Fourth Circuit Remands Rosetta Stone Ltd. v. Google Inc. 2010 Ruling

By Virginia Dudley

On April 9, 2012, the U.S. Court of Appeals for the Fourth Circuit revived the trademark infringement case Rosetta Stone Ltd. v. Google Inc., 730 F. Supp. 2d 531 (E.D. Va. 2010). The Fourth Circuit overturned the summary judgment granted in favor of Google by the U.S. District Court for the Eastern District of Virginia.

The Rosetta Stone case stemmed from Google’s sale of marks as AdWords. Adwords are Google’s online advertizing tool that allows a sponsor to “purchase” keywords that prompt the appearance of the sponsor’s advertisement when the keyword is entered as a search item. Rosetta Stone, a language-learning software company, was established in 1992 and began advertizing in connection with Google’s website in 2002.

Rosetta Stone initially accused Google of trademark infringement as a result of the website’s use of their mark in AdWords. In terms of this appeal, the Fourth Circuit re-addressed the possible elements of confusion, application of the functionality doctrine, dilution claims, and Google’s knowledge of infringement formerly discussed in favor of Google by the district court.

In August 2010, the district court rejected Rosetta Stone’s claim of an element of confusion caused by Google’s use of their mark by considering 3 out of 9 “likelihood-of-confusion” factors: (1) Google’s intent, (2) actual confusion, and (3) sophistication of the consuming public. The district court dismissed confusion claims against Google by ruling that Google did not intend to create confusion and that high consumer sophistication could be determined based on the nature and price of the product alone.

Conversely, the Fourth Circuit called for greater proper analysis of possible evidence of confusion and found a genuine issue of fact in terms of the previously discussed three factors of confusion. In particular, the Fourth Circuit reasoned that Google’s shifting trademark policies from the year 2004 on, as well as Rosetta Stone’s evidence of 123 complaints from those who had purchased knockoff software believing it to be legitimate, could reveal that Google had an intent to confuse. Also, the presence of confusion was further suggested by the difficulty Google’s own witnesses experienced in distinguishing between authentic and counterfeited Rosetta Stone advertisements on the search engine’s site.

Secondly, the district court held that the use of Rosetta Stone marks as keywords was protected by the functionality doctrine. The court found that Google’s use of Rosetta Stone’s trademarks as keywords was functional in that the keywords have “an essential indexing function because they enable Google to readily identify in its databases relevant information in response to a web user’s query.”[1] Trademark law’s functionality doctrine states, “a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” The district court claimed that Google’s AdWords were also protected under the Lanham Act, which states that a party cannot receive exclusive rights over solely functional features. 15 U.S.C. § 1114(a).

This past April, the Fourth Circuit stated that the district court did not consider whether the mark was functional in the way Rosetta Stone used the mark. Instead, the appellate court affirmed that the District Court focused solely on how Rosetta Stone’s mark made Google’s product more useful. The Fourth Circuit asserted that the functionality doctrine had been incorrectly applied to the case. In general, the Fourth Circuit emphasized that the words “Rosetta Stone” are not necessary to the function of the language-learning software, thus establishing the mark’s non-functional nature.

As for dilution claims against Google, the district court denied the presence of dilution in Google’s use of the mark. The district court also applied the fair use argument, which is present in the federal statute dealing with dilution 15 U.S.C. §1125 (c) (3) (a). The district court confirmed that Google did not use Rosetta Stone’s mark to identify its services. Moreover, the possibility of dilution of the mark was also disregarded by the district court as a result of the increase in public awareness of Rosetta Stone’s mark following its appearance in Google’s AdWords.

The Fourth Circuit, on the other hand, found evidence of dilution and stated that the notion of good faith arises in regards to the fair use inquiry mentioned by the district court.

Lastly, the Fourth Circuit addressed the extent of Google’s knowledge of infringement. In 2010, the district court referenced the Second Circuit ruling in Tiffany v. eBay 600 F.3d 93 (2d Cir. 2010)to claim that generalized knowledge of infringement makes Google less liable. The district court also ruled that Google would not be liable unless Rosetta Stone could provide concrete evidence that the search engine was aware that an act of infringement was occurring.

However, the Fourth Circuit held that the district court’s decision was gathered in an inappropriate and untimely manner. As with many of the other aspects addressed in this case, the appellate court supported Rosetta Stone and called for further analysis on Google’s knowledge of infringement in its use of the words “Rosetta Stone.”

Such recall of a former trademark infringement case also occurred on April 5, 2012 when the U.S. Court of Appeals for the Second Circuit heard Viacom International Inc. v. YouTube Inc., No. 10-3270 (2d Cir. April 5, 2012). Similar to Rosetta Stone Ltd. v. Google Inc., the Appellate Court pushed for greater analysis of trademark infringement claims against Google because they found the trial court to have been too swift in their decision making.

In sum, in focusing on the factors of confusion, mark functionality, dilution, and Google’s knowledge, the Fourth Circuit remanded the summary judgment granted by the U.S. District Court for the Eastern District of Virginia in favor of Google. [1]

[1] Rosetta Stone Ltd. v. Google Inc. Court of Appeals, Fourth Circuit 2012. available at,9&as_vis=1

ICANN’s New gTLD: Dot.Protect.Your.Trademark

By Meera El-Farhan

The Internet Corporation for Assigned Names and Numbers’ (ICANN) leap into the new generic Top-Level Domains (gTLDs) will introduce one of the largest unprecedented Internet developments. ICANN’s introduction of the New gTLDs is aimed to promote competition, add consumer choice, increase market differentiation and enhance the diversity pool of geographical and service providers.[1] The New gTLD program allows any private or public entity worldwide to apply for any custom-made gTLDs (example: .com or .yournewdomainname). Furthermore, gTLD strings will be capable of incorporating characters from other languages such as Mandarin Chinese.

Although many corporations and other organizations publicly announced their application to certain gTLDs -Google announcing its application to .google, .docs, .youtube, and .lol- ICANN has postponed sharing applicants’ information until “Reveal Day” (June 13, 2012). On Reveal Day ICANN will publicly post all TLD character strings entities have applied for; thus, triggering the processes of trademark “protection” mechanisms.


The new gTLD is designed to virtually introduce an unlimited number of namespaces. Qualifying for a new gTLD requires an applicant to meet a fairly limited but stringent number of requirements. Once the applicant satisfies the financial requirements, such as the $185,000 fee, the applicant may apply to two types of gTLDs:

  1. Community-based: whereby the applicant must demonstrate its association and representation of a recognizable and defined community.


  1. Standard: applications that do not qualify for community-based usually fall under the standard category.

Additionally, as part of the application process, ICANN will conduct background screening to ensure an applicant passes specific criteria for criminal history and general business diligence.

Furthermore, to be mindful of potential trademark protection challenges, ICANN incorporated mechanisms within the gTLD system itself to ensure legal rights are protected. Prior to the introduction of the new gTLD, previous gTLD expansions allowed ICANN to better-prepare for the coming trademark challenges. Nevertheless, the appropriate balance between protecting trademark owners and other interests cannot be perfected. To assist ICANN with the coming new gTLD, the World Intellectual Property Organization identified the need for “preventative mechanisms;” prior solutions rather than post-remedies. To create such “preventative mechanisms,” ICANN formed the Implementation Recommendations Team (IRT), a team consisting of a diverse group of trademark experts. IRT’s recommendations formed the basis for trademark protections. IRT sought to provide a “tapestry of globally effective-solutions to some of the major overarching issues of trademark protection in connection with the introduction of new gTLDs.”[2] Additionally, many parties in the trademark community also had an influential impact on increasing the protection mechanisms for the new system.


Strategies for Trademark Protection

Although many individuals argue that ICANN’s trademark protection mechanisms tip in favor of trademark owners, such assertions do not translate into guaranteed trademark protections. Private and public entities must remain on the lookout to ensure that their trademark rights are not infringed. Accordingly, there are three approaches a trademark owner may take.

First, participating in ICANN’s processes. ICANN outlined the following three main protection processes within the application to provide various forums for interested groups to discuss, object, or resolve trademark protection issues: (1) Application Comment Process, (2) Program Feedback, and (3) Objection Period.  Trademark owners will likely find the Objection Period to be the most relevant to protecting their trademark rights. According to ICANN, grounds for filing an objection include (1) String Confusion Objections: objecting to strings likely to result in user confusion, (2) Legal Rights Objection: objecting to strings infringing on existing legal rights, (3) Public Interest Objection: objecting to strings contrary to international legal norms of morality and public order, (4) Community Objection: a significant portion of the community which the gTLD string is targeted at objecting to the gTLD. [3] Note that an objector does not need to be an applicant.

Second, utilizing the mechanisms ICANN will facilitate once the new gTLD program is operating:

  1. 1.      Trademark Clearinghouse: this repository organization accepts, authenticates, stores and pertains rights of trademark holders. Trademark holders are advised to register their trademarks to increase trademark protections. Additionally, the Clearinghouse will serve as an information bank enabling trademark owners to have access to a wide-variety of gTLD information.
  1. 2.      Uniform Dispute Resolution Policy (UDRP): UDRP is limited to clear cases of “bad-faith, abusive registration and use of some domain names.”[4] UDRP, being an out-of-court mechanism, applies to all gTLDs. Successful claims enable the transfer of the infringing domain name to the complainant’s control.
  1. 3.      Uniform Rapid Suspension system (URS): URS is also limited to clear cases of trademark infringements. Remedies under the URS are limited to temporary suspension of a domain name for the duration of the registration period.  Additionally, a successful complainant has the option of paying for one additional year at commercial rates.

Third, additional steps a trademark owner is recommended to take are: (1) applying for a second-level domain within a new gTLD registry, and (2) monitoring Reveal Day’s published gTLD strings to object to those in conflict with the entity’s trademarks.

Future Considerations and Challenges

Introducing the new gTLD will create a multitude of global challenges thus affecting organizations of all sizes. Entities are advised to avoid the wait-and-see strategy. Instead, entities should reassess risks associated with their trademarks continuously. Although the new gTLD’s risks might not be fully understood today, organizations are advised to plan, discuss, and carefully evaluate the implications of the new gTLDs as it unfolds itself worldwide.


Introducing Stein McEwen LLP Fall 2012 IP Training Program October 1-19, 2012

 Stein McEwen LLP is pleased to announce that it will be hosting an intellectual property training program from October 1-12 with an add-on session from October 15-19, 2012 in Washington DC.

 The purpose of the Stein McEwen LLP Fall 2012 IP Training Seminar is to provide an overview of U.S. Intellectual Property Law, including patents, trademarks, copyrights, and trade secrets. The lectures will cover fundamentals of patent procurement, with optional sessions extending to the scopes of trademarks and copyrights, IP licensing, and IP litigation. A series of lectures will be presented by Stein McEwen LLP attorneys regarding these subjects, including workshops for the participants to receive hands-on experience.  These workshops will include activities such as reviewing disclosures of an invention and drafting sample claims to cover the subject matter of the invention. Tours of the U.S. Patent and Trademark Office, the U.S. Court of Appeals for the Federal Circuit, and a U.S. District Court will allow the participants an opportunity to understand the complexities of these agencies and courts.  At the U.S. Court of Appeals for the Federal Circuit, the participants will likely have an opportunity to observe a portion of a hearing involving patents. The IP Training Seminar is intended to provide a broad-based understanding of U.S. Intellectual Property Law, with a strong emphasis on patents. The already-implemented and still-to-take-effect provisions of the Smith-Leahy America Invents Act (AIA) will be woven throughout the syllabus.


Who Should Attend?

In-house staff members of corporate IP departments, patent attorneys, staff members of overseas law firms, inventors, and members of academia who deal in some aspect of IP.

Basic understanding of patent law for at least one country is recommended. No formal registration of any country’s patent office is required.

More information can be found at

If you have any questions, please contact Sarah Brogi at or

Hermes LosesTrademark Battle on its Chinese Name for the Third Time in China

By Evelyn Li

Beijing Municipality First Intermediate People’s Court ruled against Hermes International on its appeal for an earlier 2011 decision made by the Trademark Appeal Board of State Administration for Industry and Commerce of PRC (the “Board”) on an issue of a trademark cancellation dispute. A clothing manufacturing company in Guangdong province, China, applied for the trademark “ai ma shi (爱馬仕)” with the Chinese Trademark Office in 1995. After passing the Board’s preliminary review and being publicly announced through the official trademark Gazette in 2002, the manufacturing company, Dafeng Garment Factory (“Dafeng”), gained trademark rights to use the mark “ai ma shi (爱馬仕)” in China mainland. “Ai ma shi” is what the Chinese call Hermes in Mandarin. Although there are several different ways for spelling out “ai ma shi” in Chinese characters, all of them look extremely similar and all of them pronounce the same way.

According to the record in the Chinese Trademark Office and the Board, Hermes had asked the trademark office and the Board separately in 1997 and 2001 to cancel the trademark registration of Dafeng’s “ai ma shi”, but was denied both times. In 2009, Hermes asked the Board to cancel the disputed mark “ai ma shi” used by Dafeng on ties and clothing, saying Hermes’s Chinese name enjoyed a high reputation around the world including mainland China, but this argument was again rejected by the Board. Hermes had not lost its hope at that point.

After learning the Board’s ruling, Hermes sued the board in Beijing Municipality First Intermediate People’s Court asking for a reversal of the Board’s decision in 2012. And this time, Hermes was let down again. The Beijing court did not agree with Hermes on its arguments and accordingly affirmed the Board’s decision, allowing Dafeng to continue the use of trademark on “ai ma shi.”

Admittedly, Chinese courts sometimes share a reputation of favoritism towards national businesses, and Hermes’s foreign identity most likely did not help it in the case. However, if we read the Chinese trademark law carefully, the failure to convince the Beijing court in this case was most likely a result of Hermes’s ineffectiveness on proof of being a “well-known” mark to the related public in mainland China. Court records showed that most of the evidence presented by Hermes was media reports fifteen years ago from Hong Kong. Those reports are not enough to prove the “well-known” requirement of a mark under Article 13 of the Trademark Law in China. Besides, Hermes also failed to provide evidence showing the disputed trademark was acquired by Dafeng illegally. Consequently, the court ruled against the French luxury brand. Hermes lost the battle for taking backing its Chinese name for the third time.

It has always been somewhat ambiguous for foreign companies, even the ones with registered marks in mainland China, to figure out what the standard is when Chinese courts rule on the issue of “well-known” marks. Statutes from the Chinese Trademark Law Article 14 listed out five factors that shall be considered in determining whether a mark is well-known: (1) the degree of knowledge of the relative public; (2) the duration of use; (3) the duration of time, degree and geographical range of any publicity of the mark; (4) any record of the mark being protected as a well-known mark; (5) other factors which make the mark well-known. Courts in most cases consider all the factors together as a basis for their rulings. Nevertheless, results of different cases show that courts have not followed a consistent pattern—a considerable amount of judges’ discretion is often involved in the outcomes of cases. Interestingly, in this case, the Beijing court’s ruling hardly showed much of a judge’s discretion on weighing of those aforementioned factors. It seemed relatively clear that Hermes had not quite satisfied the burden of proof that it had become famous in mainland China before Dafeng’s registration of “ai ma shi,” which probably requires showings of sales records, market promotions and other related evidence from mainland China before 1997. It is not clear whether Hermes only had related evidence before 1997 from Hong Kong area, or it was not very well prepared to meet the requirements of being a “well-known” mark before 1997 in mainland China for this particular lawsuit.

After the courts’ decision, Hermes and “ai ma shi” will exist together in the mainland market. Hermes will probably have to reconsider its promotion strategy in order to make sure consumers in China are not confused when they speak of Hermes’s Chinese name. (Remember “ai ma shi” is what the Chinese call Hermes in mandarin.) Or Hermes could try to buy the name from Dafeng. But after observing a series of trademark cases concerning similar issues, specifically Ipad v. Proview and Michael Jordan v. Qiao dan (both mentioned in our previous blog articles), Dafeng will probably not be very easy-going in any negotiations for a fair price on its mark.

An interesting question to ask is why such a big brand like Hermes, who registered its mark with the Chinese mainland government in the year 1977 would lose for the third time in this thirty- year long battle against a relatively small clothing manufacturing company in China. It is possible that Hermes neglected the importance of obtaining a Chinese name/Chinese transliteration of its mark when it first registered in 1977. However, Dafeng only applied for registration of the mark “ai ma shi” in 1995. Hermes did use an almost identical Chinese transliteration in Hong Kong before 1995 for many years, but it never registered that transliteration with the trademark office of mainland China. Some are wondering if it is too late for Hermes to get angry at acts of Dafeng in 1997 when it eventually realized the importance of getting back the Chinese name.

A lesson to be learned from this case for companies who is planning to enter the market of mainland China, is that they need to think ahead of time a catchy translations in Chinese for their products in order to avoid similar trademark problems later. Chinese customers are often more comfortable accepting foreign products that bear “friendly” names in Chinese. (e.g. Coke’s Chinese name is “ke ko ke le”, which not only sounds like Coca-Cola but also means ‘tasty and feel happy’ in Chinese.)

If a company’s mark is already enjoying fame internationally, that company should always be very careful in choosing its Chinese name because someone in China might have already registered a transliteration for that company’s mark and might have already been using that transliteration for a while.  Consultation with attorneys well-versed in Chinese trademark law is well-advised.

Linsanity Hits Trademark Registration both in the United States and China

By Evelyn Li

New York Knicks’ rising star Jeremy Lin has filed a trademark application with the United States Patent and Trademark Office for the term “Linsanity” on Feb. 13th, 2012. Three different fillings under the same term came to the agency before Lin acted on claiming his IP rights. Yenchin Chang, one of two California applicants who works as an importer/exporter, has paid the $1,625 filing fee to use the phrase on sports apparel so that he could “be a part of the excitement.” The other California applicant, Slayton, purchased the domain name None of those three applicants have any ties to Jeremy Lin.

15 USC §1052 (c), states that no trademark shall be refused registration unless it “Consists of or comprises a name, portrait, or signature identifying a particular living individual except by his written consent, or the name, signature.” Also, in determining whether a particular living individual with that “name” would be associated with the mark, the TTAB must consider: “(1) if the person is so well known that the public would reasonably assume the connection, or (2) if the individual is publicly connected with the business in which the mark is being used.” Given the popularity the term “Linsanity” has gained through media publication and other communicational channels, it would appear that the public is well informed of the indication on the identity of Lin whenever such term is used. Thus, if anyone tries to put “Linsanity” on their product, they would very likely need to obtain Lin’s written consent. However, it is unlikely that Lin will give his consent since he is already applying for the same term for his own trademark.

On the other hand, because these applications are still in the process of trademark examination, they all need to show “use” on the term in identifying the source of their goods. To fulfill the “use” requirement, applicants must provide “one specimen showing use of the mark in commerce for each class of goods/services.” It remains unclear whether the applicants will be able to show such specimens. In addition, if a potential mark is used “solely to identify a character” it is unlikely that the application for registration will be successful. “[P]ersonal names (actual names and pseudonyms) of individuals or groups function as marks only if they identify and distinguish the services recited and not merely the individual or group.” In re Mancino, 219 USPQ 1047 (TTAB 1983). It is arguable whether “Linsanity” qualifies as a source identifier due to the lack of use in all of the applicants’ cases.

Another interesting report from the China Daily, the Chinese government’s official English language newspaper, just made Lin’s case more complicated. According to the report, Minjie Yu, owner of WuxiRisheng Sports Utility Company, has successfully registered the trademark “Jeremy S.H.L.” with the Chinese trademark office in 2010 prior to Jeremy Lin’s rise to fame. The company applied to trademark a variation of Lin’s name, “Lin Shuhao (in Chinese characters) Jeremy S.H.L. (initials of Lin’s Chinese name),” according to the website of the trademark office of China’s State Administration of Industry and Commerce. The application was approved in August, with the company paying just 4,460 Chinese yuan (US$710) for the rights and creating a headache for Lin and his corporate partner Nike, with whom Lin signed a three-year contract in 2010. WuxiRisheng Sports Utility Company is a major manufacturer of sports equipment in China, reportedly producing about one million basketballs, volleyballs, and soccer balls each year. Under the registration of Lin’s name, the company is entitled to use the trademark for sportswear, accessories, balls, and toys until August 2021. According to Chinese trademark law, if Lin wants to use his name as trademark on any goods he wants to sell in China, he will have to obtain WuxiRisheng’s consent.

Under Chapter I Articles 9, 10, and 11 of the Trademark Law of the People’s Republic of China, there are limitations against registering certain types of names and symbols as trademarks. However, there are no clear regulations on whether anyone could register a trademark under the names of celebrities. If anyone wanted to register a celebrity name as trademark, the trademark examiner has relatively broad discretion in granting the application. As a result, celebrities often find it hard to rely on the judgment of those examiners to protect their commercial interests. Thus, the Chinese trademark system makes it relatively easy for other people to profit from celebrities’ names and the protection of trademark interests under celebrity’s names is mostly the burden of the celebrities themselves. In Lin’s case, he could have filed a trademark opposition claim within three months of the publication of the preliminary examination and approval of WuxiRisheng’s trademark under Chapter III, Article 30 of the Trademark Law of People Republic of China. Such a claim would require Lin to present proof that the use of his name as another’s trademark harmed his reputation or confused the related public. However, as the three month period has elapsed, Lin may no longer choose this course of action.

However, there is another way for Lin to bring an action against the company in China. Under Chapter V Article 41 of the Trademark Law of China, Lin may file a request with the Trademark Review and Adjudication Board for adjudication to cancel the registered trademark. Although highly unlikely to succeed, Lin may petition the Board to revoke WuxiRisheng’s trademark by asserting that his name is a “well-known mark” and was registered in bad faith by WuxiRisheng.

Where the Chinese Trademark Law has failed to adequately protect the rights of private persons to trademark their name, courts have introduced principles found in Chinese civil code. When cancelling registered trademarks under celebrities’ names, courts have considered Article 9 of the Chinese Trademark Law together with the rights guaranteed under Article 99 of the General Principles of the Civil Law. Article 9 states that, “the trademark for which an application for registration is filed shall have distinctive characteristics easy to identify, and may not conflict with the legal rights acquired by others in priority.” Under Article 99, “Citizens shall enjoy the right of personal name and shall be entitled to determine, use or change their personal names in accordance with relevant provisions. Interference with, usurpation of, or false representation of personal names shall be prohibited.” Thus, Lin could argue that the right to use his personal name existed prior to the WuxiRisheng’s trademark rights. However, Lin would have a difficult time convincing a Chinese court to revoke WuxiRisheng’s trademark under this rationale because the courts rarely uphold the rights of foreign nationals over that of Chinese citizens.

It should be noted that there is no “first to use” doctrine under Chinese trademark law. Instead, China uses the “first to register” doctrine. Therefore, based on the facts of Lin’s case, the Chinese company has a very good chance of prevailing in the Chinese courts.

It is not a new trend in China for businesses to register trademarks under celebrity names, both foreign and domestic. In fact many businesses have been making considerable profit using such names as their trademarks for a long time. For example, most recently, Michael Jordan has brought lawsuit against Fujian Province-based Qiaodan Sports Co. Ltd. for allegedly building its business around his Chinese name and jersey number. Unfortunately the case was thrown out by a court in Beijing. In the court’s decision it stated that Michael Jordan’s Chinese name was “neither distinctive nor unique.” The court found the name “Qiaodan” was a common one, which could refer to any number of people and didn’t specifically refer to the former NBA superstar. Similarly, if Lin were to bring a lawsuit against WuxiRisheng’s registration on his Chinese name, he would most likely be facing the same difficulty in proving that his Chinese name solely indicates him. In addition, the businesswoman who registered Lin’s name has also registered other basketball players’ names based on her judgment of their future potential. As long as she claims that making such registrations is an “entrepreneurial investment”, she should be safe under the current Chinese trademark system.

There is an old saying in China that one should “think twice before acting.”  Given the realities of the Chinese trademark system, it appears that Jeremy Lin should think twice before planning to bring a trademark suit in China.

Levi Strauss Wins a Trademark Infringement Lawsuit in China

By Evelyn Li

Levi Strauss recently won a trademark lawsuit in China against four Chinese companies on its trademark infringement claim regarding its double-arc stitching design. Levi asked the court to order the four companies to immediately stop using its double-arc stitching design, destroy all infringing products and delete all Internet ads. Moreover, it also asked for compensation of 1 million yuan from the infringers, “Jasonwood” brand owners and their manufacturer. The Chinese companies argued that they designed their trademark based on the letter “J,” and it is different from Levi Strauss’ design. But the court was not convinced.

The main issues in the case were: (1) whether the two trademarks were in fact similar; (ii) whether the double-arc mark on Levi Strauss’s jeans has gained distinctiveness as required by the Trademark Law of China so that any similar marks used on the same class of goods would cause confusion among the relevant public; and (iii) whether the plaintiff Levi Strauss is entitled to recover a damage of 1 million yuan based on the infringement of its trademark.

By comparing the two trademarks in dispute, the designs are could likely to be found identical. Thus, the defendants argued that the “double-arc” design used on jeans’ back pockets is too common of a practice to be granted an exclusive right under the protection of the Trademark Law of China. Such an argument has weakness because, first of all, the Levi Strauss’s trademark is a registered mark in mainland China and therefore enjoys all the exclusive trademark rights under the law; secondly, Levi Strauss has already been using the mark in the course of commerce in the mainland market for more than 10 years and has done a significant amount of promotion in educating the public with the trademark on its product. Under Article 11 of the Trademark Law of China, those marks that lack distinctive characteristics may not be registered as a trademark unless they later obtained distinctive characteristics and can be easily identified through use. So based on the facts admitted by the court, the relevant public has become so familiar with Levi Strauss’ trademark that they would be confused by an almost identical mark on jeans produced by another company.

As to the damages of a million yuan, which Levi Strauss asked for, the court has reduced the amount to 350,000 yuan. The court took the following argument into consideration in reaching the final decision on such number: that Levi Strauss is a famous mark; that the defendants’ infringing goods have been sold in a relatively large number covering a broad geographic area and therefore has harmed the Plaintiff’s trademark to a relatively high extent; that the defendants ignored all of the attorneys’ letters sent from the plaintiff asking for a halt in sales of the infringing goods and therefore shows the malice on the defendants part; that the defendant has used its mark in the course of commerce in its own stores with promotions on its own brand and therefore the defendant will likely suffer great loss from losing their right to use the infringing trademark.

The defendants are planning to appeal the court’s decision.

The following are a few take-a points to be gleaned from the matter:

First, as more and more internationally well-known brands are entering Chinese mainland market, cases like this are becoming common to the Chinese courts. Companies should not be surprised to find similar designs to their trademarks or a transliteration on their marks in Chinese characters in the market. (“Hermes” lost its case to a Chinese company who owns the Chinese transliteration to the Hermes trademark.)

Those companies who own the famous trademarks should act timely on obtaining a trademark registration with the State Trademark Office. In filling the application, counsel should always consider adding the Chinese transliteration to their original trademark of other languages. Always remember that China is a “first to register” country.

Second, registration strategy is very important to big brand holders. Usually, it is beneficial to register one main mark with a series of subsidiary marks along the line so that the protection could be extended to cover more goods of the same company, and to cover a wider range of variations on the marks. Besides, many restrictions on the main mark registration will not apply to the subsidiary marks. So companies should be more flexible and creative on their choices of words or symbols on those subsidiary marks.

Has Christian Louboutin Committed Trademark Shoe-icide?

By Rob Lower

With a trademark this fragile, Christian Louboutin shouldn’t throw stones in a glass house. Last year, Louboutin sued another high-end shoemaker, Yves Saint Laurent S.A.S., alleging YSL’s shoes infringe Louboutin’s federally registered trademark for red shoe soles. On top of losing in Southern District of New York late last year (appeal pending), Louboutin is now defending counterclaims by YSL seeking cancellation of the red sole mark along with damages.

So can you actually get a trademark on a color? Yes, says the Supreme Court, along with a list of caveats below. First, here’s the shoes:

Left — Louboutin’s Rolando
Right — YSL’s Palais 105 (one of YSL’s four allegedly infringing monochrome shoes)

While this looks like a home run for Louboutin at first blush, his registered mark looks quite a bit different:

As implied by the registration, Louboutin’s red soles are unique only when the rest of the shoe is not red. Additionally, Louboutin’s optimistic claim to all-red shoes raises issues raised by the Supreme Court last time they addressed color trademarks. In Qualitex v. Jacobson Products Co., 514 U.S. 159 (1995) the court allowed a “green-gold” color trademark for dry cleaning press pads. However, the court was careful to limit the holding that “no special legal rule prevents color alone from serving as a trademark”, stating color “cannot serve as a trademark” if it is “functional”. According to the court, color is “functional” for trademark purposes when it is “essential to the use or purpose of the article or if it affects the cost or quality of the article”.

For example, a trademark for the color black on car tires would be functional, because changing tires’ natural color would raise the cost of manufacture. Similarly, the color red as used in traffic lights is essential to accomplishing lights’ purpose of stopping traffic.

Louboutin has a good argument that the increased cost of installing “lacquered red soles” falls solely on him and not his competitors. Although not explicitly stated in Qualitex, the court was clearly concerned about increased costs for competitors of color mark holders. Nonetheless, for shoes manufactured as a single part from colored foam (e.g., Crocs), red shoes soles cannot be made in any color but red without altering the manufacturing process. For Crocs, compliance with Louboutin’s expansive claim would require modification to hide the color of the sole, driving the total cost of manufacture up for red Crocs like these:

Although shoes by Louboutin and YSL are sharply distinguished from Crocs in price and appearance, Louboutin has sued other low cost shoemakers in the past for infringement. See, Zara France, S.A.R.L. v. Christian Louboutin, S.A. (En français).

Another example, Mont Blanc’s “snowcap” mark, is a clear indication of Mont Blanc only because of what the rest of the pen is not — white. If the entire pen were white, the snowcap would lose its capacity to indicate the source of the pen. For the same reason a lawsuit by Mont Blanc alleging infringement by an all-white pen ought to fail, Louboutin’s claim to all-red shoes should be dismissed.

Prospective plaintiffs should hold competitors’ products up next to their registration, and not their products, before filing infringement suits to see if their allegations can pass the straight face test. Louboutin now faces a substantial likelihood of losing his registered trademark mark along with his case, which remains on appeal in the Court of Appeals for the Second Circuit, where oral argument was held 24 January 2012.

Fortune Apple falls on the head of Proview— Proview Shenzhen sees a new way to get out of its debt

By Evelyn Li

Apple’s successful marketing on its product “iPad” may be facing a big loss in China when a court in China rejected its claim on ownership of the iPad trademark in the country. The court ruled for its rival Proview Technology (Shenzhen) Company Ltd. (Proview Shenzhen), a struggling company that registered trademarks for the name IPAD in mainland China long before Apple conceived its smash hit tablet computer.

Following the court’s decision, Proview Shenzhen has sought to halt sales of Apple’s iPad in two Chinese cities. A court in Shanghai refused its request on preliminary injunction on “all sales of ‘iPad’ by Apple Computer Trading (Shanghai) Company Ltd.” due to “the uncertainty of the decision which will be made by the High People’s Court of Guangdong on trademark ownership over ‘iPad’.” Although Apple was able to stop the preliminary injunction, the appeal to the High People’s Court of Guangdong does not look optimistic.

One big problem for Apple on its appeal is the proof of existence of a valid contract between Proview Shenzhen and Apple’s shell company IP Application Development in Britain on the transfer of the ownership on “iPad” trademark in mainland China. Apple believed that a 2006 agreement between Apple and Proview Electronics Company Ltd. (Proview Taipei) to sell Apple the “global trademark” for the iPad name for around $54,000 includes mainland China. Proview Shenzhen claimed that it was not involved in such negotiation.

Based on the facts presented by Proview Shenzhen, it arguably holds the “iPad” trademark registration on record with State Trademark Office in mainland China since 2001. Therefore, the inference would be that Apple was not careful enough to follow up on the procedural requirements after signing the contract with Proview Taipei to make sure that Proview Shenzhen transferred its ownership on two registrations. It is possible that the lawyers of Apple did not understand very well while dealing with Proview Taipei that the two companies are treated as two different entities under the Contract law of mainland China, even though both companies are subsidiaries of a parent company, Proview International Holdings Ltd. Or it is also possible as Proview Shenzhen claimed that Apple’s counsel was confused about the authorities of certain employees from Proview Shenzhen during the communication through e-mails. According to the evidence admitted by the Chinese court on contract for sales of ownership on ten registered “iPad” trademarks, Proview Taipei only had ownership on eight of those registrations in a number of countries not including mainland China. And Proview Shenzhen was most likely the owner of the other two registrations in mainland China. Therefore, without Proview Shenzhen’s consent and signature, Proview Taipei could not transfer the two trademark registrations.

Moreover, under Article 39 of the Trademark Law of China, where a registered trademark is assigned, “the assignor and assignee shall conclude a contract for the assignment, and jointly file an application with the trademark Office.” Also under that statute, “The assignment of a registered trademark shall be published after it has been approved, and the assignee enjoys the exclusive right to use the trademark from the date of publication.” Therefore, even if Apple could prove on appeal that the contract of all ten trademark registrations on the “iPad” from Proview Taipei had Proview Shenzhen’s official consent and signature, Apple would still need to show that it has fulfilled those procedural requirements under the Trademark Law of China before it started selling iPads in mainland China.

It should be noted that assignment contracts of trademark ownership are characterized as “consensual contract” instead of “real contract” in mainland China. More specifically, under Article 44 of the Contract Law of China a lawfully formed contract usually becomes effective upon its formation. However, “Where effectiveness of a contract is subject to any procedure such as approval or registration, etc. as required by a relevant law or administrative regulation,” such provision applies. Thus even if Apple could prove that a contract was formed between Apple and Proview Shenzhen, Proview Shenzhen could still claim that the contract has not become “effective” under the Trademark Law of China and therefore could still be terminated by the parties under certain circumstances.

Many believed that Apple would settle the case with Proview Shenzhen, and Proview Shenzhen has stated many times that it is willing to settle with Apple on the case. However, Apple also worries that doing so would likely encourage more frivolous lawsuits from companies like Proview Shenzhen. Whatever Apple decides, the litigation situation does not look good. If the High People’s Court in Guangdong rules for Proview Shenzhen on Apple’s appeal, under the The Regulation for the Implementation of the Trademark Law of the People’s Republic of China, Apple will be liable for “the infringements on registered trademark rights,” and be fined “no more than three times of the amount of profit made on such illegal business.” In addition to that, Proview has asked for damages on lost profits and attorneys’ fees.

There are cases and opinions from the Supreme People’s Court of China and some Provincial High People’s courts establishing relevant principles in deciding on trademark infringement cases. Those principles suggest that courts should rarely support claims of damage on unused registered trademarks. Also, on deciding issue of damage on such cases, instead of calculating the unjust enrichment of the infringer, courts should only look to actual loss of trademark holders who are able to prove the amount of damage. In addition those opinions also suggested a requirement for trademark owners to provide evidence on use of the trademark within three years of their infringement lawsuit. Therefore if Proview has not been using the trademark in fact in the course of commerce, its chance of getting a huge amount of damage from Apple is very little on the appeal.

The following are a few take-away points to be gleaned from the matter:

First, to confirm trademark ownership in China, businesses must look to the official Gazette of the State Trademark Office of China. Counsels must make sure the procedure for transfer of trademark ownership required by the Office has been satisfied. Otherwise the transfer is not complete and the earlier owner still holds the trademark as its own.

Second, the authority of employees from Proview Shenzhen who communicated through e-mails with Apple during the contract negotiation with Proview Taipei was one of the focuses on the appeal. Apple brought up this issue first in the trial court to help its argument on formation of the contract. There, Apple claimed “apparent agency” during the negotiation process. However, on the appeal level Apple changed its theory to “undisclosed principal”.

First of all, those two theories are contradictory to each other under the Contract Law of China. And it is unclear whether Apple was being a bit careless on its arguments for the trial level, or Apple did it on purpose for strategic reasons. Secondly, Apple should have been more careful in checking the authority of those employees they were negotiating with through e-mails. It should have been aware that the signing party on the contract was only “Proview Taipei”, and should have asked for clarifications from Proview Taipei on its authority to transfer the two registered trademark rights in mainland China. Apple tried “group transactions” theory to try to convince the court on the appeal that the deal it made with Proview Taipei includes all of the ten trademarks because both Proview Taipei and Proview Shenzhen are subsidiaries of the same parent company. But, such theory does not exist under Chinese law. Even if applying the concept here, Apple mostly likely would still need to show every party’s consent and signature in the “group” for the transfer.

Although Apple tried to bring Article 402 of the Contract Law of China to help establishing the applicability of “undisclosed principal” theory, it is highly likely that the court will deny the argument for more evidence is needed to prove Proview Taipei acted as an agent for Proview Shenzhen during the contract negotiation. (Article 402 states “Where the agent, acting within the scope of authority granted by the principal, entered into a contract in its own name with a third person who was aware of the agency relationship between the principal and agent, the contract is directly binding upon the principal and such third person, except where there is conclusive evidence establishing that the contract is only binding upon the agent and such third person.”)

Third, it is wise for Apple to move timely in stopping the preliminary injunction Proview Shenzhen sought in the Shanghai Court after Apple lost its first case on the trial level. Otherwise, when provincial administrations for industry and commerce take actions under the courts’ decisions, Apple’s loss could be much greater than it would have imagined.

Getting to “Use”

By Dan McPheeters and Michael Stein


In our earlier post, we discussed the ambiguities surrounding the determination of whether or not a mark had been used in commerce sufficiently for federal trademark protection to accrue. The case-law revealed strong support for an “analogous use” doctrine that falls somewhere below actual sales, though how much lower is ambiguous and will certainly require litigation to confirm. If only there existed some resource, something up to date and freely accessible to all, where one could turn for help navigating these deep and existential questions…

The analogous use doctrine vests rights in a mark when the marketing and promotion of the product or service with which the mark is associated rise to the level of communicating a bona fide intention for “continuous commercial utilization” of the product. Examples cited approvingly by Courts range from Marvel Comics’ distribution of 430,000 fliers with the title of a new comic book to the creation of a webpage that was “universally available,” “place[d] the mark in the public domain,” and attached the mark to Plaintiff’s product “in a readily accessible manner.” The focus will not necessarily be on the number of persons who are actually touched by the marketing scheme, but rather the nature of the marketing scheme such that the mark and its connection to a product or service is readily accessible to the public.

This is all well and good, but begs the question: By what standard can a non-sale be evaluated in order to determine whether or not trademark protection vests? First, it would be helpful to briefly define the elements.

Addressing the low-hanging fruit, bona fide means, quite simply, with good faith. Drawing from our earlier post, the café owner Santambrogio from Buti v. Impressa Perosa S.R.L. would likely be unable to establish a bona fide intent to commercially exploit clothing apparel marks included on his T-Shirts. This is because his intent was not to sell apparel; it was to advertise a café. Absent a connection to the café itself, Santambrogio’s claims to a mark would fail.

Continuous, commercial utilization is, practically speaking, the act of selling the product or service on an on-going basis. A use intended solely to expose the mark publicly in order to gain protection is not enough. Aktieselskabet AF 21 November 2001 v. Fame Jeans Inc., 525 F.3d 8, 20 (D.C.Cir. 2008). It stands to reason, based on the purpose of trademark law, that “on-going” and “continuous” relate to the amount of time required for the mark and product to become connected in the minds of consumers. Cf. Halo Mgmt., LLC v. Interland, Inc., 308 F. Supp. 2d 1019, 1033.

Thus, the analogous use standard can be restated as marketing or promotion sufficient to communicate to consumers the intent to connect the product (or service) and mark for enough time as it takes consumers to view the mark as the brand signifier for the particular product sold by the particular company. So when will marketing or promotional plans achieve this goal?

Halo Mgmt. placed the threshold at “public and widespread dissemination” and ruled that an internet homepage was sufficient because it was widely accessible, even though it had not been widely accessed. 308 F. Supp. 2d at 1033. The focus on accessible as opposed to actual access cannot be overstated.

The Court in Brookfield Communs., Inc. v. West Coast Entm’t Corp. believed that a website by itself was insufficient because only a limited number of persons were aware of its existence. 174 F.3d 1036, 1052 (9th Cir. 1999). The mild conflict regarding the sufficiency of a website can be attributed in part to the time period of each case; between Brookfield (decided in 1999) and Halo Mgmt. (decided in 2003), the internet became much more ubiquitous as a communication and marketing tool, and this trend has increased by orders of magnitude since. The result is that websites present a stronger case for widespread dissemination than the Brookfield decision would indicate. Interestingly, the parties in Brookfield stipulated that a nationwide press release constituted a use in commerce, an outcome the court was likely to reach for the reasons that follow.

There is also something fundamental behind the Halo decision, and why the parties in Brookfield would stipulate to a national press release, regardless of any indication on the record that it was ever read. Both Halo and the national press release in Brookfield reflect an affirmative attempt by the producer to publicly disseminate the mark in a commercial context. Whereas “” was unsuccessfully defended on the grounds that the mark was used in e-mail correspondences, such use is far different from a press release in a major newspaper, or ad space purchased from Google. Affirmative steps taken with the intent that they be received by the public generally, as opposed to specific members of the public, form the basis of satisfying the analogous use doctrine.

By Dan McPheeters and Michael Stein

Some examples of activities that may be protected under the analogous use doctrine are: national or regional advertising with Google or a cable company; passing out fliers or pamphlets at multiple locations around the country, such as train stations or city centers; a readily accessible web presence; the pre-production distribution of marketing materials and signage to distributors and/or retailers. The mark and associated product must be connected in some way, and it is likely that a suggested method of interaction accompanies the mark; because the basis for protection is the intent for commercial exploitation, it seems necessary that there be some means by which a prospective customer can readily purchase the product, or in some way interface with the product and producer. A website address, phone number, or local address will likely suffice.

Uses Wild

By Dan McPheeters and Michael Stein

Trademarks have been an interesting topic of late, particularly with the drama surrounding Apple’s voyage into China. One interesting question that has not received much coverage of late is when exactly a mark qualifies for federal protection. This post and its follow-ups will explore one method of applying for trademark protection that is particularly ambiguous.

Among the five bases for filing a trademark application, one popular method is a “use” application, which is allowed under 37 C.F.R. § 2.34(1).  The core element to filing such an application is the requirement that product is “in use in commerce” under 15 U.S.C. § 1127. 37 C.F.R. § 2.34(1). The phrase “use in commerce” is defined in 15 U.S.C. § 1127 as:

the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this Act, a mark shall be deemed to be in use in commerce–
(1) on goods when–
(A) it is placed in any manner on the goods or their containers or the     displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and
(B) the goods are sold or transported in commerce, and
(2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.

Courts have been uniform in recognizing that the qualifying phrase “in commerce” indicates Congress’ intent to apply this provision to the full extent allowable under the Commerce Clause. See, e.g., Buti v. Impressa Perosa S.R.L., 139 F.3d 98, 102 (2d Cir. 1998) (quoting United We Stand America, Inc. v. United We Stand, America NY, Inc., 128 F.3d 86, 92 (2d Cir. 1997)). Any use must be bona fide, meaning the use must demonstrate an intention for “continuous commercial utilization” of the mark in connection with the product or service. Aktieselskabet AF 21 November 2001 v. Fame Jeans Inc., 525 F.3d 8, 20 (D.C.Cir. 2008) (internal citations omitted); Allard Enters. V. Advanced Programming Res., Inc., 146 F.3d 350, 358 (6th Cir. 1998) (internal citations omitted). However, Courts have been inconsistent in determining where the line for commercialization is drawn, and to what extent a mark must be disseminated before protections will attach. Compare Buti, 139 F.3d 98 and Fame Jeans Inc., 525 F.3d 8, 20 (D.C.Cir. 2008) (rejecting the argument that a product met the “use in commerce” standard when the alleged use was the sale of T-Shirts emblazoned with the logo of a foreign café, and mentioning a product’s U.S. availability in press releases, respectively), with Brookfield Communs., Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1052 (9th Cir. 1999) and Halo Mgmt., LLC v. Interland, Inc., 308 F. Supp. 2d 1019, 1033 (N.D. Cal. 2003) (recognizing that rights to a mark can vest prior to the actual sale of a good if there is public and widespread dissemination of the relevant marketing materials, or if “the totality of [the seller’s] prior actions, taken together, can establish a right to use the trademark,” respectively) (internal quotations omitted).

In Buti and Fame Jeans, the Courts were confronted by what can best be described as “token uses” that put the marks outside the realm of the “use in commerce” standard. See, e.g., Fame Jeans, 525 F.3d at 20. For instance, Giorgio Santambrogio had distributed within the U.S. “literally thousands of T-Shirts, cards, and key chains” on which the logo of his Italy-based café was emblazoned prominently, despite never having opened a restaurant or café in the United States. Buti,139 F.3d at 105. The Court reiterated the principle that the rights that vest in a mark are contingent upon “an established business or trade in connection with which the mark is employed” and rejected the claim that Santambrogio’s actions constituted a use in commerce sufficient for rights in the mark to vest. Id. at 105 (quoting United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97 (1918), superseded by statute, Lanham Act, 15 U.S.C. 1115(b)(5)); see also Allard Enters., Inc. v. Adv. Programming Res., Inc., 146 F.3d 350, 359 (6th Cir. 1998) (noting that “sporadic or minimal sales” are insufficient) (internal citations omitted). This principle is echoed in Fame Jeans, where the Plaintiff failed to demonstrate a continuous commercial exploitation of the branded jeans, despite press releases heralding the brand’s presence in the U.S. 525 F.3d at 20. Plaintiff’s advertisement, which the Court found lacked the character of “continuous commercial utilization,” touted their product’s availability “to U.S. consumers through [Plaintiff’s] foreign customers and stores as well as through re-sales on” Id. (noting that the marketing language did not even state that sales had occurred in the U.S.) (internal citations omitted).

Conversely, the 9th Circuit has mirrored the 1st Circuit and the Southern District of New York in recognizing that rights to a mark can vest prior to sale of the product or service. Brookfield, 174 F.3d at 1052. While noting that mere intent or preparation for use are not enough, the Brookfield Court adopts the standard that rights to a mark vest when a use is “sufficient to create an association among the public between the mark and [its producer].” Id. In this case, the Defendant had registered a website titled “” and used the purported mark in e-mail correspondence with lawyers and customers. Id. However, the Court looked at the limited number of individuals to whom this mark was disseminated and rejected Defendant’s claims as “akin to putting one’s mark on a business office door sign.” Id. (internal citations omitted). A national press release from 1998 announcing the website was the first moment the Court believed use in commerce could be said to have occurred, more than two years after the communications on which Defendant based their earlier claim. Id.; but see, Halo Mgmt, 308 F. Supp. 2d at 1033 (holding that an internet homepage used “to promote its mark and attendant offerings” was sufficient to constitute a use in commerce, despite many of the small number of customers being close acquaintances of Plaintiff).

Fame Jeans itself supports the interpretation adopted by the 9th Circuit. While the Court rejected the notion that Plaintiff had used the mark sufficiently to gain trademark protection, it did note that “analogous use” afforded one the right to oppose others from filing an application covering the mark. Fame Jeans, 525 F.3d at 20 (noting that 15 U.S.C. § 1052 “requires only ‘use[] in the Unites States,’ and adoption of the mark by use analogous to strict trademark use will therefore suffice”) (internal quotations omitted). Among the activities that meet this standard are the “marketing of a trademarked product before the product is ready for sale” so long as the marketing is “of such a nature and extent as to create public identification of the target term with the [producer’s] product.” Id. (internal quotations omitted). The Fame Jeans Court never actually settles the question of whether the Plaintiff in this case had met this standard by virtue of their “research and marketing” uses, as it had not been raised at trial. Id. at 20-21.

While it appears clear that the use in commerce standard can be met by means other than actual sales of a product across state lines, the precise line between protectable and not is blurry. Strong support exists for an “analogous use” standard that vests rights in a mark when the marketing and promotion of the product or service with which the mark is associated rise to the level of communicating a bona fide intention for “continuous commercial utilization” of the product. Examples cited approvingly by Courts range from Marvel Comics’ distribution of 430,000 fliers with the title of a new comic book, Brookfield, 174 F.3d at 1052, to the creation of a webpage that was “universally available”, “place[d] the mark in the public domain”, and attached the mark to Plaintiff’s product “in a readily accessible manner.” Halo Mgmt., LLC, 308 F. Supp. 2d at 1033. As Halo illustrates, the focus will not necessarily be on the number of persons who are actually impressed upon by the marketing scheme, but rather the nature of the marketing scheme such that the mark and its connection to a product or service is readily accessible to the public.

In our next post on this topic, we will expand upon the analogous use standard in the hopes of providing a useful tool for practitioners in evaluating whether a client’s mark is subject to federal protection.