The Basics: What is Protected? - ASIPI

Intellectual Property in the
Fashion Industry
ASIPI 2013
Presented by
•Theodore C. Max
•Sheppard Mullin Richter & Hampton LLP
•tmax@sheppardmullin.com
Anthony V. Lupo
Arent Fox LLP
avlupo@arentfox.com
December 4, 2013
Hot Topics
 IP Protection
 Copyright Protection
 Trademark and Trade Dress infringement
 Patent Infringement
 Counterfeit
 ITC
 Right of Publicity
 Advertising & Media
 Endorsements & Testimonials
 Privacy & Data Collection
2
The Basics: What is Protected? Copyright Laws
Historical Background:
 Knockoff designs were a problem in the early 1920s and
1930s for the growing fashion and apparel industry.
 Fashion Originator’s Guild of America formed in 1932 to
combat design piracy.
 The Guild consisted of garment manufacturers and
retailers who dealt with and used the products of
fashion designers.
 To eradicate design theft, retailers and manufacturers
pledged to only deal in original creations.
 If a retailer refused or failed to follow Guild provisions,
the retailer was put on "red card" which listed noncooperating retailers. Other members were forbidden to
deal with red-carded retailers
 In 1936, The Guild controlled 60% of the dress market
selling for $10.75 or more, but only 38% of $6.75 and up
dress market.
•3
Historical Background: What is Protected?
Copyright Laws
United States Supreme Court Outlaws The Guild
Fashion Originator’s Guild of America v. FTC, 312 U.S. 451, 461-62 (1941).
Holding: Pirating of designs does not justify a combination which restrains trade
and possibly influences prices.
The U.S. Supreme Court found:
• “[T]he reasonableness of the methods pursued by the [Guild] to
accomplish its unlawful object is no more material than would be the
reasonableness of the prices fixed by unlawful combination.” 312 U.S.
at 468;
• “Nor can the unlawful combination be justified upon argument that
systematic copying of dress designs is itself tortious, or should now be
declared so by us...[E]ven if copying were an acknowledged tort
under the law of every state, that situation would not justify
petitioners in combining together to regulate and restrain interstate
commerce in violation of federal law.” Id.
•4
The Basics: What is Protected? Copyright Laws
Copyright Protection
 What can be Copyrighted:
• Original works of authorship fixed in a tangible medium.
 What is Protected:
• Visual or sculptural works are protectable as are sound recordings,
audiovisual works, motion pictures and software programs. The design
must be separable from its utilitarian aspects.
 NOTICE: © Design LLC 2008.
 Advance Registration is Prerequisite:
• For Statutory damages, costs and attorney fees. Needed in some
jurisdictions to bring legal action. 17 U.S.C. § 504(c).
 Issues to be Careful About:
• Where did the design come from and can you show independent
creation? Keep evidence of creation and documentation, if work-madefor-hire or independent contractor.
•5
The Basics: What is Protected? Copyright Laws
Copyright Protection
• Registration Provides:
• Basis for filing copyright infringement claims in Federal Court.
• Protection of embodiment of an idea (especially visual art and
sculptural works).
• Evidence of validity and ownership, as well as exclusive right to grant
exclusive license to copyrighted works.
• For works created after January 1, 1978: Valid for life of author plus
70 years. For work-made-for-hire: 95 years from publication or 120
from creation, whichever is shorter.
•6
The Basics: What is Protected? Copyright Laws
•7
Current
Copyright
Case
Law
Photographer Sabine Liewald sues Apple stating that
her “Eye Close-Up” photograph was infringed at the
launch of the Apple Retina MacBook Pro in June
2012. Parties settled case on January 2, 2013.
•8
Jovani Fashion,
Ltd. V. Fiesta
Fashions:
Second Circuit
Current
Copyright
Case
Law
held in a summary opinion that the prom dress artwork of
sequins and bead patterns on the bust of the Jovani dress
lacked copyrightable elements and dresses not
protectable as useful articles. Aesthetic and functional
elements were inseparable.
•9
Design Protection: Amending the Copyright Act?
Protection Against Design Piracy
 Why are current intellectual property
provisions insufficient to adequately
protect fashion designs?
• Copyright
• Trademark (Trademarks, Service
Marks, and Trade Dress); and
• Design Patent
•10
Design Protection: Amending the Copyright Act?
Design Protection in Europe
 France affords broad copyright
protection, extending to “all works of
the mind, whatever their kind, form
of expression, merit or purpose”,
including “creations of the seasonal
industries of dress and articles of
fashion.” French I.P.C., Article L 1121-2

1994 Societe Yves Saint Laurent
Couture S.A. v. Societe Louis Dreyfus
Retail Mgmt. S.A., 1994 E.C.C. 512
(Trib. Comm. (Paris)).
 Great Britain and the European
Community also afford protection of
fashion designs.
•11
Design Protection: Amending the Copyright Act?
The Arguments for Design Protection:
 Promotes creativity by providing protection for creators;
 Protects fledgling designers in particular;
 Evens the field with foreign designers (EC Design Protection);
 Disrupts counterfeiting using imported unlabeled imitations; and
 Avoids distortion of current copyright and trade dress law.
The Arguments Against Design Protection:
 Stifles creativity by providing too much protection and threat of liability;
 Fashion is driven by past styles;
 Mass copying creates design obsolescence, which spurs further fashion creativity;
 Knock-offs provide less expensive copies and have economic utility; and
 Induced obsolescence and anchoring
•12
The Basics: What is Protected? Trademark Law
 Word
 Symbol
 Slogan
That identifies a specific product and distinguishes
it from others in the marketplace
•13
The Basics: What is Protected?
Functions of a Trademark
 Indicates the source or origin of goods or services
 Assures consumers of the quality of goods bearing
the mark
 Creates business goodwill and brand awareness
– Develops loyal customer base
– Creates an image in the mind of the ultimate purchaser
•14
The Basics: What is Protected? Trademark Law
A trademark could also be:
 Trade dress – the non-functional features of a
product’s
packaging,
appearance
or
configuration that contributes to the overall
commercial impression of the product, e.g., the
product configuration of a Coke bottle or a
handbag.
 Symbols, colors, or even sounds, if they
distinctively designate the source of the product.
• NBC’s chimes were the first sounds ever
registered by the U.S.P.T.O.
•15
The Basics: What is Protected? Trademark Law
(U.S. Reg. No. 2,361,695)
CHANEL
(U.S. Reg LOUIS VUITTON
(U.S. Reg. No. 1,990,760)
. No. 626.035)
VERSACE
(U.S. Reg. No. 2,121,984)
(U.S. Reg. No. 3,051,235)
(U.S. Reg. No. 1,875,093)
(U.S. Reg. No. 3,023,930)
(U.S. Reg. No. 3,021,231)
(U.S. Reg. No. 1,770,131)
(U.S. Reg. No. 3,022,708)
FENDI
U.S. Reg. No. 1,244,466
(U.S. Reg. No. 1,214,472)
POLO BY RALPH LAUREN
(U.S. Reg. No. 167,743)
(U.S. Reg. No. 1,212,060)
•16
The Basics: What is Protected? Trademark Law
•17
The Basics: What is Protected? Trademark Law
•18
The Basics: What is Protected? Trademark Law
 Service mark: used to identify services rather than goods
15 U.S.C. §1127
•19
The Basics: What is Protected? Trademark Law
Goods and Services: IC 035. US 100 101 102. G & S: RETAIL
STORE SERVICES FEATURING SHOES, HANDBAGS AND
POCKETBOOKS. FIRST USE: 20071116. FIRST USE IN COMMERCE:
20071116
Mark Drawing Code: DESIGN ONLY
Serial Number: 77730209
Filing Date: May 6, 2009
Current Filing Basis1A
Supplemental Register Date: January 20, 201
Owner(APPLICANT): Stuart Weitzman IP
Attorney of Record: Barbara Kolsun
Description of Mark: The color(s) white is/are claimed as a
feature of the mark. The mark consists of the Ribbon Store
Design is a retail store design that is marked with a large scale
ribbon, that inverts and twists, wrapping around the store. The
material that creates the illusion of a ribbon is Conan. The
ribbon design spans the circumference of the store and often
the ceiling, seating, and display areas. The entire pattern
creates a stylish and modem atmosphere within the store. The
color pallet is neutral, consisting of off-white with light grey
accents. The neutral pallet serves as a backdrop highlighting the
products being sold. (i.e handbags and shoes).
Type of Mark: SERVICE MARK
Register: SUPPLEMENTAL
•20
The Basics: What is Protected? Trade Dress –
Product Design or Packaging
The trade dress of handbags is protectable
•21
The Basics: Enforcement
 Trademark Act of 1946 – the Lanham Act
– Infringement / Unfair Competition
– False Advertising
 Trademark Dilution Revision Act of 2006
 Anticybersquatting Protection Act
•22
The Basics: Enforcement
Likelihood of Confusion
 Courts typically apply a multi-factored test. See, e.g., Polaroid
Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir.
1961); AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir.
1979)
 Each test considers similar factors, such as:
1) Similarity of marks;
2) Similarity of products;
3) Area and manner of concurrent use;
4) Degree of care likely to be exercised by consumers;
5) Strength of Plaintiff’s mark;
6) Whether actual confusion exists; and
7) Intent of Defendant in selecting its mark
•23
The Basics: Enforcement
Dilution
Enables famous trademark owners to prevent the gradual weakening or “whittling away”
of the strength of their marks even if the public is not likely to be confused.
– Dilution by “blurring” –
• Trademark is used by someone other than the trademark owner on products
that are very different from those normally produced by the trademark owner
• KODAK pianos
– Dilution by “tarnishment”
• Trademark is used in a way that degrades the mark or presents it in an
unsavory context.
– PepsiCo stopped a company from modifying PEPSI soda cans to add a
hidden compartment for concealing drugs
– ToysRUs successfully brought a tarnishment claim against
adultsrus.com, a pornographic website. Toys “R” Us v. Akkaoui, 40
U.S.P.Q.2d 1836 (N.D. Cal. Oct. 29, 1996)
•24
Current Fashion Trademark Cases: Louboutin v.
Yves St. Laurent, 696 F. 3d 206 (2d Cir. 2012)

Louboutin owns registration for red
lacquered sole

Proved secondary meaning
– 240,000 pairs sold annually
– $135 million annual revenues
– Pop culture

YSL sold monochromatic red shoe
– YSL claims chose red sole to
invoke Chinese design elements

District Court denied injunction

Second Circuit Reversed
•25
Louboutin: District Court Decision

In fashion, color serves to advance expressive, ornamental, aesthetic
purposes

Louboutin acknowledged non-trademark functions for choosing red
–
–
–
–

Give his shoe styles “energy”
Red color is “engaging”
Red is “sexy”
“Attracts men to the women who wear my shoes”
Outsole of shoe is pedestrian
– “To attract, reference, to stand out, to blend in, to beautify, to endow with sex
appeal – all comprise non-trademark functions of color in fashion”

Awarding one shoe designer a monopoly on the color red would hinder
competition (Picasso and Monet both need to use the color blue)
•26
Louboutin: Second Circuit Decision

Court erred in finding that single color could never serve as a trademark in
the fashion industry

Louboutin’s red, lacquered outsole has secondary meaning

Limits trademark to contrasting uses:
– Red Undersole v. Remainder of the Shoe

Decision allows YSL to sell a monochromatic shoe

Debate continues over language for description of goods in registration
•27
Current Fashion Trademark Cases: Levi Strauss & Co. v.
Abercrombie & Fitch Trading Co., 633 F.3d 1158 (9th Cir. 2011)
•28
Levi Strauss & Co. v. Abercrombie & Fitch
Trading Co., 633 F.3d 1158 (9th Cir. 2011)
 District Court Findings:
– The Arcuate design is famous
– The Arcuate design is distinctive
– The Ruehl design is not “identical or nearly identical”
 District court held that Abercrombie did not dilute
“Arcuate” design
 Ninth Circuit remanded
– Standard for dilution is not “identical or nearly identical”
– The TDRA defines “dilution by blurring” as the “association arising from
the similarity between a mark or trade name and a famous mark that
impairs the distinctiveness of the famous mark.”
•29
Current Fashion Trademark Cases: Adidas-America, Inc.
v. Payless ShoeSource, 2008 WL 4279812 (D. Or. 2008)
 Alleged infringement of THREE STRIPES
trademark and SUPERSTAR trade dress
 Jury awarded Adidas $305M – record trademark
infringement verdict
 The jury found 267 different styles and colors of Payless
shoes infringed
•30
Current Fashion Trademark Cases: In re Lululemon Athletica
Canada Inc., Serial No. 77/455,710 (TTAB Jan. 11, 2013)
 Refused to register design mark
for “hooded sweatshirts; jackets;
coats” -- Merely Ornamental
 Applicant may overcome an
ornamentality refusal by:
– proving inherent distinctiveness
– establishing acquired distinctiveness;
or
– showing that the mark is registered for
other goods or services, and thus that
the applied-for mark serves as a
secondary source indicator.
 Lululemon could not meet any of
these standards
•31
Trade Dress Protection
 Bottega Veneta successfully
convinced the Trademark
Trial and Appeal Board
(TTAB) to register the
company’s “signature” look, a
box weave of slim strips of
leather displayed at a 45
degree angle.
 The USPTO had refused the
design on aesthetic
functionality grounds.
•32
Converse
Inc. v. Autonomie Project,
Trade Dress
Enforcement
Inc.
– Converse sued for willful trademark
infringement of its famous Chuck Taylor
All Star shoes.
•33
– Autonomie's website does not deny the
similarities between the products, and
boasts that its line is "just SO much
better."
 Tommy Hilfiger U.S.A., Inc. v. Jumbo
Trade Dress
Enforcement
Bright Trading Limited
– Hilfiger brought a declaratory judgment
action asking the court to find that its use
of a vertical stripe pattern on the inside
lining of its shoes does not violate Jumbo
Bright's common law trademark rights in
a vertical stripe pattern on the interior
lining of its shoes.
– Hilfiger asserts that the stripe pattern is
ornamental and has not acquired
distinctiveness
•34
Unfair Competition
 Tiffany & Co. v. Costco Wholesale Corp
(No. 13-cv-1041) (filed Feb 14, 2013,
S.D.N.Y)
─ Suit over sales in Costco store of diamond engagement
rings that included “Tiffany” in the description;
─ Rings were not genuine Tiffany rings;
─ Sales were only in Costco stores; no use of “Tiffany” online
-- was not noticed by usual Tiffany policing procedures;
─ Alleges that Costco engaged in sale of counterfeit diamond
engagement rings, along with trademark infringement,
dilution, unfair competition, injury to business reputation,
and deceptive business practices and false advertising.
Unfair Competition
 Tiffany & Co. v. Costco Wholesale Corp (No. 13cv-1041) (filed Feb 14, 2013, S.D.N.Y)
– Costco answered and sought declaratory judgment
that Tiffany’s mark should be declared invalid, that
Costco only used mark in descriptive sense, and the
Tiffany mark has become generic for multi-prong
solitaire ring setting;
– “the word Tiffany is a generic term for ring settings
comprising multiple slender prongs extending
upward from a base to hold a single gemstone;” and
– Dispute over whether “Tiffany” or “Tiffany Setting” is
the properly allegedly infringing/non-infringing use.
Unfair Competition
 Potential implications from Tiffany v. Costco
– Loss of protection for one of strongest and bestknown luxury brands; and
– Increase burden of brand owner to police mark and
products sold in association with brand name
(beyond just internet sales surveillance).
False Advertising
 Michael Kors (USA), Inc. v. Costco Wholesale
Corp., (13-cv-4832) (filed July 11, 2013, SDNY)
– Costco is not authorized
seller of Michael Kors
handbags; ran advertising
featuring MK handbags
and claiming those handbags
were available from Costco
“starting at $99.”
False Advertising
 MK accuses Costco of a “bait-and-switch” scheme, saying ads
intentionally exploited the popularity of expensive Michael Kors
bags, and lured consumers away from authorized retailers and
into Costco stores.
 Alleges Costco advertised bags as starting at $99, but didn't
actually have any to sell.
 No MK handbags available on Costco website.
 MK visited 19 Costco stores; found no MK handbags.
 Complaint claims false advertising and unfair competition.
 Issues raised: How available must the discounted products be
for the advertising not to be false or unfair competition? 1 store?
100 stores? Available in stores and online?
The Basics: What is Protected? Patent Law
United States Patent Act §171 (35 U.S.C. §171 ):
• Grants exclusive rights to novel, non-obvious and ornamental designs
• Confers the right to exclude others from making, using and selling
designs that closely resemble the design
• Copyright protection
•40
The Basics: What is Protected? Patent Law
•41
Current Patent Case Law: Recent Cases

Lululemon Athletic Inc.
Sued Calvin Klein in
federal court in Delaware
in August 2012 for
infringing design patents
issued in June and
September 2011 for its
Astro Pant with its
performance compression
overlapping wasteband.
The case settled late in
2012.
•42
Patent Enforcement
 Skechers U.S.A., Inc. v. Perry Ellis
International, Inc., and Shoe Confession
LLC
– Skechers sued for patent infringement of its
patented design on the sole and outside
periphery of the Skechers Go Run shoe,
featuring ornamental patterns of various-sized
“nubs” and cleats, including a series of large
yellow nubs that form the shape of an “X” on
the sole.
•43
Search Concepts LLC v. Macy’s Inc. et
Patent Enforcement
al.
•44
– In June 2013, Smart Search filed nine patentinfringement lawsuits targeting fashion
retailers Gap, JC Penney, Kohl’s, Macy’s,
Neiman Marcus, and Nordstrom, claiming
that these companies use of an “on-the-fly”
search feature on their websites that allowed
users to see sizing of a particular item, was
infringing on their patent.
– These types of cases are normally filed by
patent trolls looking to extort companies for
payment.
Trademark Counterfeiting
What is Trademark Counterfeiting?
The act of manufacturing or distributing a product or service bearing a
mark that is “identical or substantially indistinguishable”
from a registered trademark.
15 U.S.C. § 1116(d)(1)(B)(ii)
•45
Protection Tools




Federal Criminal Statutes
State Criminal Statutes
Civil Statutes
Customs Border Patrol/Homeland Security
Enforcement
What can/should you do?









Register, Record and Renew your IP
Train Your Staff
Tell Everyone to Keep Vigilant
Consider Publicity
Know the Laws and Who to Call
Hire/Train Private Investigators
Have Identification Materials Ready
Prepare your CFO for the Costs of Enforcement
Form Strategic Alliances
•47
Civil Enforcement: 15 U.S.C. 1116 et. Seq:
Enhanced Tools and Remedies






15 U.S.C. § 1116 et. seq.
Ex Parte Seizure Order
Treble Damages
Statutory Damages
Seizures
Attorney's Fees
•48
Treble Damages
15 U.S.C. § 1117(b)
. . . according to the circumstances of the case
 Knowledge and intent are key
 Reasonable attorneys’ fees also available
under § 1117(b)
•49
Statutory Damages
 15 U.S.C. § 1117(c)
 $1000-$200,000 per counterfeit mark per type of
goods or services and, if willfulness is found,
$2,000,000 per counterfeit mark per type of
goods or service
•50
Notable Damages Cases
 Shell Co., Ltd. v. Los Frailes Service Station, Inc., 596
F.Supp.2d 193 (D.D.R. 2008)
– Under Lanham Act, only registrant of a mark, including exclusive
licensees but not non-exclusive licensees, entitled to damages for
infringement
 Philip Morris USA, Inc. v. Lee, 547 F.Supp.2d 685 (W.D. Tex.
2008)
– Damages for trademark infringement prescribed by Lanham Act;
however, willful violation increases range of damages that may be
awarded and right holder has burden of showing that an infringement
warrants increased damages
 Cartier, Inc. v. Symbolix, Inc., 544 F.Supp.2d 316 (S.D.N.Y. 2008)
– Intentional use of a counterfeit mark entitles a right holder to treble
damages
•51
Notable Damages Cases
 Coach, Inc. v. Sassy Couture, 2012 WL 162366 (W.D. Tex. Jan.
19, 2012)
– Despite finding that defendants willfully engaged in counterfeiting, Court
declines to award significant statutory damages in part because
plaintiffs’ investigation into defendants’ counterfeiting was limited.
Plaintiffs’ investigator visited defendants’ website only once and ordered
only one item.
 Koon Chun Hing Kee Soy &Sauce Factory, Ltd. v. Star
Management, Inc., 628 F.Supp.2d 312 (E.D.N.Y. 2009)
– Court must award treble damages if it finds willful infringement without
extenuating circumstances.
•52
Taking it a step further…Third Party Liability




Locate the property owner
Put third parties on official notice
Monitor the location
Look for other potential Defendants
•53
Contributory and Vicarious Liability
 Inwood Laboratories v. Ives Labs., Inc., 456 U.S. 844
(1982)
– Any distributor who supplies a product to one whom it knows is
engaging in trademark infringement may be held liable itself.
 Hard Rock Café v. Concession Svcs., Inc., 955 F.2d
1143 (7th Cir. 1992)
– Willful Blindness
 Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th
Cir. 1996)
– Right to police vendors = vicarious infringement
– Cited in A&M Records, Inc. v. Napster, 239 F.3d 1004
(9th Cir. 2001)
•54
Contributory and Vicarious Liability
Key Cases – cont’d
1165 Broadway Corp. v. Dayana of N.Y. Sportswear, Inc.,
633 N.Y.S.2d 724, 726-8 (N.Y. City Civ. Ct. 1995)
 Action by landlord against tenant for eviction pursuant to RPL
§ 231(2) and RPAPL § 711(5)
 Court considered the applicability of Real Property Law 231(2)
as a matter of first impression
 Court found trademark counterfeiting outlawed in New York in
1992, and therefore illegal conduct under § 231(2) and §
711(5)
 Limitations imposed by the Court on the reach of the
language “unlawful use, occupancy, trade, manufacture or
business.”
•55
Auction Sites: Tiffany v. eBay
 Tiffany (N.J.) Inc. v. eBay, Inc.,
600 F. 3d 93 (2d. Cir. 2010)
 Takeaways from eBay:
– Burden is upon trademark owner to vigilantly protect its trademark,
which includes notice and takedown of infringing activity;
– Use of protected mark on a website and in sponsored links is lawful as
long as the use is “nominative fair use” – i.e. a use that accurately
describes genuine goods for sale on website and does not suggest
affiliation or endorsement by mark owner;
– Due to its level of control and monitoring over its website, Inwood
applies and eBay (and companies like it) will be considered a “flea
market owner,” and not an online classified ad service, for contributory
liability questions;
– Following Inwood, generalized knowledge of infringement not enough
for contributory infringement; specific knowledge and failure to act
required. No “reasonable anticipation” standard;
Auction Sites: Tiffany v. eBay
 Tiffany (N.J.) Inc. v. eBay, Inc.,
600 F. 3d 93 (2d. Cir. 2010)
 Takeaways:
– Where eBay advertised the sale of Tiffany goods on its website and many
of the goods were in fact counterfeit, court was unable to affirm that the
advertisements “were not ‘likely to mislead or confuse consumers’” without
extrinsic evidence;
– For online sales and advertising, even if a defendant’s use of another’s
trademark was a “use in commerce” under the Lanham Act, a defendant
who makes nominative fair use of a trademark will not be liable as long as
the use accurately describes genuine trademarked goods offered for sale
on and does not suggest affiliation or sponsorship by trademark owner;
– Online advertisers may not imply that all goods offered on website are
authentic if sizeable proportion are not, even if sold by third parties; and
– Online advertisers need not cease advertisements for a kind of goods only
because it knows not all those goods are authentic. “A disclaimer may
suffice” – question remains as to what really would be sufficient.
Third Party Liability Cases
 Coach Services, Inc. v. City of Chicago et al.,
– Coach sought $2M in damages per counterfeit mark, per
type of counterfeit good, and an injunction
– Coach notified the City of Chicago numerous times to
report sales of knockoffs at a city market
– Coach settled with the City of Chicago in November of
2011
 Coach Services, Inc. v. Gata Corp., 2011 WL 2358671 (D.
N.H. Jun. 9, 2011)
– Willful blindness by flea market operator
– Case concluded in February of 2012 with entry
of default judgment against the individual
defendants
•58
What Other Forum is Available?
The ITC
•59
International Trade Commission Section 337 Claims
 The ITC forum is traditionally used in connection
with patent infringement, trade secrets and gray
goods. However, ITC Section 337 also may be
used to combat trademark counterfeiting.
•60
Potential Remedies



Cease and Desist Order
Limited Exclusion Order: An order to exclude infringing items from entry
into the United States by the parties to the claim. It may include
successors, assigns and affiliates as well.
General Exclusion Order: An order to exclude all infringing items, not just
those made by the companies at issue in the case. The broad remedy
requires a finding that
– a general exclusion from entry of articles is necessary to prevent circumvention
of an exclusion order limited to products of named persons; OR
– there is a pattern of violation of this section and it is difficult to identify the source
of infringing product.

A general exclusion order based on a default carries the additional showing
that:
– that no person appears to contest an investigation concerning a violation of the
provisions of [Section 337]; AND
– that such a violation is established by substantial, reliable, and probative
evidence.
•61
Enforcement
 Enforcement is done through U.S. Customs.
 Formal and informal enforcement proceedings may also be
conducted by the Commission through the Office of Unfair Import
Investigations, for “any act or omission by any person in possible
violation of any provision of an exclusion order, cease and desist
order or consent order.”
 Commission may initiate a civil action in U.S. district court to obtain
judicial enforcement of an exclusion order, a cease and desist order,
a consent order or a sanctions order.
 Under 19 U.S.C. 1337(f)(2), civil penalties accrue for violations of
the cease and desist order or consent order, and accrue to the
United States government in an amount of “more than the greater of
$100,000 or twice the domestic value of the articles entered or sold
on such day in violation of the order.”
•62
LVMH Case (In the Matter of Certain Handbags, Luggage,
Accessories and Packaging Thereof, 337-754)
 LVMH brought a Section 337 claim against US and
Chinese companies that import and sell counterfeit
LVMH product.
 LVMH requested the relief of:
– A cease and desist order to the respondents and their affiliates,
and
– A permanent general exclusion order excluding entry into the
US of all infringing goods.
•
•
•
The Administrative Law Judge found that a general exclusion order was
warranted. It found there were “overwhelming presence of counterfeit and
infringing goods in the United States and the existence of countless sellers
of the accused products support a finding of a widespread violation” It
also found that the products were “difficult to identify;”
On April 12, 2012 the Commission decided not to review the initial
determination; and
On May 30, 2012 the ITC issued its order granting the remedies requested
by LVMH.
•63
Right of Publicity
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Right of Publicity
The right of publicity originated from principles of
invasion of privacy that provided protection against
the misappropriation of an individual’s name and
likeness.
Presently, the right of publicity also includes a
celebrity’s “likeness” and personal elements that
allow the public to identify the individual such as
their voice, vocal style, and often used expressions.
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Privacy Rights v. Publicity Rights
 Privacy Rights
 Protect against unreasonable intrusion upon the seclusion of another
(ex: photographing someone through the window of their home); or
 Appropriation of another’s name or likeness; or
 Unreasonable publicity given to another’s private life; or
 Publicity that unreasonably places another in a false light before the
public.
 Publicity Rights
 The right of publicity is essentially the right to control the commercial
use of one’s identity, including his or her name or likeness.
 It provides an individual with an exclusive right to license the use of his
or her identity for commercial purposes.
 The right of publicity is governed by state law with protections varying
state to state. Currently, approximately nineteen states protect the
right of publicity pursuant to statute. And, twenty-eight states
recognize the right via common law.
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Celebrities Sell!
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Publicity Rights:
Elements of a Claim
 Lawsuits involving publicity
rights come in one of two
forms:
•1.
Defendant’s
use of the
plaintiff’s
identity
•2. To
defendant’s
commercial
advantage
•4. Resulting
injury to the
plaintiff
•3. Without
plaintiff’s
consent
 An individual is sued for
using his/her publicity rights
in a manner not permitted
by an existing agreement
 An individual sues for
unlawful use of his/her
publicity rights
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Publicity Rights: Rihanna
 Rihanna sued Topshop's
parent company Arcadia in
the UK for $5 million over Tshirts, which featured a
photo taken during a video
shoot in 2011.
 The court ruled that a
"substantial number" of
buyers were likely to have
been deceived into buying
the T-shirt because of a
"false belief" it had been
approved by the singer.
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Publicity Rights: Peter Fonda
Peter Fonda v. Dolce & Gabbana
 Filed suit in July 2013 alleging that
D&G appropriated images of Mr.
Fonda from the film Easy Rider and
used the Easy Rider logo without his
permission. These images were printed
on T-shirts advertised and sold by the
company for $300.
 Asserted two grounds of action violation of the Californian Civil Code
§3344 for use of another’s name,
image, and likeness on merchandise
and for advertising, and common law
misappropriation of name, image, and
likeness.
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Protection:
Liability & Publicity Releases
 Release of liability in connection with
use, distortion of images
 Waiver of claims based on publicity
rights, false endorsement, invasion of
privacy
 Acknowledgement of amount to be paid
 Grant of right to use publicity rights,
including name and likeness
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Protection:
Liability & Publicity Releases
 Russell Christoff v. Nestle USA
 Former model sued for right of publicity violation based on
use of his image on Taster‘s Choice coffee packaging fifteen
years after signing a release
 The Supreme Court of California held that the single
publication rule applies to claims of approrpriation of
likeness, but remanded for a determination as to whether
Nestle‘s various uses constituted a single publication
 Hamideh v. Dolce & Gabbana
 Former model sued for common law misappropriation,
breach of obligation, and unjust enrichment under California
law based on unauthorized reuse of his image on Facebook
 Although he had signed a model release, he argued that the
release had expired and did not apply to use in social media
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Publicity Rights:
1st Amendment Protection
 Courts have placed some degree of First
Amendment restraints on the right of publicity
regarding communications which relate to the public
interest. A fair use exception exists for the use of a
person’s name or image if such use does not
defame, invade privacy and is not used for
commercial purposes.
 Generally, an individual cannot use the right of
publicity to prevent the dissemination of “news.”
 News has been construed to include traditional,
informational news reporting, entertainment “news,”
documentary use, and reporting regarding matters
of “public concern.”
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Advertising & Media
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Endorsements & Testimonials
 Federal Trade Commission (“FTC”)
Definition
 An endorsement is a statement,
depiction, or similar demonstration that a
consumer is likely to believe reflects the
opinion or experience of a party other
than the sponsoring advertiser with a
particular product or service
75
What types of statements are
endorsements?
 Verbal Statements
 Written Statements
 Scripted Statements
 Implied Statements
76
What statements are not
endorsements?
 Statements without material
connections between the advertiser
and the person making the statement
77
Are there material
connections?
 Material connections between advertisers
and endorsers – those that consumers
would not expect – must be fully disclosed
 Such connections may involve payments or
free products, or any other benefit that
might “materially affect the weight or
credibility of the endorsement”
 Generally available benefits v. Special
benefits
78
Material Connections: Relationship
between Endorser and Company
 Many Shape-ups ads
included an
endorsement from a
chiropractor named
Dr. Steven Gautreau,
who recommended
the product.
 Skechers failed to
disclose that Dr.
Gautreau was
married to a Skechers
marketing executive,
and that Skechers
paid Dr. Gautreau to
conduct the study.
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Material Connections: Relationship
between Endorser and Company
 Company settled Federal Trade Commission charges
that it engaged in deceptive advertising by having
employees pose as ordinary consumers posting game
reviews at the online iTunes store, and not disclosing that
the reviews came from paid employees working on behalf
of the developers
80
Material Connections: Relationship
between Endorser and Company
 The FTC and other regulators recognize that
consumer endorsements and testimonials are a
powerful selling tool for businesses and that
some companies are exploiting that by writing
and posting fake online reviews.
 The Attorney General of New York announced
that nineteen companies agreed to pay more
than $350,000 in fines for writing fake online
consumer reviews.
 Based on a year-long undercover investigation
into companies that posted fake reviews to
websites such as Yelp and Google Local. The
state alleged that the practice of posting fake
reviews violated New York’s laws against false
advertising and deceptive business practices.
81
How should material
connections be disclosed?
 Prominent
 Clear and Conspicuous
 Understandable
82
Prominent
83
Clear & Conspicuous
84
Understandable
85
Celebrity Endorsements
 Disclosure of Material Connections
 Not Always Required
 Consumer Expectations
86
Liability for Endorsers
 The FTC and Courts may hold
companies or endorsers liable for
statements made by:
 Consumer endorsers
 Celebrity endorsers
 Affiliates
 Competitors may also challenge
claims.
87
Consumer Endorsers
 FTC closed an investigation of Ann Taylor Stores
for providing entry into a giveaway for bloggers
who posted reviews of a Spring 2010 fashion show
88
Celebrity Endorsers
 Kardashian was sued for making misleading
comments about her hair removal product that
were in direct conflict with the instructions in the
package
89
Affiliates
 Legacy Learning paid $250,000 to settle FTC
action charging that it deceptively advertised its
products through online affiliate marketers who
falsely posed as ordinary consumers or
independent reviewers
90
Privacy & Data Collection
91
Privacy & Data Collection: Notable
Topics
 Website Disclosures
 European Data Transfer Concerns
 Song-Beverly Credit Card Act
 Telephone Consumer Protection Act
92
Website Disclosures
Privacy policies provide information related to data
collection, use, storage, and sharing. Additional
disclosures required by recent updates to the law should
also be noted. Examples:

CA Do-Not-Track: Effective January 1, 2014, website
operators must disclose how they respond to “do-nottrack” signals sent by browsers. While a website is not
required to respond to the signal, it is required to state, at
a minimum, “we do not respond to do-not-track signals” or
the like.

CA Transparency in Supply Chains Act: This Act
requires retailers to post a clear and conspicuously
labeled link on the retailer’s home page disclosing its
“efforts to eradicate slavery and human trafficking” in its
supply chain.
93
European Data Transfer Concerns

EU Directive: Personal data may only be transferred to
countries outside of the EU and EEA when there is a
guaranteed adequate level of protection
 “Personal data” includes information that could be
potentially tied to an identifiable person (e.g., Car VIN
No.).
 Applies to personal and employee data

Ways to transfer from EU to US with acceptable
purpose:
 Notice and consent
 Contractual clauses between entities
 Safe Harbor
94
Song-Beverly Credit Card Act
 Generally prohibits businesses from requesting
or requiring consumers to provide personal
identification information (PII) during a credit
card transaction.
 The Act applies even when retailers request only
a portion of a customer’s address, such as a zip
code.
 California courts have held that the Act does not
apply to retail transactions made outside a brick
and mortar environment including downloadable
products.
95
Song-Beverly Case Law
 There have been numerous class action
lawsuits related to the collection of
information.
 Exercise extreme caution in California,
Massachusetts, D.C.
 Hancock v. Urban Outfitters/Anthropologie
 Plaintiffs allege that store personnel asked for
customer zip codes in a way that implied the
information was required to complete a credit card
transaction. Instead, plaintiff’s claimed the defendants
used the zip codes to track down customer addresses
for marketing purposes in violation of the District of
Colombia Consumer Protection Act
96
Telephone Consumer
Protection Act (TCPA)
 Among other things, the TCPA provides a cause of
action for sending automated messages to a
consumers mobile phone absent consent (call or
text message). As of October 16, 2013, the
consent must be prior express written consent.
 Sample Consent Language:
 I hereby consent to receive autodialed and/or prerecorded telemarketing calls and text messages from or
on behalf of [COMPANY] at the telephone number I
provided above. I understand that consent is not a
condition of purchase.
 For mobile marketers, also integrate other required carrier
disclosures, including message frequency,
Msg&DataRatesMayApply, unsubscribe instructions, help
instructions, and T&Cs as required.
97
TCPA Case Law
Samantha Ellison v. Steven Madden Ltd.
 A nationwide class action based on violations
of the Telephone Consumer Protection Act
(TCPA) recently settled for $10 million.
 Steven Madden had sent unsolicited text
message advertisements to over two hundred
thousand consumers’ mobile phones.
 The TCPA provides for statutory damages of
$500 – or $1500 if the violation is proven to
be willful or intentional – for each unsolicited
call or text message.
98