TradeKey Found Liable for Contributory Counterfeiting

In a strongly-worded decision issued by a California federal district court judge this week, the owners of TradeKey.com were found liable for contributory counterfeiting and placed under a permanent injunction.

TradeKey is a multinational company with offices in Saudi Arabia, China and Pakistan, which claims to be one of the largest and fastest growing online business-to-business (B2B) marketplace that connects small and medium businesses across the globe for international trade.

For an annual fee of $519, wholesale sellers and distributors can set up customized accounts on TradeKey, offering thousands of items for sale to businesses in bulk quantities.  TradeKey also solicits its wholesale buyers and distributors worldwide to become "premium" members, which costs $3,000 annually.

TradeKey had garnered something of a reputation for being a retail counterfeiters' supermarket.

Undercover investigators working for Richemont became premium members, and were contacted by TradeKey's sales representatives.

When the undercover investigators (posing as wholesale distributors) asked TradeKey's sales representative if there was any problem with selling counterfeit luxury goods on the TradeKey website, the sales representative replied that it was "not a problem," and further said that "as far as the replica industry is concerned it's one of the businesses that we rely on to get us a whole lot revenue."

The investigators also were able to purchase numerous counterfeit goods from a variety of sellers on TradeKey.

Richemont filed suit in Los Angeles federal court against the individual sellers (who defaulted by not defending themselves), but also against TradeKey and its various corporate owners, alleging that they were contributorily liable for counterfeiting.

Essentially, Richemont's lawyers alleged that, by knowingly aiding and abetting the sale of counterfeit goods and receiving a direct financial gain from doing so, TradeKey's owners should be held liable for the sellers' conduct.  Richemont moved for summary judgment against TradeKey and won.

Notably, based on the written decision, it is clear that TradeKey's legal defense was an unmitigated disaster.

TradeKey's lawyers first tried to argue that the undercover investigation was "sloppy" and not credible, suggesting that technical defects in chain of custody forms injured the investigators' credibility.

The Court roundly rejected this criticism, finding that the goods that where purchased were clearly counterfeit and the results of the investigation was very persuasive.

Further, TradeKey alternatively tried to argue that the sales representative "clearly misunderstood the term replica."  The Court found this argument wholly unpersuasive, as it was "undermined by the plain language of his [own] statements, their context" and the fact that the investigators posted multiple listings for counterfeit goods using the term "replica," all with TradeKey's clear knowledge.

TradeKey also even tried to argue that counterfeit products don't cause any consumer confusion, because those consumers purchasing the spurious goods in bulk essentially knew the goods were fake.

Ultimately, the Court rejected all of these arguments, and found that TradeKey had known about widespread counterfeiting activity that was taking place on its website, and found that TradeKey had permitted it to continue in order to unlawfully profit.

Consequently, TradeKey was found legally responsible for the conduct of its counterfeit sellers, and a Court order was entered that permanently prohibits any seller on the site to sell goods bearing the Plaintiffs' counterfeit trademarks.

What lessons can be learned from this important decision?  

First, other trade boards similar to TradeKey should stop harboring counterfeiters.

Second, conducting a thorough undercover investigation before filing litigation is the paramount way to gather evidence.

Third, as a matter of legal strategy, if you are a lawyer defending a client with a difficult factual record, pick your best single legal argument and stick with it.

Attacking the credibility of reputable undercover investigators and simultaneously trying to claim that your client didn't know what the word "replica" means, is not likely to sustain your credibility with the Court, especially when combined with obviously silly arguments such "the sale of counterfeit goods doesn't cause consumer confusion."

Such a tactic will likely anger most judges and won't give you a very strong appellate record if you lose.

Pinterest Sues Travel Planning Startup PinTrips

Social media service Pinterest has filed a federal trademark infringement lawsuit in California against travel startup PinTrips.

Pinterest is a pinboard-style photo-sharing website that allows users to create and manage theme-based image collections such as events, interests, and hobbies.  

Users can browse other pinboards for images, "re-pin" images to their own pinboards, or "like" photos.  The popular site was founded by Ben Silbermann, Paul Sciarra, and Evan Sharp.  It is managed by Cold Brew Labs and funded by a small group of entrepreneurs and investors.

Founded in 2011, PinTrips.com is a Santa Clara, California-based startup.  PinTrips claims that it turns the tedious task of planning and coordinating travel into a seamless experience by allowing a user to "bookmark" specific flights from all travel sites you already use, track and compare results on a main dashboard, and collaborate with others.

According to Pinterest, the startup was faced with a challenging business environment, so it deliberately adopted a name to cause confusion with its popular service.  Further, Pinterest alleges that PinTrips deliberately uses a "Pin" button that Pinterest alleges is a knockoff of its "Pin It" button.

The full Complaint is embedded below:

Trader Joe's Lawsuit Against "Pirate Joe's" Thrown Out of U.S. Court

In August, we reported on the federal trademark infringement lawsuit that had been filed by Trader Joe's against a Vancouver-based retailer named "Pirate Joe's."

The District Court has now ruled that Trader Joe's did not sufficiently allege how commercial activities arising out of consumer confusion in Canada is harming Trader Joe's in U.S. commerce. Consequently, the Court dismissed Trader Joe's federal claims with prejudice.

"Here, all alleged infringement takes place in Canada and Trader Joe's cannot show economic harm," ruled the Court.  "Even if Canadian consumers are confused and believe they are shopping at a Trader Joe's or an approved affiliate when shopping at Pirate Joe's, there is no economic harm to Trader Joe's because the products were purchased at Trader Joe's at retail price."

Trader Joe's now faces a legal conundrum  -- since it has no stores and does not own a trademark in Canada, it is not clear that it can file a trademark lawsuit there against Pirate Joe's.

Additionally, since all the goods that Pirate Joe's sells are genuine and purchased at full price, as the District Court noted, the adverse ruling might lead the Canadian court to agree, and similarly rule that Trader Joe's suffers no harm there either.

Maybe Trader Joe's should just offer Pirate Joe's a distribution agreement?  Just a thought.

Copying the Copycats: Versace and MIA Find Inspiration in Counterfeits

In a bit of "turnaround is fair play," Grammy-award winning rapper M.I.A. has reportedly teamed up with Italian fashion house Versace to design a fashion collection that draws its inspiration from -- of all places -- counterfeit street markets that had been hawking counterfeit Versace designs.

MTV Australia reports that the "Paper Planes" singer said "Versace's designs have always been copied, now it's Versace that copies the copies, so those that copy must copy the copies.  So this will continue."

Donatella Versace told reporters that "when MIA proposed to expose the issue of counterfeit Versace pieces by creating a collaboration inspired by these items, I thought it was an incredible idea."

A photoshoot starring MIA took place in counterfeit marketplaces around London.

Can "ObamaCare" Be Legally Trademarked?

President Obama Signs "ObamaCare" Into Law in 2010

In the last several months, numerous formal trademark applications have been filed with the U.S. Patent and Trademark to attempt to own the term "ObamaCare."

Some were applications filed by insurers or HR professionals, whereas others were filed by opponents of the Patient Protection and Affordable Care Act, which has been dubbed "ObamaCare" ever since its passage in 2010.

For example, the "ObamaCare Calculator" trademark application was filed in August 2013 by Trendsetter, a Texas-based human resources firm.  Meanwhile, "ObamaCare.  Run for your Life," a proposed trademark for sports clothing was also filed, but quickly abandoned.

As reported today by the Wall Street Journal, one of the more controversial applications was filed in July of this year for "Destroy ObamaCare" t-shirts, being sold by a New Orleans-based attorney.  In an interview, the lawyer said that he doesn't "really have a particular desire to see ObamaCare destroyed or saved."  In fact, he has been busy applying for a trademark for "Save ObamaCare" for t-shirts.

The legal problem with all of these trademarks is that they use a living person's name (namely, the sitting President's) without his express written consent.  In recent years, the Trademark Trial and Appeal Board has blocked a number of registrations featuring the President's name, including "Obama Pajama", on this basis.

Therefore, it appears highly unlikely that anyone will be able to legally trademark "ObamaCare," at least in the United States.

Jay-Z, Kanye West, Run D.M.C. and Others Sued for Past Sampling

Unauthorized "sampling" of catchy melodies used in modern music is heating up as a recurring legal issue.  

Several high-profile copyright cases have been filed in recent months against major performers, accusing them of taking a portion, or "sample," of one sound recording and reusing it as an instrument or a sound recording in a different song or piece, without authorization.

As discussed in detail on Wikipedia, sampling was originally developed by experimental musicians in the 1960's.  However, hip hop music was the first popular music genre based around the art of sampling - being born from 1970's DJs who experimented with manipulating vinyl on two turntables.

Sampling is now most often done today with a computer program. However, vinyl emulation software may also be used, and turntablists continue to sample using traditional methods.  The inclusion of sampling tools in modern digital production methods increasingly introduced sampling into many genres of popular music, as well as genres predating the invention of sampling, such as classical music, jazz and various forms of traditional music.

Several recent cases have been filed against established performers, premised on allegations that such activity constitutes a clear form of copyright infringement -- even when the alleged infringement occurred decades ago, and was only recently discovered.

It is likely that sophisticated software tools have allowed performers to go back and analyze musical catalogs to locate potential infringement that may have been harder to audibly detect with the "naked ear."

Jay-Z, Kanye West, Mark Wahlberg, Run D.M.C. and many others face a new copyright infringement lawsuit brought by Twilight Records and Syl-Zel Music which claim that the 1967 song "Different Strokes" that was performed and recorded by Syl Johnson was sampled without permission in a variety of derivative works in the 1990's.

According to the suit which was filed in federal district court in Chicago, Usher infringed upon the Different Strokes copyright with his 1993 song "Call Me a Mack," while Public Enemy allegedly made use of a copyrighted riff without authorization on multiple hit songs including Fight the Power.

Both Mark and Donnie Wahlberg are accused of sampling the same tunes on "The Last Song on Side B."  Run D.M.C. faces similar allegations for its songs "Naughty" and "Beats to the Rhyme."  All of the accused songs were released in the 1990's.

The Different Strokes melody has previously been the subject of similar litigation against more recent music performed by Jay-Z and Kanye West.  A lawsuit filed in 2011 had claimed that those performers improperly sampled the tune on their "Watch the Throne" album.  That suit was settled confidentially.

Putting aside the merits of the factual allegations, the latest cases may face an interesting legal problem.

The U.S. Copyright Act imposes a three year statute of limitations on civil copyright infringement claims from when the claim "accrued," barring a copyright owner from seeking damages for infringement that occurred in the past.

However, where alleged infringement is ongoing, federal courts have split on whether any bar applies, and whether the more flexible and equitable "estoppel by laches" defense should apply.

Furthermore, there is some dispute as to when the statute of limitations begins to run, given modern technology.  Usher's song "Call Me a Mack" was released in 1993, two decades ago.  However, the use of iTunes and cell tone ringtones have created a robust new marketplace for such a song.

The Ninth Circuit Court of Appeals, based in California, ruled in 2012 that an admitted 13-year delay in filing a copyright lawsuit after infringement had been discovered, barred all relief against the defendant.

Other courts have held that the doctrine does not apply in this context, because there is nothing in the text or legislative history of the U.S. Copyright Act that suggests that Congress ever intended for an equitable defense to apply.  It is unclear if the Supreme Court will resolve this split among the federal appeal courts on how to measure a purported delay.

Injunctions against further use of the song by these third parties could present a concern, but equally worrisome to these defendants is the fact that the copyright owner has sought an accounting for all past profits, as well as reimbursement of its' attorneys' fees.

U.S. Trademark Office Could Shut Down Within Weeks

USPTO Headquarters in Virginia

The U.S. Patent and Trademark Office only has enough reserve cash to avoid shutting down completely for "a few weeks," according to a top agency official.

Deputy Director Teresa Stanek told the agency's employees that the agency has enough leftover fee collections from prior years to operate as usual for "at least a few weeks," in the event the federal government does not manage to pass a law increasing the debt limit, which is reached on October 1.

The agency largely funds itself without the need for congressional funds by generating filing fees, but would nonetheless run out of cash and only be able to maintain IT functions in the event of a shutdown.

Congress is in the midst of a deep partisan divide over how to avert the shutdown, with a faction of Republicans in the House joined by a few Republican Senators both trying to use fear of the shutdown as leverage to de-fund the Affordable Care Act, also known as ObamaCare.