the defendants’ products, bore expiration dates and batch codes, as well as various warnings to the consumer. These factors convinced the district court that the defendants’ allegedly counterfeit products were materially different from those of the plaintiff, as the district court viewed these differences as being potentially significant to customers. For the above reasons, the district court granted Johnson & Johnson summary judgment against some of the defendants with respect to the plaintiff’s Lanham Act claims, as well as related state law dilution and unfair competition claims. Because there were issues of fact not resolved with regard to other defendants, plaintiff’s motion for summary judgment against them was denied, and further proceedings were ordered to resolve those issues. Source: Johnson & Johnson Consumer Companies, Inc. v. Aini, U.S. District Court for the Eastern District of New York, No. 02-CV-6624, March 25, 2008.

Hearsay Testimony Cannot Be Admitted, Under Hearsay Exception Permitting Receipt of Out of Court Statements to Show Declarant’s “Confused” State of Mind, in Order to Show Actual Confusion and Likelihood of Confusion in Trademark Infringement Case The U.S. Court of Appeals for the Eleventh Circuit has rejected a lower court’s receipt of hearsay testimony in a trademark infringe-

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ment suit for the purpose of showing actual confusion and likelihood of confusion, finding that admission of such testimony was not permissible for that purpose under the hearsay exception allowing receipt of out of court statements for the purpose of showing the declarant’s “confused” state of mind. The ruling came in a dispute between private pilot organizations over the right to use the service mark “Angel Flight” to promote their services and solicit donations in the southeastern United States. Angel Flight Georgia claimed common law trademark rights in the Angel Flight mark and sued other organizations for infringement, as well as various related violations of state and federal law. A federal district court found in favor of Angel Flight Georgia on all claims, ruling, among other things, that Angel Flight Georgia established a likelihood of confusion by showing actual confusion in the relevant marketplace through testimony from two of plaintiff’s employees regarding the content of conversations they allegedly had with would-be donors and medical personnel, in which the donors reported misdirecting donations and the medical professionals reported problems with medical transportation because of a confusion between plaintiff and defendants. On appeal of the district court decision to the Eleventh Circuit, the Court of Appeals noted that the district court had received the evidence from the plaintiff’s employees under Federal Rules of Evidence 803(3), a hearsay exception permitting receipt of out of court statements for the purpose of showing the declarant’s “confused” state of mind. But, in its opinion, the district court recounted as fact the stories of actual confusion relayed by the plaintiff’s employees, and the Court of Appeals ruled that, by finding the incidents described to the employees by the out of court declarants had actually taken place, the district court used the statements as evidence of the truth of the matters asserted – a classic hearsay purpose. Disregarding the evidence of actual confusion considered by the

For all of the above reasons, the Court of Appeals concluded that the district court did not err by concluding that consumers were likely to be confused by the concurrent use of the Angel Flight mark in the same territory by both the plaintiff and the defendants. The Court of Appeals then went on to affirm the district court’s ruling for the plaintiff on all counts and its issuance of injunctive relief, as well as cancellation of a federal trademark registration for a logo containing the Angel Flight mark, which was found to have been obtained by a predecessor in interest to one of the defendants through fraud on the Patent and Trademark Office. That fraud included providing an incorrect date of first use in connection with the registration application and failing to disclose knowledge that the plaintiff and other organizations throughout the United States had been rightfully using the Angel Flight mark prior to the registration application date. Source: Angel Flight of Georgia v. Angel Flight America, U.S. Court of Appeals for the Eleventh Circuit, No. 07-11460, April 4, 2008.

This newsletter provides information on current legal issues. However, that information should not be construed as legal advice or opinion in particular situations or applications.

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district court, however, the Court of Appeals found that there was ample evidence to support the district court’s ultimate finding that confusion in this case was likely, as the defendants had used the same mark the plaintiff had used in the southeastern United States for over 20 years and had used it for the same services provided by the plaintiff, namely, public benefit flying. Furthermore, the plaintiff and the defendants had targeted the same consumers in conjunction with those identical services and had used identical advertising methods, namely, radio, television and fundraisers, and the district court had found that the defendants had intentionally exploited the goodwill associated with the plaintiff’s common law mark.

Spring 2008 Intellectual Property Update

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