By: Scott Hervey

Chipotle’s entry into the burger business has a Boston based small burger chain up in arms.  The Boston burger spot, which has been in operation since 2010 and goes by the name Tasty Burger, has a beef with the brand Chipotle has chosen for its restaurants, Tasty Made.SHervey

Tasty Burger claims that Chipotle brand infringes on its trademark,  Despite a cease and desist letter and public threats of a lawsuit, Chipotle has publicly stated that it “fully intend(s) to move forward with the name Tasty Made for our burger restaurant and strongly believe that we are on solid footing in doing so.”

Why might Chipotle feel – or claim to feel – so secure in its brand choice.  Tasty Burger has superior common law rights; it has been using its mark since July 2010.  Additionally, Tasty Burger applied for a Federal trademark registration in December 2010 and was granted federal registration for its trademark in 2012.  On first blush, it seems that Tasty Burger has a strong case.  However, things may not be as they seem.

During the registration process for Tasty Burger’s trademark, the United States Patent and Trademark Office refused to register the trademark for Tasty Burger on the Principal Register because it is merely descriptive.  A mark is merely descriptive if it describes an ingredient, quality, characteristic, function, feature, purpose or use of the specified goods and/or services.  The trademark examiner assigned to the Tasty Burger application argued as follows:

In the present case, applicant is using the mark TASTY BURGER, stylized, and design, in connection with “Restaurant services.”   As indicated in the initial Office action, the wording TASTY BURGER describes good tasting hamburgers, an item presumably offered in applicant’s restaurants.  See the definitions enclosed with the initial Office action.

In addition, the applied-for mark shows the wording in stylized lettering.  However, the degree of stylization in this case is not sufficiently striking, unique or distinctive so as to create a commercial impression separate and apart from the unregistrable components of the mark.  See In re Sambado & Son Inc., 45 USPQ2d 1312 (TTAB 1997); In re Bonni Keller Collections Ltd., 6 USPQ2d 1224 (TTAB 1987). Furthermore, the design consists of a common geometric shape and merely functions as a background carrier for the word portion of the proposed mark.  Accordingly, the entire mark must be deemed to be merely descriptive.

In response to the refusal to register, Tasty Burger abandoned its request for registration on the Principal Register and sought registration on the USPTO’s Supplemental Register.  Marks that do not meet the Principal Register’s requirement of being inherently distinctive but that otherwise meet the technical requirements for registration are registrable on the Supplemental Register.  The benefits and protections for marks registered on the Supplemental Register do not compare to those granted to marks registered on the Principal Register.  Registration on the Principal Register is prima facie evidence of the mark owner’s exclusive right to use the mark nationwide in connection with the goods or services set forth in the registration.  The Supplemental Registration provides no such benefits; the owner of a mark registered on the Supplemental Register must rely on common law rights and must also prove that their mark actually functions as a trademark.

So is Tasty Burger’s claim cooked?  Maybe not.  Merely descriptive trademarks may become protectable through “acquired distinctiveness” or “secondary meaning.”  These are legal concepts by which a term that is descriptive may, through use, has become distinctive of the owner’s goods or services.  One of the ways a mark owner may establish secondary meaning is by showing exclusive and continuous use in commerce for the five years.

Tasty Burger has been using its mark since 2010.  As such, it will be able to establish a prima facie case that its mark is distinctive.  This in and of itself does not mean that Tasty Burger will be able to establish likelihood of confusion; a mark can be distinctive and still be highly suggestive and entitled to little protection.  In order to establish greater protection, Tasty Burger must introduce other evidence of acquired distinctiveness such as declarations from its customers, its advertising and promotional activities and market research and consumer reaction studies.

Tasty Burger will have a strong position to argue that the Chipotle Tasty Made burger chain will infringe its common law rights in its Boston and Washington, DC locations.  Tasty Burger can take certain immediate actions that may increase its strength and leverage but whether Tasty Burger will prevent Chipotle from opening Tasty Made throughout the rest of the US remains to be seen.

 

When fashion fuses with high tech, we see our friends show up with trendy wearables, such as smart watches, fitness bands, and even high-tech, designer purses.  But, trendiness aside, wearables raise numerous questions for designers, manufacturers and consumers relating to intellectual property, data privacy and data security.  For example, how does a company protect the technology for its latest smart watch?  Should they rely on patents, trademarks, copyrights or something else?  Who owns the rights to a designer tote with an embedded charging station—the fashion designer or the circuit designer?  Is your employer allowed to collect location and health data via sensor-infused fabric in your work uniform to improve productivity and wellness?  What happens when your fitness band is hacked, revealing personal health data that makes its way to your insurance company?  Can they raise your rates upon learning you have high blood pressure and have stopped working out?Jo-Dale-Carothers-015_web

The questions are unending and some answers are still unclear because laws, courts and contracts have not necessarily caught up with advances in this technology.  Further, the fashion and high tech industries have traditionally approached IP protection differently due to the different nature of their products.  Meanwhile, we have seen high-tech industry leaders (e.g., Apple, Fitbit, and Google’s parent, Alphabet), as well as non-practicing entities, actively amassing patents relating to wearables.  This indicates that licensing and litigation will soon escalate as new wearable products arrive in the marketplace.  We have already seen patent litigation related to products such as Ralph Lauren’s Ricky bag, which has an illuminable interior and charger for electronic devices, and Adidas and Textronic’s shirt with special fibers for sensing vital signs and communicating them to a smartphone.  But merely taking off-the-shelf electronics and making them “wearable,” may not be patentable.  Therefore, companies should consider combining patents on novel innovations that make the electronics wearable with other forms of IP protection for appearance, branding and expression to effectively protect their wearable technology.

Despite its recently soaring growth, wearable technology is not new.  For example, the first electronic hearing aid was constructed well over a hundred years ago.  By the 1980s, we saw digital watches with built-in calculators.  But constraints on size, power, weight, etc., limited the development and adoption of early wearable products.  Now, advances in technology have broadened current applications to include fitness, communication, medical monitoring and more.  In addition, tech companies have learned that widespread adoption of wearables requires that these high-tech accessories fit with current fashion trends.  No one wants to wear something that is clunky and doesn’t match their fashion sense or personality, right?  As a result, tech companies have teamed up with designer brands and hired experts from the fashion industry to co-develop and market wearables.

Today, wearables offer convenience and the potential to monitor and/or increase wellness, safety, productivity, sleep, etc.  But the wearer is often not the only one with access to the data collected, which raises privacy concerns and issues regarding data security.  For example, companies often make a wearer sign up for an account or load an app on a phone to use the wearable.  Then these companies collect, process, and perhaps back up the data along with the wearer’s account information.  These companies could share this information with advertisers who then target the wearer with ads for specific products based on current or past location, health statistics, exercise habits, etc.  We see this user-specific advertising on our phones and computers every day.  For example, since I recently searched for information on a particular car, ads for that car and similar cars are showing up when I use Facebook, browsers and other apps.  This example is rather benign, albeit a little annoying given that I already purchased the car I wanted.

But not all examples are so benign.  Now advertisers and others not only have information on your recent Google searches, but may also be able to gain real-time statistics and other information about your stress level, heart rate, blood pressure, location, etc.  The risks associated with dissemination of your health, location, and financial data are much higher than the mere sharing of information about a car you are interested in purchasing.  These risks also raise additional liability concerns for companies if the data is stolen or misused.  Therefore, it is crucial that companies safeguard against data breaches and understand the privacy rights of their employees and customers.  Some companies are even purchasing cyber insurance as protection against data breaches.  But merely having an insurance policy is not enough.  If your company doesn’t have the proper safeguards in place, such as updated security patches and practices, then the insurance company may not have to pay.

To advise clients in this area, attorneys must be knowledgeable about the technology and the integration of technology with fashion, as well as the legal issues surrounding IP, data privacy and data security.  For a particular client and product, it is critical to develop an integrated approach that effectively provides protection via a combination of utility and design patents, trade secrets, copyrights, trademarks and where appropriate, the lesser-used trade dress protection.  The goal is to use the appropriate IP mechanisms to protect all facets of wearable technology, including the electronics, software, functionality, packaging, marketing materials, appearance and the branding associated with it, while avoiding liability from breaches of data privacy or security.

James-Kachmar-08_webCrazy Horse was a legendary Native American chief of the Oglala Lakota tribe who lived during the second half of the 1800s.  Unfortunately today, his name may be more familiar as a brand for various products, such as motorcycle gear, whiskey, rifles and strip clubs.  In Russell Road Food & Beverage, LLC v. Spencer, et al., the Ninth Circuit was faced with the issue of the assignability of the trademark “Crazy Horse” in a lawsuit between two strip club operators in Las Vegas, Nevada.

In Paris in 1951, Alain Bernardin, opened the infamous “Crazy Horse Saloon.”  Since that time, the “Crazy Horse” mark has seen numerous trademark battles beginning in 1967 London.  During the 1970’s, Crazy Horse night clubs opened throughout the United States, from Alaska to Florida.

In January 2006, a strip club owner from the Carolinas, Carl Reid, successfully registered the “Crazy Horse” and “Pure Gold’s Crazy Horse” marks with the USPTO for “entertainment services, namely, exotic dance performances.”  Years later, Russell Road and Spencer each attempted to register their respective “Crazy Horse” marks for their strip clubs but the USPTO rejected both of them on the grounds of “a likelihood of confusion with the Reid’s previously registered marks.”  Russell Road and Spencer then pursued different methods to secure the right to use the “Crazy Horse” mark.

Russell Roads obtained the right to use the “Crazy Horse” mark through an agreement with another strip club operator of the “Crazy Horse Too” clubs in Las Vegas.  In September 2007, the owner of that club sought to register the mark “Crazy Horse Too” but like the other “Crazy Horse” marks, the USPTO rejected it. Crazy Horse Too initiated a cancellation proceeding to which Reid, the original owner of the “Crazy Horse” mark, failed to timely respond.  A default was entered but before a default judgment could be rendered in favor of Crazy Horse Too, Reid and the owner of Crazy Horse Too agreed to resolve the dispute through a trademark co-existence agreement.  Under that agreement, Crazy Horse Too agreed to withdraw its challenge to the “Crazy Horse” mark and Reid consented to Crazy Horse Too’s “use and registration” of “any mark that includes the phrase Crazy Horse provided the mark does not contain the phrase pure gold.”  In 2011, Crazy Horse Too encountered financial difficulties and was dissolved.  A year later, Russell Road bought Crazy Horse Too’s rights under the trademark co-existence agreement for $2,500.

Spencer, on the other hand, went straight to the source. In August 201, Spencer formed Crazy Horse Consulting, Inc. (“CHC”) for the purpose of expanding the “Crazy Horse” brand. Later that year, Reid assigned his rights in the “Crazy Horse” trademark to CHC and the assignment was registered with the USPTO.

Following the registration, Spencer learned that Russell Road had a strip club in Las Vegas called Crazy Horse III.  Spencer notified Russell Road that its use of the “Crazy Horse” mark infringed on his trademark rights.  Rather than seeking a license from Spencer, Russell Road entered into a further assignment agreement with the former owner of Crazy Horse Too whereby Crazy Horse Too assigned all of its rights to Russell Road under the September 2009 trademark co-existence agreement.

Russell Road then filed suit against Spencer seeking a declaratory judgment that its use of the “Crazy Horse” mark did not infringe on Spencer’s trademark.  The lower court granted summary judgment to Russell Road finding that it had the right to use the “Crazy Horse” mark under a valid trademark co-existence agreement.  Spencer and CHC appealed that decision to the Ninth Circuit.

The Ninth Circuit began by recognizing that it was undisputed that a trademark owner could assign his or her trademark citing 15 U.S.C. §1060(a)(1).  Furthermore, when a trademark is assigned, the assignee “steps into the shoes of the assignor.”  This means that the assignee not only acquires all of the assignor’s rights, but also assumes any “burdens or limitations” on the use of the mark.  In addition to recognizing the assignability of trademarks, the Ninth Circuit observed that trademark co-existence agreements have long been enforceable.  Furthermore, like other contracts, trademark co-existence agreements could be assignable.

The Ninth Circuit found that the facts showed that it was undisputed that there was a valid trademark co-existence agreement between Reid and Crazy Horse Too.  The Court found that the undisputed evidence showed that Crazy Horse Too had lawfully assigned its rights under that co-existence agreement to Russell Road. Given that Russell Road had obtained the rights that Crazy Horse Too owned, Spencer and CHC had a duty to Russell Road by way of its obligations to Crazy Horse Too “not to oppose each other’s use of the Crazy Horse mark, to make reasonable steps to reduce the likelihood of confusion and so on.” The Ninth Circuit found it significant that the trademark co-existence agreement made it explicit that it would “be binding upon and shall inure to the benefit of the parties hereto, their respective successors, assigns, and licensees.

The Ninth Circuit then turned to various arguments raised by Spencer and rejected each of them in turn.  First, the Ninth Circuit found that the assignment of the trademark rights from Crazy Horse Too to Russell Road was supported by adequate consideration in that Russell Road had paid $2,500 for the assignment.  Next, Spencer argued that because Crazy Horse Too was not using the mark it had essentially “abandoned” it.   The Ninth Circuit found that even if Crazy Horse Too was not using the mark, this did not invalidate the trademark co-existence agreement.  That agreement had no requirement that Crazy Horse Too actually use the mark and therefore the “trademark abandonment” doctrine did not apply.  Spencer also argued that Crazy Horse Too could not assign its rights to Russell Road without Spencer’s consent but the Ninth Circuit rejected this argument finding that Spencer had not raised it with the lower court.

The Ninth Circuit affirmed the lower court’s summary judgment in favor of Russell Road and found that it had properly concluded that there had been a valid assignment of the rights under the trademark co-existence agreement between Reid and Crazy Horse Too.  The Russell Road case is a reminder that parties facing claims of trademark infringement should determine whether there is any basis for their use of a mark, such as through a valid assignment or trademark co-existence agreement.

James Kachmar is a shareholder in Weintraub Tobin Chediak Coleman Grodin’s litigation section.  He represents corporate and individual clients in both state and federal courts in various business litigation matters, including trade secret misappropriation, unfair business competition, stockholder disputes, and intellectual property disputes.  For additional articles on intellectual property issues, please visit Weintraub’s law blog at www.theiplawblog.com.

In Warsaw Orthopedic, Inc. v. NuVasive, Inc. (June 3, 2016) 2016 U.S. App. LEXIS 10092, the Federal Circuit Court of Appeals broadly interpreted the Supreme Court’s test for induced infringement, finding irrelevant the defendant’s belief that there was no infringement.

Warsaw and a related company, Medtronic, sued NuVasive for patent infringement.  NuVasive counterclaimed against Warsaw and Medtronic for infringement of its patent.  NuVasive’s patent covered methods used during surgery to detect a nerve and determine the distance to the nerve.  NuVasive alleged that Medtronic manufactured a device that surgeons used to directly infringe the method claims of NuVasive’s patent, and that Medtronic induced the surgeons’ infringement.  Medtronic contended that it had not induced infringement because it had a reasonable belief, under Medtronic’s narrow construction of the claims, that the device did not perform the claimed method.Audrey Millemann 03_web

The case was tried in the district court for the Southern District of California.  The court instructed the jury on the requirements for proving induced infringement, under 35 U.S.C. section 271(b), as set forth by the Supreme Court in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011). Under Global-Tech, induced infringement requires proof that the defendant knew of the plaintiff’s patent and knew that the acts it induced were infringing.  Global-Tech also held that a plaintiff can prove the defendant’s knowledge that the induced acts were infringing by proof of the defendant’s willful blindness, which can be proved by circumstantial evidence.

At trial, the jury found that Medtronic had induced infringement of NuVasive’s patent by instructing the surgeons on the use of Medtronic’s device.  On appeal, the Federal Circuit affirmed the jury’s verdict.  The Supreme Court then decided Commil USA, LLC v. Cisco Systems, Inc., 191 L. Ed. 2d 883 (2015), which confirmed the Global-Tech test for induced infringement.

Medtronic filed a petition for certiorari in the Supreme Court, seeking an order vacating the Federal Circuit’s decision and remanding the case for further consideration under Commil.  In particular, Medtronic argued that NuVasive had not proved that Medtronic knew that the surgeons’ acts it induced were infringing.

The Supreme Court granted certiorari and remanded the case to the Federal Circuit.  On remand, the sole question before the Federal Circuit was whether NuVasive had produced substantial evidence that Medtronic knew, or was willfully blind to the fact, that the surgeons using their device infringed NuVasive’s patent.  Medtronic argued that it did not believe its device infringed the patent and that this belief negated the specific intent required for a finding of knowledge.

The Federal Circuit disagreed and affirmed its original decision.  The court held that Medtronic’s belief was objectively unreasonable, and that there was substantial evidence that Medtronic knew (or was willfully blind to the fact) that the surgeons infringed NuVasive’s patent.  In a concurring opinion, however, one of the judges pointed out that the majority based its conclusion solely on the evidence of direct infringement (that the surgeons’ use of the device performed the claimed method), not on any evidence of Medtronic’s knowledge or willful blindness.

This case appears to be a warning – if you think you may be inducing infringement of a patent, relying on your “reasonable” belief that there is no underlying direct infringement is a bad idea!

 

Super Lawyers has released its Northern California, Southern California, and San Diego lists of outstanding attorneys for 2016, on which 33 Weintraub Tobin attorneys have been included. Three Weintraub Tobin attorneys received special honors in their respective regions. To learn more, click here: http://bit.ly/29Wsut4

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