The Ninth Circuit recently considered an issue of first impression: What standard of review does an appellate court apply when reviewing a district court’s grant of summary judgment in a trademark infringement case on the equitable basis of the unclean hands doctrine. The Ninth Circuit faced this issue in the case titled: Metal Jeans, Inc. v. Metal Sport, Inc. (decided Feb. 16, 2021).

In the Metal Jeans case, Gary Topolewski owned Metal Jeans and was the former owner of Topolewski America, Inc. (“TA”). He had been selling “METAL” branded clothing since the early 1990s, primarily through hard rock music magazines. He gradually expanded his offerings to a variety of markets, including motorcyclists, skaters, lumberjacks and “headbangers.”

In 1999, he registered the “METAL” mark on TA’s behalf for use on various clothing items, including jeans, shirts and boots. Six years later, Topolewski told the USPTO that TA had continuously used the METAL mark on these various items since 1999. This was apparently untrue and in a separate 2008 proceeding, the PTO concluded that this was a false statement, at least as to boots, and cancelled TA’s registration of the METAL mark. Topolewski almost immediately reapplied for the mark, this time through Metal Jeans, which obtained the “METAL” registration in 2013.

Metal Sport was started by a retired Finish power lifter and specializes in power lifting apparel, gear and accessories. The owner created a stylized “METAL” mark that he registered in August 2016 and used for power lifting apparel and gear that he marketed. He apparently drew and began using the stylized “METAL” mark sometime around 1997.

Metal Jeans sued Metal Sport for trademark infringement in 2015 claiming that the use of its stylized “METAL” mark created a likelihood of consumer confusion between the two marks. Both parties moved for summary judgment and the district court granted Metal Sport’s motion on the basis of the affirmative defense of unclean hands. Metal Jeans timely appealed to the Ninth Circuit.

The Ninth Circuit began by recognizing that normally a grant of summary judgment by a district court in a trademark infringement claim is reviewed “de novo with all reasonable inferences drawn in favor of the non-moving party.” The Ninth Circuit also recognized that grants of equitable relief, on the other hand, are generally reviewed under an abuse of discretion standard. The doctrine of unclean hands is based in equity and is a form of equitable relief. The Ninth Circuit noted that it had decided two prior cases involving summary judgment on the issue of unclean hands but neither decision addressed the specific standard of review that would apply.

The Ninth Circuit continued by noting that a number of cases had recognized the general principle that other equitable doctrines such as acquiescence and/or laches should be analyzed under an abuse of discretion standard. The Ninth Circuit reasoned that it was “a modest and obvious step to extend these previous holdings to the present situation,” i.e., to the application of the unclean hands doctrine. The Ninth Circuit concluded that “the appropriate standard of review of a district court’s determination to grant summary judgment on the affirmative defense of unclean hands is abuse of discretion.” The Ninth Circuit noted, however, that other aspects relating to the granting of summary judgment would continue to be reviewed under a de novo standard, such as “whether the district court inappropriately resolved any disputed material facts in reaching its decision.”

In a separate unpublished memorandum that it issued simultaneous with the opinion discussed above, the Ninth Circuit concluded that the district court had erred in granting summary judgment on the basis of unclean hands. In that memorandum, the Ninth Circuit recognized that, “to constitute unclean hands, a defendant must show (1) that the plaintiff’s conduct is inequitable and … (2) relates [directly] to the subject matter of its claims.’” The Ninth Circuit next reviewed the six examples of the alleged misconduct that the district court relied upon in finding that unclean hands should apply. These included: (1) Metal Jeans’ various accounts of how it acquired the mark; (2) Metal Jeans’ representation that it had owned the “METAL” mark at the time TA had in fact owned it; (3) Topolewski had apparently advised the PTO that Metal Jeans was a “premium denim lifestyle clothing brand,” which may not have been accurate; (4) Metal Jeans apparently sourced some of its products from China despite having a “American made, American worn” slogan; (5) Topolewski testified inconsistently as to how he had assigned the goodwill and trademarks between TA and Metal Jeans; and (6) Topolewski’s apparent false statement to the PTO that had led to the cancellation of the mark in 2008.

The Ninth Circuit continued by holding that the district court had improperly resolved several disputes of material fact as to the first five examples in the movant’s favor as opposed to the non-moving party. Furthermore, the Ninth Circuit held that five of the six examples did not “necessarily relate directly to the trademark claim Metal Jeans asserts in this case;” did not appear to cause any harm; and did not evidence any malintent by Metal Jeans. The Ninth Circuit noted that although a jury could later find that each of these examples did evidence unclean hands (as the district court found in ruling on summary judgment), the Ninth Circuit ruled that it was equally likely that the jury could reach other reasonable conclusions. Thus, the Ninth Circuit held that the district could had erred in grating summary judgment on the basis of unclean hands.

Parties litigating trademark claims need to remember in moving for summary judgment and subsequent appeals, which standard of review the appellate court may apply as to certain issues, especially as to equitable defenses.

The validity of a United States patent can be challenged in federal court litigation.  Patents can also be challenged in the U.S. Patent and Trademark Office, which, in most cases, is a quicker and less costly process.

The PTO provides three procedures by which a patent can be challenged: inter partes review (IPR), post grant review (PGR), and ex parte reexamination.  In IPRs and PGRs, the challenger and the patent owner both participate, and the proceedings are handled by the Patent Trial and Appeal Board (PTAB).  In an ex parte reexamination, the challenger is not involved after the request for reexamination has been filed, and the proceeding is handled by the PTO examiners.

In IPRs and PGRs, anyone except the patent owner may file a petition to challenge the patent.  The filing fees are high, $41,500 for an IPR and $47,500 for a PGR, with additional fees depending on the number of claims challenged.  The proceedings are handled by a three-judge panel of administrative judges with technical background in the field of the patent.  There are two phases in these proceedings.  The first phase consists of the filing of the petition by the challenger, the filing of a response by the patent owner, and the decision whether to institute the IPR or PGR by the PTAB.  If the PTAB institutes the IPR or PGR, then the second phase (the trial phase) begins.  The second phase consists of discovery (more limited than in litigation), briefing, an oral hearing, and a final written decision by the panel.  The entire process from institution to the final decision should take no more than 12 months.  The parties may appeal the decision to the Federal Circuit Court of Appeals. Continue Reading How to Challenge a Patent in the PTO

On March 16, 2021, U.S. Circuit Judge Evan J. Wallach for the Federal Circuit Court of Appeals announced he plans to take senior status on May 31, 2021.  This semi-retirement is set to create the first vacancy at the Federal Circuit in almost six years.  The Federal Circuit handles all appeals of patent cases from Districts Courts in the U.S., and appeals from various government agencies.  Thus, the Federal Circuit is the only one of the thirteen federal courts of appeal whose jurisdiction is determined entirely on the subject of the lawsuit it hears, rather than on the geographical location from which the appeal originated.  This means the Federal Circuit can hear appeals from every District Court in the United States as long as it has subject matter jurisdiction. The only court in the United States with more authority over patent related issues in the United States Supreme Court.

The Federal Circuit was the only federal court of appeals that did not have any vacancies during President Donald Trump’s administration.  In fact, President Trump nominated and succeeded in putting a judge in every other appellate court during his four years in office, including fifty-four judges on the federal appeals bench.  However, the Federal Circuit remained untouched, and in fact currently has eight Democratic-President appointed judges, and four Republican-President appointed Judges. Continue Reading Federal Circuit Set to Have First Vacancy in Six Years

We recently discussed a new trend in celebrity copyright litigation on our YouTube channel and podcast (The Briefing on YouTube). Specifically, we discussed celebrities taking a stand and defending copyright claims brought by photographers against celebrities who reposted photos on their social media accounts. Two specific celebs who have taken a stand are Emily Ratajkowski and LeBron James. I am writing today to discuss what may be a new strategy in such copyright litigation. That strategy is defaulting.

When a party is sued in federal court—the exclusive jurisdiction for copyright actions—they have 21 days from the date of service to file a responsive pleading under Federal Rule of Civil Procedure 12(a)(1)(B). If a defendant fails to file a response, the plaintiff can apply to the court for entry of default under Federal Rule of Civil Procedure 55(a). Unless the defendant files an untimely response, the court will likely enter the defendant’s default. Once that occurs, the defendant is deemed to have admitted the well-pleaded allegations of the complaint. The plaintiff can then apply to the court for entry of default judgment. In doing so, the plaintiff requests that the default judgment include all damages that the plaintiff claims to have incurred, attorney’s fees (if applicable), and costs. Of course, the plaintiff has to provide factual and legal support for the damages request. Obviously this isn’t an ideal situation for a defendant given that the plaintiff gets to provide uncontested evidence to the court to support its damages claim while the defendant is deemed liable due to the entry of default. If you ask most attorneys, they would tell you that defaulting is never advisable, unless perhaps you’re judgment proof. But a recent ruling from the United States District Court for the Southern District of New York may cause some attorneys to rethink things.

In the matter of Clint Brewer v. Sofia Vergara Enterprises, Inc. and Sofia Vergara (collectively, “Vergara”) (Docket No. 1:20-cv-4865-AKH), a photographer who licensed a photo that he took of Vergara walking onto the set of America’s Got Talent sued Vergara for copyright infringement after she reposted the photograph on her Instagram account to her 21.2 million followers. Brewer hired the infamous copyright troll Richard Liebowitz, who has been repeatedly sanctioned by the federal courts for filing frivolous litigation and who was recently suspended from practicing law in New York, pending a disciplinary investigation. In short, Brewer claimed that Vergara published his copyright-protected photograph to promote her clothing brand—which she arguably did since she tagged Wal Mart and mentioned her clothing line in the caption. Brewer’s prayer for relief included a claim for $150,000 in statutory damages under the Copyright Act and additional damages under the Digital Millennium Copyright Act for removing the copyright notice. Despite a significant request for damages, Vergara never responded to the complaint. It’s unclear whether this was intentional, but presumably it was given Vergara’s familiarity with litigation.

As a result of Vergara’s failure to respond, the Court entered her default, and Brewer subsequently moved the court for a default judgment. Although Brewer alleged that he was seeking up to $150,000 in statutory damages, his motion only sought $5,000 in statutory damages, $455 in attorney’s fees, and $440 in costs. In determining statutory damages, the court has great discretion to award between $750 and $150,000 per work, depending on whether the infringement was willful.

On February 18, 2021, the court issued its order and entered default judgment. The court exercised its discretion and awarded a mere $750 in statutory damages for the copyright infringement claim and refused to award attorney’s fees and costs. Given the amount in controversy for a violation of the Copyright Act, this is a great outcome, and it’s exponentially better when you consider that Vergara didn’t spend a dime in attorney’s fees or costs, which easily could have exceeded six figures if the matter were contested.

While this was a fantastic outcome for Vergara, I can’t say that I’ll be inclined to suggest to my clients that they simply default in such cases. The risk of doing so is far too great. Sure, the court in the Vergara case found that her conduct wasn’t willful, awarded the statutory minimum in damages, and refused to award attorney’s fees and costs. But it was also possible that a judge could have deemed her conduct willful and awarded the statutory maximum of $150,000 and attorney’s fees and costs. In this instance, the gamble paid off, and I will unquestionably inform my clients of this outcome, but I will not be the one to recommend the default strategy. If a client chooses to roll the dice after being provided with a thorough explanation of the possible outcomes, that is their prerogative. But flatly recommending such a course of action seems imprudent.

While Shakespeare may have wondered “what is in a name?”, the executives at Peloton believe that the trademark SPIN is of great importance. Last month (February, 2021), Peloton filed petitions to cancel the trademarks SPIN and SPINNING for physical fitness instruction and for stationary exercise bicycles on the grounds that the marks are generic. Mad Dogg Athletics, located in Venice, CA, is the owner of the trademarks SPIN and SPINNING. Mad Dogg registered SPIN on the principal register in 1998 and SPINNING in 1993. In its petition, Peloton asserted that Spin classes and spin bikes are part of the fitness lexicon and that Mad Dogg’s trademarks for SPIN and SPINNING have become generic. Peloton cited to Internet evidence, including memes, to support its argument that the terms SPIN and SPINNING have become generic.

It is a serious issue for a trademark owner if their trademark becomes generic.  Generic terms are terms that the relevant purchasing public understands primarily as the common or class name for the goods or services. Put in common parlance, if the general public primarily understands the word to designate the product rather than the producer, the word is generic. Generic terms are incapable of functioning as registrable trademarks denoting source, and are not registrable on the Supplemental Register or on the Principal Register after having acquired secondary meaning.

There is a two-part test used to determine whether a designation is generic: (1) What is the class of goods or services at issue? and (2) Does the relevant public understand the designation primarily to refer to that class of goods or services? The test turns upon the primary significance that the term would have to the relevant public. Continue Reading SPIN Trademark Has Peloton Wrapped Around the Axel