Theodore H. Davis Jr.

This episode is about generic toplevel domains (gTLDs), we have an interview with Ted Davis on Federal Trademark Caselaw and finally Ken will tell us about an interesting trademark case Sealtight vs. Sealtite.

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IP FRIDAYS

Co-Presenters:

Rolf Claessen and Kenneth Suzan

Episode 7 – July 25, 2014

RC = Rolf Claessen

KS = Kenneth Suzan

KS: Hello and welcome to this episode of IP Fridays. Our names are Ken Suzan and Rolf Claessen and this is THE podcast dedicated to Intellectual Property. It does not matter where you are from, in-house or private practice, novice or expert, we will help you stay up-to-date with current topics in the fields of trademarks, patents, design and copyright, discover useful tools and much more.

RC: Thank you very much for returning to the 7th episode of IP Fridays. If you hear this and you want to be on the show, please let us know at www.ipfridays.com/feedback or just send us an email, or if you have any favorite topics that should be covered, please let us know. Today we have three topics. The first topic will be generic top level domains and then we have an interview with Ted Davis who will tell us about the federal case law regarding trademarks and then we have the latest on the fight over the Sealtight/Sealtite trademarks. First, Ken will tell us about general top level domains.

KEN SUZAN’S DISCUSSION REGARDING TOP LEVEL DOMAINS

KS: Rolf, new generic top level domains will cause some difficulties for IP holders, but open up a new array of Web address possibilities, including more internationalized top level domains.

What is a domain name?

Domain names are labels assigned to IP addresses in the Domain Name System (DNS). IP addresses are unique numerical identifiers that computers actually use to connect to one another, but they are difficult for humans to remember. A user enters the Web address (also called URL, or uniform resource locator), including the domain name, on their local device.

What are the parts of a Web address, including top level domains (TLDs)?

TLDs are the end parts of a web address, the period or “dot†followed by some characters. The most common top levels domains are .com, .net, .org, .edu, and .gov.

Other important parts of a Web address are the second level domain, which is to the left of the TLD. There may be additional domains in the Web address to the left of the second level domain, also called sub domains. Taken together, the combination of the TLD, the second level domain, and any sub domains is known as the host name.

The big question is who is in charge of selling domain names to the public? Well, domain name registrars and domain name resellers. In the United States, one of the most powerful domain name registrars is Verisign, which is the authoritative registry for .com, .net, .tv, .cc, and .name. GoDaddy and eNom are also popular registrars. Not only do registrars sell domain names, but resellers may do so also. ICANN (or the Internet Corporation for Assigning Names and Numbers) maintains a list of accredited registrars and resellers for seventeen top level domains.

What are gTLDs?

Well, gTLD stands for “generic top level domain.†In 2000 and 2004, ICANN conducted two rounds of applications for new TLDs and released seven and eight new TLDs in each round respectively. After 2005, ICANN began a program to create an application process for gTLDs, which resulted in organizations “applying†for a gTLD, meaning that if ICANN approved the application, then the organization would run the gTLD the same way that Verisign runs .com – it would be the authoritative registrar for the gTLD. These gTLDs began to be released in October 2013, with new gTLDs being released every few days.

What are the intellectual property concerns for the new gTLDs?

Intellectual property owners’ biggest concern is that someone will purchase a gTLD in order to deceive and abuse consumers into believing that they are dealing with the intellectual property owner.

During the 2000 and 2004 TLD releases, the domain names were “first come, first served,†so speculators and cyber-squatters tried to buy up popular and potentially valuable domain names, costing a great deal of money and attention for IP owners to search out and combat deceptive domain names. One method of heading this off at the pass is simply to register all valuable identifiers of their brand across all domain names to prevent abuse – this was possible when there were 23 TLDs, but if there will be potentially 1,600 new gTLDs (with 600 gTLDs expected to launch this year), this strategy will be prohibitively expensive.

To combat this problem, the new gTLDs will have a “sunrise†period, where authorized trademark holders can “register domain names corresponding to their marks before names are generally available to the public.†To use the sunrise service, trademark holders must identify and verify their marks with the Trademark Clearinghouse, a service of ICANN.

What else can IP owners do to protect their rights?

Because of the sheer number of new gTLDs, IP owners can no longer proactively prevent abuse. However, there are some reactive strategies that are available once problems arise: One is to seek injunctions in domestic court – Identify infringing websites and sue to enjoin their use, use the Objection & Dispute Resolution process with ICANN over gTLD applications that infringe their rights, or use ICANN Uniform Rapid Suspension System (otherwise known as URS) which can be used to suspend infringing domain names. Alternatively, a Uniform Domain Name Resolution Policy (UDRP) complaint can be filed to transfer the infringing domain name to the trademark holder.

What are the most popular new gTLDs these days?

Well, Namestat has a list of the fastest growing best selling gTLDs, as well as the same for internationalized domain names (known as IDNs). As of now, .xyz is both the fastest growing and best selling gTLD, while the Chinese character equivalent of “online†is the same in IDNs. That information is available at: http://namestat.org/ and we will have a link to that on www.ipfridays.com.

What are some helpful tools to research the availability of domain names and who owns a domain name?

Well, one can consult ICANN’s list of newly released gTLDs. You can check the Whois database. You can go to ICANN’s sunrise periods listing for upcoming gTLDs and you can also go to Namestat which maintains a list of upcoming sunrise periods and launches in a slightly different format. We will have links to all those resources on www.ipfridays.com.

RC: If you want to know more about this, please visit www.ipfridays.com/gtld.

I had the chance to interview Ted Davis who gave a brilliant talk at the INTA meeting in Hong Kong about the federal case law in the field of trademarks and here is the interview:

ROLF CLAESSEN’S INTERVIEW WITH TED DAVIS

RC: I am here with Ted Davis at the INTA meeting and I am glad that I have you as a guest. Thank you very much for being here.

TD: Thank you.

RC: And he is partner with Kilpatrick Townsend and Stockton and maybe you can just briefly introduce yourself.

TD: Hello, my name is Ted Davis and I am with Kilpatrick Townsend and Stockton primarily in the Atlanta office of that firm and my practice is split between trademark and unfair competition litigation on one hand and prosecution and clearance on the other.

RC: Thank you very much. I heard earlier today that you are the big expert on federal case law in the U.S. about trademarks and maybe why don’t you tell our listeners a little more about this.

TD: I’d be happy to tell you what has been going on in the United States in the case law over the past twelve months. It has been something of an unusual year in the sense that our Supreme Court has suddenly developed an interest in our main trademark and false advertising statute which is called the Lanham Act. The Court did hear a case last year and decided a case last year involving a registered trademark but it was decided more or less on procedural grounds and not really on the merits of any trademark claim in the case. This year though the Court has decided one case, it has one case under advisement, and it appears to be seriously entertaining taking on a third case. The reason that is unusual is that it has been since 2004 since our Supreme Court entertained a full scale trademark case on of merits. Generally speaking, these cases come along once every five or six years and now, as I indicated, the Court has expressed an interest in three of them.

Two of these cases, the one that the Court has decided earlier this year and the one that the Court currently is considering, are technically false advertising cases. In the United States, the federal False Advertising Statute is contained in the Lanham Act, just as our routine trademark statutes, so those trademark practitioners in the U.S. do have an expertise in false advertising law as well because of the two bodies of law being covered by the same statute.

In the case the Supreme Court already has decided, the primary issue was who has standing to bring a false advertising claim under our federal Lanham Act. And standing is concept that makes sure, that guarantees, that parties that don’t have an interest in the case cannot file complaints and challenge particular uses or particular advertising. The rule that was at stake in this case was whether only direct competitors of defendants could bring claims for false advertising under the Lanham Act and this was one of three rules that were out there among the lower courts. It was by far and away the most popular one. And under that rule if you were not a direct competitor of the party you wanted to sue, you did not have standing to bring that action and your claim would be thrown out. So this was an issue on which there was very much a split on our lower federal courts and that’s the scenario in which the Supreme Court often gets involved.

Our Supreme Court has to hear certain cases but not very many. It ordinarily can pick and choose among the ones it wants to hear and it generally looks for cases in which there is a split among the lower Courts that needs to be resolved. In this particular case, the Court took a look at the three rules that were out there in the lower Federal Courts and it disposed of all three of them and went with a new rule that had articulated itself basically to the effect that to have standing to bring a false advertising claim under our Lanham Act you have to suffer a financial loss and the financial loss has to be in the form of business that you have lost as a consequence of the defendant’s action.

RC: So if I understand correctly, they completely changed the case law. The earlier cases were all in a completely different direction.

TD: Yes, that is correct. The three approaches that the lower Federal Courts took were all dismissed by the Supreme Court which came up with its own test which in a real sense is very much broader than any of the three tests that had been applied by the lower Federal Courts but at the same time is not so broad that it allows consumers to bring claims for false advertising because under our federal false advertising statute, consumers have never had standing. And so the Court has broadened that test. It, nevertheless, has not done so in a way that allows consumers to file suit. If a consumer believes that he/she has been the victim of false advertising, he/she has to fall back on state law causes of action rather than the federal statute. So that is the first case that the Court actually has decided.

There is another case currently before the Court in which the Court has heard oral argument. The case has been fully briefed, but there is no holding yet. That case addresses the issue of if our Federal Food and Drug Administration, one of our very significant federal agencies here in the United States, if it has approved a food label, and in this case it is a fruit juice label, a pomegranate juice label, does that approval mean that the label is immune from false advertising based challenges. This is also an area in which there is a pronounced split among the Federal Circuit Courts, our lower Federal Courts. However, it is one in which the split is not as dramatic as it was in the first case that I spoke of. And that first case goes under the name of Lexmark, if you need to find it. The second case goes under the name POM Wonderful, that is the name of the plaintiff. The plaintiff objects in this case to Coca Cola’s description of a beverage that it puts out as having pomegranate juice. The Coca Cola beverage has a federally approved label on it that does use the word “pomegranate.†It also uses the word “blueberry.†The plaintiff’s claim in this case is based on the theory that that juice really isn’t pomegranate juice because it only contains very small percentages of pomegranate juice. The Court below threw out this claim holding that because the label had been approved by the government, the content of the label could not be challenged under a false advertising theory. Now this case has been fully argued, and although it is dangerous to try to guess where a case is going based on questions that our justices asked, it does appear from oral argument that the Court is going to reinstate the plaintiff’s claims. So, in other words, the fact that your label has been approved by the federal government may no longer prevent a false advertising claim against you. If that is the way the Court ultimately goes, the primary question will be how broad is that holding? Will it be a holding that is limited to food labels on the one hand, or alternatively is it something that will have an effect in other areas of the law as well.

RC: For example, automotive or pharmaceutical companies?

TD: Pharmaceutical, yes. You can even add fertilizers and pesticides have their labels approved by another agency within the government. Alcoholic beverages must have their labels approved by still another agency within our federal government. So if, as it seems, the Court is going to allow these claims, the question is will that holding be linked to the particular statute at issue, which is our Food, Drug and Cosmetic Act, or, alternatively, will it be a holding that will allow claims based on other labels that have been approved under other bodies of law. No telling when that issue will be resolved. The Court can set its own timetable, as it often does.

And then finally the Court has expressed an interest in a third case. It hasn’t decided whether to take it or not to take it but it has expressed an interest in it and that increases the chances of the Court actually taking the case up to about 50%. How the Supreme Court expresses an interest in a case is it asks our federal government, our Department of Justice for its views on whether or not it should be heard by the Supreme Court. Strangely enough, even if the Department of Justice says this is a case the Court should not review, just the mere fact that the Court asked drives the chances up as I said to about 50% from about 2%.

RC: Wow.

TD: Now, that case involves the degree to which a Federal Court should defer to a past decision of our Trademark Trial and Appeal Board which is not itself a Court but is a tribunal within a Federal Agency. There are two issues here. One is, if you have lost an issue before the Trademark Trial and Appeal Board and that decision has become final, can you even re-litigate it at all? There are some Courts that will say that “no, you can’t even revisit that issue later on in litigation against the same party.†Then there are some courts that say we will let you re-litigate the issue but the TTAB decision is entitled to some degree of weight. It may be that you have to work hard to overturn that decision. It may be for some Courts that you don’t have to work that hard. And there are still some Courts that say you don’t have to do anything because the TTAB decision is not entitled to any deference whatsoever. If the same issue is re-litigated, the parties start from the very beginning. So that, too, is that those two issues: whether you can re-litigate it and, additionally, if you can re-litigate it, what do you have to do to overturn the TTAB decision? Both of those issues also are ones on which there are significant splits among our lower Federal Courts.

RC: And very interesting for our trademark attorneys in the U.S. Very relevant.

TD: Very much so because a lot of trademark lawyers do not take litigation before the TTAB that seriously because all the Board decides are questions of registrability. But if the Supreme Court were to take this case, and even though it is a case that the Court should take in the sense that there is a split in the lower Courts that the Supreme Court should resolve, the Court can exercise its discretion and decide not to. But if the Court does that the case and does hold that TTAB decisions are entitled to great weight, or that once you lose before the Board and if you don’t appeal that decision you cannot re-litigate that issue, there will be a lot of old decisions by the Board that will all of the sudden become a lot more important than perhaps they were when they were originally decided.

RC: So these could be opened up again.

TD: Yes, or alternatively, the door could be closed to the losing party which would take a number of trademark practitioners by surprise and their clients by surprise as well. So, again, a case that the Court should be interested in, it seems to be interested in, but whether it will take the case remains to be seem.

RC: Very interesting. So it seems the Supreme Court is unusually busy with trademark cases this year.

TD: It has been unusually busy and that may be a function of the Court getting very interested in patent law at the same time. The Court has been taking an unusual number of patent cases for review in recent years and generally speaking the Court has not taken those cases to affirm the claims of patent owners. So the Court has expressed great skepticism towards the scope of patent claims. It remains to be seen whether the Court in its interest in the Lanham Act, in the Trademark Statute, will do the same thing – come out with holdings that are not favorable to trademark owners and their claims.

RC: Correct. Very interesting. Thank you very much for this overview of the activities at the Supreme Court this year. So, if our listeners would like to know more about you, where could they reach you best?

TD: By e-mail is the best way. My e-mail address is tdavis@kilpatricktownsend.com. I would be happy to answer any questions based on what I have said here today.

RC: And if people want to see your profile on the web they can go to www.ipfridays.com/ted. Thank you very much.

TD: Thank you.

RC: If you want to visit Ted’s profile on the web, please visit www.ipfridays.com/ted.

Next, Ken will tell us about an interesting trademark case regarding two homonyms as trademarks – “Sealtight†against “Sealtiteâ€. So Ken, take it away…

KEN SUZAN DISCUSSION ABOUT THE SEALTIGHT VS. SEALTITE CASE

KS: Rolf, “Sealtight†and “Sealtiteâ€: B&B Hardware and Hargis Industries are fighting over their trademark rights in a pair of homonyms each has used to name their respective products. B&B registered its “SEALTIGHT†trademark first, in connection with fasteners used in the aerospace industry. Hargis later attempted to register its “SEALTITE†mark for a different set of fasteners. (The “SEALTITE†name Hargis attempted to register is spelled S-E-A-L T‑I‑T‑E, while B&B’s registered trademark is spelled S-E-A-L T-I-G-H-T).

B&B challenged Hargis’s attempted registration in front of the Trademark Trial and Appeal Board (TTAB), claiming that there would be a likelihood of confusion between the two marks, as both referred to metal hardware fasteners. After litigation in front of the Board, B&B prevailed and the TTAB found a likelihood of confusion between the marks. The Board found the two marks “substantially identical†and “used on closely related products,†and Hargis did not appeal the TTAB ruling.

In the meantime, while the TTAB case was still pending, B&B had also filed a trademark infringement lawsuit against Hargis in federal court. However, although B&B was able to prevent Hargis’s registration, the federal district court refused to give any preclusive effect or deference to the TTAB finding of likelihood of confusion, and a jury subsequently found no likelihood of confusion between the two marks. On appeal, the Eighth Circuit upheld the district court, and held that TTAB decisions on registration based on likelihood-of-confusion grounds were not owed any preclusive effect or deference in infringement litigation.

B&B petitioned the Supreme Court for certiorari, and the Court agreed to hear their appeal on July 1, 2014, after considering briefs from the parties and the United States Solicitor General on the issues in the case. The Solicitor General’s recommendation that the Court hear the case was likely influential in helping B&B get their case in front of the Supreme Court. The case will be argued in front of the Court sometime in their 2014 term, which begins in October.

As outlined by B&B and the United States, there are several important issues here that will now hopefully be clarified by the Supreme Court. B&B claims that a circuit split has been created here by the Eighth Circuit, with other circuits allowing for issue preclusion of TTAB decisions or at least deferential review. Both B&B and the United States further highlight the importance of applying correct preclusion law, and that the standard employed here by the Eighth Circuit was incorrect.

This case tees up a larger issue in trademark law: Should TTAB decisions be accorded any effect in subsequent infringement litigation? And if so, to what extent should lower courts defer to TTAB’s findings? The Supreme Court’s answer to that question will be of great importance to trademark holders. The concern among trademark holders is that an affirmation of the Eighth Circuit will render those litigants with a double burden—they will have to challenge an infringer in front of both the TTAB and a federal district court, and therefore face the litigation costs of two proceedings and the possibility of contrary rulings. A Supreme Court decision allowing TTAB decisions to have some effect in infringement litigation would cut down on litigation costs and incentivize trademark holders to take care of possible infringement issues in the registration phase, before litigation in federal court becomes necessary.

RC: If you want to read more about this case, please visit www.ipfridays.com/sealtite.

KS: That’s it for this episode. If you liked what you heard, please show us your love by visiting ipfridays.com/love and tweet a link to this show. We would be so grateful if you would do that. It would help us out to get the word out. Also, please subscribe to our podcast at ipfridays.com or on iTunes or Stitcher.com. If you have a question or want to be featured in one of the upcoming episodes, please send us your feedback at ipfridays.com/feedback. Also, please leave us a review on iTunes. You can go to ipfridays.com/itunes and it will take you right to the correct page on iTunes. If you want to get mentioned on this podcast or even have comments within the next episode, please leave us your voicemail at ipfridays.com/voicemail.

You have been listening to an episode of IP Fridays. The views expressed by the participants of this program are their own and do not represent the views of nor are they endorsed by their respective law firms. None of the content should be considered legal advice. The IP Fridays podcast should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents of this podcast are intended for general informational purposes only and you are urged to consult your own lawyer on any specific legal questions. As always, consult a lawyer or patent or trademark attorney.

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