Weekly IP Takeaways

In IP Blog

Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.

1. In a recent opinion from the Fifth Circuit Court of Appeals, the Court affirmed a summary judgment of no likelihood of confusion, but reversed a cancellation of a trademark as to abandonment or lack of a bona fide use of the mark. The case involved the mark METCHUP, which was a mayonnaise/ketchup combination. An individual registered METCHUP and was selling small amounts of it out of a motel in Louisiana. Heinz was looking to bring its mayonnaise/ketchup product into the U.S. and held a naming context. One name proposed was METCHUP, and Heinz put a mockup of a METCHUP bottle on its website. Heinz, however, never actually used that name on a product. It went with MAYOCHUP instead. Nonetheless, the plaintiff sued Heinz for trademark infringement, and Heinz counterclaim for cancellation of the plaintiff’s mark. Heinz moved for summary judgment of non-infringement (no likelihood of confusion) and for abandonment or non-use based on the plaintiff’s minimal use of the mark in commerce, and also for cancellation of the plaintiff’s mark. The district court granted summary judgment for Heinz. The Fifth Circuit affirmed on the lack of confusion. It reversed the cancellation of the mark, and found triable issues of fact as to abandonment and non-use, or use that is only maintained so as to preserve the mark.

2. In an interesting case out of Texas, the Texas Supreme Court extended the attorney-immunity defense to situations beyond a litigation context to business transactions, as well. The attorney-immunity defense is one that essentially allows an attorney to generally avoid liability to third parties based on work performed for the attorney’s client. A typical example might be that the beneficiaries of a trust cannot sue the attorney for how the trust was drafted. In this case, a law firm advised a company on a business sale that also included several design patents. The purchasing party subsequently sold the design patents to another party, but was sued by the subsequent purchaser for misrepresentations related to the deal. The initial purchasing party then turned around and sued the original seller, as well as the original seller’s lawyers, who were allegedly the source of the misrepresentations. The trial court dismissed the claims against the law firm, but a Texas Court of Appeals reversed, refusing to extend the attorney-immunity defense to business transactions (as opposed to limiting it to litigation contexts). The Texas Supreme Court reversed, determining that the attorney-immunity defense is not limited to litigation, but applies in connection with providing legal services in an adversarial context, including business transactions. The case was remanded so that certain arguments under the law correctly espoused would fall within the adversarial context referenced by the Texas Supreme Court in order for the attorney-immunity defense to apply. The takeaway here may be that, in some limited instances in which a single law firm may represent both sides in a transaction, this may be ill-advised because, among other things, you may eliminate the availability of the attorney-immunity defense if the context is not sufficiently adversarial.

3. In a recent opinion from the Seventh Circuit Court of Appeals, the Court reaffirmed that plaintiff Design Basics is a “copyright troll” (i.e., “opportunistic holders of registered copyrights whose business models center on litigation rather than creative expression … [who] try to extract rents from market participants who must choose between the cost of settlement and the costs and risks of litigation”). Design Basics owns thousands of registered copyrights for architectural plans largely for tract homes, many of which contain unprotectable stock elements, and which otherwise provide for “thin” copyright protection that requires virtual identity between protectable elements in the copyright and in the accused work. In this case, the defendant moved for summary judgment of non-infringement, and the Court granted the motion finding that there was not virtual identity between the copyrighted and allegedly infringing works. The takeaway here is simply a reminder that not all copying is unlawful, and where copyright protection is “thin,” virtual identity of the protected and accused elements is needed to demonstrate infringement.