The Declaratory Judgment Complaint -- Being Quicker on the Draw

As a routine practice, a brand owner's trademark lawyers send formal cease and desist letters to companies or persons who become accused of using a confusingly similar name or design without authorization.  

Such a letter is often sent before a lawsuit is filed.  
It is not legally necessary for a brand owner to send such a demand letter, but (depending on the circumstances) many brand owners believe that it is helpful to give notice before filing suit.


This process also allows the accused infringer to settle potential litigation for smaller (or no) damages, depending on the circumstances.  


For example, some infringers may agree to share their sales figures of accused products, and in doing so, deter the brand owner from seeking excessive damages.


Of course, there is never a guarantee that the brand owner will agree to settle, and these documents can have the opposite effect, and end up fueling litigation.


Trademark lawyers send out dozens, hundreds -- even thousands of such demand letters each year.  Most of the time, the recipients apologize, comply with the letter's demands and move on.
 In some cases, the unwise recipient just ignores the letter, leading to a second, usually more aggressive letter or a lawsuit.


But in some rare cases, if the recipient of a letter receives what could be interpreted as a legally baseless or overly aggressive threat leading to a reasonable apprehension of imminent litigation, he may opt for a highly aggressive strategy -- sue the brand owner first.  
In other words, he is quicker to the draw in gunslinger terminology.

This process is called invoking declaratory judgment jurisdiction.  The reason is that the plaintiff is seeking a "declaration" that he is not infringing.

Upon receiving a cease-and-desist letter, the recipient may seek a tactical advantage by instituting declaratory judgment litigation in a more favorable jurisdiction.
  The end result may require the sender of the cease and desist letter to appear in a distant court, at their own expense, in a case that it never would have actually brought.

The declaratory judgment plaintiff also could catch the overly aggressive brand owner off guard, and put it in the posture of being a defendant rather than a plaintiff.
  This tactic seems to have worked, at least initially, for the recipients of a cease and desist letter from the Subway sandwich chain's lawyers.


In 2011, Subway's lawyers sent a cease-and-desist letter to Casey’s General Stores, a midwest convenience store operator, demanding that it stop using the word “footlong” to describe its sandwiches.

Casey’s struck back with a declaratory judgment lawsuit against Subway, arguing that the chain has no trademark rights to what it considered to be a generic term.


The suit noted that Subway has tried to register the mark protection for “footlong,” but was refused by a trademark examining attorney who was skeptical of the distinctiveness of the term, noting that restaurants across the country use the word to describe submarine sandwiches on their menus.


Thus, Subway became the unwilling defendant in a declaratory judgment case brought by an accused infringer, putting the validity of its very trademark in jeopardy.

Kansas Coffee Shop Targeted By 1980's Hair Band's Trademark Lawyers

1980's Hair Band Twisted Sister in Concert / Wikimedia Commons

Sandi Russell, along with her sister, Nancy Hansen, are two sisters operating a small coffee shop in Mission, Kansas.  Their coffee shop's name is "Twisted Sisters," and their domain name is www.TwistedSistersCoffeeShop.com.


Russell recently reported that she received a formal cease and desist letter telling them to change the name because it has been trademarked by the 1980's hair band Twisted Sister which owns and operates www.TwistedSister.com.


According to the letter, the Twisted Sister musical group coined the name “TWISTED SISTER” in 1973, and “the
juxtaposition of those two words never appeared prior to the creation and adoption of the mark by the band.”

Continuously since then, the band has had extensive media publicity and exposure of its mark, having released at least 12 full albums and 4 DVDs since 1973 under the TWISTED SISTER mark, which have been distributed and
 sold throughout the United States and worldwide. 


Consequently, according to its lawyers, the band’s trademark is well-established and legally deemed "famous."

It is true that Twisted Sister has a federally registered and incontestable federal trademark (1,098,366) issued in 1978, but that trademark only covers: "ENTERTAINMENT SERVICES RENDERED BY A VOCAL AND INSTRUMENTAL GROUP."

The letter notes that the band has been successful in requiring that the Twisted Sister Bakery in Chicago and Twisted Sister Pizza in Massachusetts change their names.

Not mentioned in the letter is that third parties have apparently received numerous approved trademarks for marks using "TWISTED SISTER" (and variants), such as for Twisted Sisters Wine (3,443,617), Twisted Sisters clothing boutique (3,216,315), Twisted Sisters Our Business Is Dyeing colored yarns (3,027,439) and Twisted Sista for hair care products (3,947,150).  All of those are live trademarks that appear to have nothing to do with the band.

Therefore, to establish even a prima facie case of trademark infringement, the lawyers would need to plead that the coffee shop's continued use of the “Twisted Sisters” name in connection with a small coffee shop is likely to lead to consumer confusion as to endorsement, sponsorship or affiliation with the 1980's band.  

This claim would likely be an uphill battle from an evidentiary standpoint, and would probably require an expensive survey expert. One suspects that instances of actual confusion among consumers would be difficult to locate.

However, assuming the trademark is indeed “famous” and worthy of legal protection under the Federal Trademark Dilution Act, the band need only prove that the use of the unauthorized name is likely to dilute, either through tarnishment or blurring, the distinctive nature and fame of the band’s mark.  In this context, this claim may be easier to plead even in the absence of confusion, as there is no doubt that the Twisted Sisters Coffee Shop likely "calls to mind" the 80's band, potentially blurring its distinctive quality.

Faced with the band’s demand that it change its name, the coffee shop’s owners reportedly intend to do just that.  As of today, the coffee shop's website is no longer operational.

IP Law Firm Targets Trademark Agency "Scammer"

It has become commonplace for small business owners to receive unsolicited notices in the postal mail that very closely resemble official, federal U.S. Government trademark renewal forms.

Without scrutinizing the official-looking legal document carefully, the business owner may send it back with a check usually for a nominal sum such as $400, to cover the cost of his trademark renewal.

Only later does he discover that the form was not official correspondence at all, but rather a mass mail solicitation designed to confuse and deceive him into sending a check to a private company.

One New York intellectual property law firm has taken the initiative to target one such alleged mass mail trademark renewal "scammer."

White Plains, New York-based Intellectual Property law firm Leason Ellis LLP recently filed a federal lawsuit on its own behalf against Patent & Trademark Agency LLC and Armens Organesjans, an individual who is reportedly the mastermind behind the alleged mass mail "scam."

Leason Ellis alleges that the Defendants, who claim to operate the "nation's premier trademark registration and renewal service," are actually nothing more than a private company that targets unwary businesses and individuals by sending mass mailings that are designed to mimic U.S. government trademark renewal forms.

To support its allegations, Leason Ellis notes that the official United States Patent and Trademark Office recently included an example of such a mass solicitation sent by the Defendants as an example of one scam to avoid.

Leason Ellis claims to have been damaged by virtue of having its clients duped by the allegedly false advertising sent by the Defendants.  The Complaint alleged a variety of torts, including tortious interference with business relationships.

Internet Scammers Targeting Lawyers

Attorneys in the United States, particularly solo practitioners and lawyers with small firms, are apparently falling prey to sophisticated international Internet scams that can have severe consequences, financial and otherwise, the California Bar Association has noted in an Alert.

To date, these scams have been more prevalent among, although not exclusive to, collection and commercial lawyers, mainly because these practice areas make it easier for those initiating the scams to make them appear legitimate. However, such frauds have affected lawyers working in family law and other practice areas, as well.

The fraudsters perpetrating the scams engage in the following conduct:

1.  The lawyer receives what appears to be a legitimate solicitation e-mail from a prospective client.  The client may be a company or an individual. The e-mail sounds something like this:  "We are a media publishing company in Japan. We have a breach of intellectual property agreement matter in your jurisdiction, we can forward you the agreement and other party information for your review to enable you run a conflict check."  The client will be willing to forward seemingly legitimate incorporation documents.

2.  The lawyer and client discuss a fee agreement by e-mail.  Most commonly, the client will offer that the attorney may keep a certain sum in exchange for collecting on an unpaid debt.  The lawyer signs the agreement, creating an ostensible attorney-client relationship.

3.  The lawyer then receives a "congratulatory" e-mail from the new client announcing that they have received a settlement offer from the debtor, and that all the lawyer needs to do is deposit the settlement check and forward the proceeds of settlement, minus the lawyer's fees and expenses.

4.  The lawyer quickly receives in the mail what appears to be a valid paper check from a reputable bank, which is deposited into the lawyer's trust account.

5.  The client then demands an immediate wire distribution of the settlement proceeds (nearly always to a foreign bank).

6.  The lawyer then wires the proceeds to the client from the trust account, as requested.

7. By that point, the lawyer's bank has discovered that the paper check is fraudulent and it is returned unpaid.  By this time, the scammer is long gone, and the lawyer's trust account is overdrawn by the amount of the fraudulent check.

This chain of events leaves the victimized lawyer in a vulnerable position.  The lawyer cannot easily press criminal charges, because of possible fear of violating client confidences.  Second, the identity of the fraudster isn't even clear.

Further, the lawyer cannot easily recoup his losses.  Malpractice insurers may not qualify the lost sum as "damages" from professional negligence.

The California Bar Association notes that, in choosing clients and accepting to represent them, it is better to err on the side of caution.  Hitting the "delete" button may be the best course of action when receiving one of these "too good to be true" new client offers.

Daunting Math Facing Brand Owners

The new reality on the Internet is a game of very large numbers -- a reality that brand owners and content creators trying to protect their intellectual property rights online may find depressing.  

Here are a few statistics to ponder:

Between 1995 and 2013, the number of Internet domain names registered went from 15,000 to 250,000,000.

There are nearly 150,000 new domain names created each and every DAY.  Even taking deletions and expirations into account, there is still a net gain of tens of thousands of new domain names created every single day, 365 days a year.  In addition, there are estimated to be 634,000,000 websites, with 51,000,000 added each year.

It is currently estimated that 2.4 BILLION people use the Internet worldwide, with 1.1 billion of them in Asia alone.

The statistics also demonstrate that counterfeiting on the Internet is similarly skyrocketing.  For example, domain name registrants frequently register names that cybersquat upon the established rights on trademark owners.

In the 1990's, Congress passed the Anti-Cybersquatting Consumer Protection Act (ACPA), to give rights owners a vehicle for protecting themselves by filing suit in federal court.  Brand owners can also initiate Uniform Domain Name Policy (UDRP) proceedings.  But litigation under the ACPA/UDRP can be expensive and time-consuming.

A very successful and aggressive brand owner may be able to set aside several hundred thousand dollars per year to budget for proactive brand protection on the Internet.

But is that even enough?

Given the massive scale and scope of counterfeiting on the Internet, this math presents a very daunting reality.

Assuming 20 newly-created domain names registered each day infringe upon a brand owner's rights, in one year alone, a trademark owner would need to spend hundreds of thousand of dollars getting all of them locked and transferred under Court Order.

Of course, a new infringer lurks around every corner, so there is nothing to stop new domain names from being created tomorrow, and the day after that, and so on.

A brand owner may hire a team of attorneys and investigators dedicated to combating this escalating problem.  But counterfeiters can find armies of extremely cheap labor to draw upon for programming, coding, marketing and distribution of counterfeit goods.

Therefore, in a long drawn out war of attrition, the math facing brand owners is daunting.

The solution?

First, brand owners need to act MUCH more aggressively and diligently.  The problem is not going away.  By ignoring the problem, it will only get worse.

Second, brand owners need to lobby the government for much more stringent penalties and enforcement mechanisms.  Individual ACPA and UDRP proceedings against infringing domain names made sense in the 1990's, but today they are anachronistic given the scope and scale of the problem.

Some brand owners have been creative and have filed large-scale litigations that have shut down thousands of domain names through sweeping Court Orders in a single case.  However, these cases have inherent limitations, and need to be filed repeatedly.

Third, ICANN needs to begin to adopt policies that are pro-brand owner, rather than pro-infringer.  The core economic dilemma is that ICANN (and its affiliated registries and registrars) stand to gain tens of millions of dollars in fees each year from newly-created domain names, and therefore have little incentive to protect the intellectual property rights of the few.  Their economic incentives, in fact, are quite in the opposite direction.

Is Albert Einstein Now in the Public Domain?

The GM Ad

Albert Einstein was no stranger to the concept of Intellectual Property.  In fact, he was a patent clerk in Switzerland as a young man.

Einstein later emigrated to the United States and took up residence in Princeton, New Jersey and held a professorship at the prestigious Institute for Advanced Study.  Einstein contributed so significantly to modern science that his name and likeness are still synonymous with genius.

Albert Einstein died in 1955, naming the Hebrew University of Jerusalem as one of the beneficiaries of his will.  As part of that will, he bequeathed all of his Intellectual Property, including any rights to his likeness or persona.

Over five decades after his death, many successful commercial products still bear his name and likeness.  So much so, in fact, that Forbes lists Einstein as one of the top 15-earning "dead celebrities," raking in up to $10M per year.

For example, new parents are familiar with the BABY EINSTEIN and LITTLE EINSTEIN products and videos.  These products were licensed by the Hebrew University, helping to make EINSTEIN a very valuable trademark.

However, now that 5 decades have past since Albert Einstein's death, Courts have ruled that at least some of Hebrew University's valuable rights may be at an end.

Carmaker General Motors had used an altered image of Einstein in a 2009 ad for the GMC Terrain, a sport utility vehicle.  The ad, which ran only once in People magazine, showed Einstein's face pasted onto a muscular body with an "e=mc " tattoo.  It carried the slogan "Ideas are sexy too." (See above)

Hebrew University sued GM in 2010, arguing the carmaker had no right to commercially utilize Einstein's image, and demanding damages.

But the Court ruled that descendants' right to control an image after death must be balanced with the public's right of expression.

The Court also ruled that any right Hebrew University had to sue expired in 2005 - 50 years after Einstein's death, because that was the limit on copyright law in 1982, when Hebrew University acquired Einstein's right of publicity.