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ELECTRONIC NEWSLETTER


The Abelman Firm Intellectual Property Report

August 1, 2003

Volume 2, Issue 1

Topics: News

Calendar (See Below)

News

Trademarks and Unfair Competition

Patents

Domain Names and Other Internet Matters

Discussions

Calendar   top

August 7 - 12, 2003 American Bar Association (ABA) - Annual Meeting. San Francisco, CA.
August 14 - 16, 2003 Patent Resources Group, Inc. (PRG) - Seminar on Madrid Protocol Practice. The Fairmont Hotel, Washington, D.C.
September 1 - 5, 2003 European Patent Office (EPO) - Workshop for Industry. EPO DG1 Office in Rijswijk, The Hague, Netherlands.
September 3 - 6, 2003 Association Internationale pour la Protection de la Propriété Intellectuelle (International Association for the Protection of Intellectual Property) (AIPPI) - International Conference: "Trends and Means of Obtaining Complex IP Protection." Hotel Hyatt Regency, Budapest, Hungary.
September 8-9, 2003 Practicing Law Institute (PLI) - Biotechnology Law 2003: Biotechnology Patents and Business Strategies, PLI New York Center, New York, NY.
September 14 - 16, 2003 Intellectual Property Owners Association (IPOA) - Annual Meeting. The Fairmont Hotel, Chicago, IL.
September 16-19, 2003 Marques (Association of European Trade Mark Owners) - Annual Conference. Intercontinental Hotel Istanbul. Istanbul, Turkey.
September 18-19, 2003 PLI - Understanding the Intellectual Property License 2003. Hotel Intercontinental, Houston, TX.
September 21 - 25 Licensing Executives Society, Inc. (LESI) - US & Canada Annual Meeting. Hyatt Regency San Diego, San Diego, CA.
September 22 - 23, 2003 International Trademark Association (INTA) - Forum: Trademarks in Cyberspace. The Ritz-Carlton, Pentagon City, Arlington, Virginia.
September 25-26, 2003 Institute of Trade Mark Attorneys (UK) (ITMA) - Autumn Conference. Glasgow, Scotland.
September 26, 2003 Intellectual Property Research Institute of Australia (IPRIA) - Conference: "Trade Marks In The Future." University of Melbourne Law School, Melbourne, Australia.
September 29-30, 2003 PLI - Ninth Annual Institute for Intellectual Property Law. PLI New York Center, New York, NY.
October 16 - 18 PRG - Seminar on Madrid Protocol Practice. The Lodge at Rancho Mirage, Rancho Mirage, CA.
October 12-16, 2003 Interamerican Association of Industrial Property (ASIPI) - XVth Congress. Mexico City, Mexico.
October 16-17, 2003 PLI - Patent Litigation 2003. PLI California Center, San Francisco, CA.
October 20-21, 2003 PLI - Understanding the Intellectual Property License 2003. PLI New York Center, New York, NY.
October 21-23, 2003 World Intellectual Property Organization (WIPO) - Workshop on Domain Name Dispute Resolution. Geneva, Switzerland.
October 27-28, 2003 PLI - Patent Litigation 2003. PLI New York Center, New York, NY.
Oct. 30 - Nov. 1, 2003 American Intellectual Property Law Association (AIPLA) - Annual Meeting. Grand Hyatt Hotel, Washington, D.C.
Oct. 30 - Nov. 3, 2003 IENA International Fair For Inventors. Nuremberg Exhibition Centre, Nurnberg, Germany

NEWS

Trademarks and Unfair Competition

Brazil: Former Ford Motor Company Dealers Permitted to Use FORD Trademark   top

The Court of Appeals of the Federal District has ruled that the use of FORD in the name Brazilian Association of Former Ford Distributors does not constitute trademark infringement.

The Brazilian Association of Former Ford Distributors was founded to defend former Ford car dealers from claims by Ford do Brasil regarding alleged acts and omissions.

Ford Motor Company filed a court action for trademark infringement against the association for the use of FORD in the association's name. The trial court ordered the association to cease use of the mark but refused Ford's request for damages. Both parties appealed.

On appeal, the court held that the former dealers are entitled to identify themselves as such and that the use of the association's name did not amount to "commercial" use.

Ford has appealed.

Chile: Implements Eighth Edition of Nice Classification of Goods and Services   top

Chile has adopted the eighth edition of the Nice Classification of Goods and Services.

Under the eighth edition of Nice, Class 42 has been restricted to "scientific and technological services and research and design relating thereto; industrial analysis and research services; design and development of computer hardware and software; legal services".

The eighth edition adds three new classes:

Class 43: Services for providing food and drink; temporary accommodation

Class 44: Medical services; veterinary services; hygienic and beauty care for human beings or animals; agriculture, horticulture, and forestry services.

Class 45: Personal and social services rendered by others to meet the needs of individuals; security services for the protection of property and individuals.

The eighth edition of Nice is applicable to new applications and pending applications. Existing registrations will be reclassified as necessary on renewal.

China: Introduction of New Regulations Regarding Famous Trademarks   top

On June 1, 2003 new regulations regarding the protection of famous trademarks came into force. The new regulations define a famous mark as one well-known in China.

In ascertaining whether a mark is famous in China, the regulations list the following factors: how well-known the mark is among the public or in its industrial field; the duration of use of the mark; the duration and extent of advertising; whether the mark has previously been recognized as a famous mark in China or elsewhere; any other factors relating to the reputation of the mark.

The extent of protection afforded a famous mark will depend on whether the mark is registered or not. A famous mark not registered in China will be protected for the identical or similar goods or services for which the famous mark is normally used. A famous mark registered in China will be protected for the same, similar and dissimilar goods or services.

Under the new regulations, it is not possible to file an application requesting recognition as a famous mark. Famous mark status may be requested upon the filing of a contentious action (for example, in a cancellation action, opposition or infringement action) whether before the China Trademark Office, the Trademark Review and Adjudication Board or the People's Courts.

Hong Kong: New Trademark Law   top

A new trademark law came into force in Hong Kong on April 4, 2003. The new law provides protection for scent, sound, and color marks, adopts the eighth edition of the Nice Classification of Goods and Services (adding new service Classes 43, 44, and 45) and permits filing of multi-class applications. The new law eliminates association requirements and makes letters of consent or coexistence agreements binding on the Registrar.

The period in which a registration becomes subject to cancellation has been reduced from five years to 3 years.

Additionally, the new law permits parallel imports and comparative advertising if the comparison is true and accurate.

Iran: Implements Eighth Edition of Nice Classification of Goods and Services   top

Effective June 16, 2003 Iran adopted the eighth edition of the Nice Classification of Goods and Services. Formerly local Class 35 covered all services. With the adoption of the eighth edition of Nice, Iran will now divide services into eleven classes: Classes 35-45.

Existing registrations and pending applications will not be reclassified at this time but it is anticipated they will be reclassified upon renewal of registrations.

Iran does not accept applications for alcoholic beverages in Class 33.

Iraq: Trademark Office Opens   top

The United States sanctions prohibiting doing business with Iraq have been lifted and the Iraq Trademark Office has opened and is accepting applications.

However, the Trademark Office still has not amended the old Power of Attorney which includes statements of cooperation with the Arab League Boycott of Israel. Therefore it is illegal for any U.S. company or its affiliates to execute the Power in its current form.

Portugal: New Trademark Law   top

Effective July 1, 2003 a new trademark law came into force in Portugal. Some of the highlights of the new law are:

The exclusive right runs from the date of the publication thereof in the Industrial Property Bulletin.

A preliminary injunction is available for those cases where it is necessary to request the judicial seizure of goods.

For the crime of counterfeiting, as well as other crimes, it is no longer required to establish that the counterfeiter acted with intent to cause harm to others or acted to obtain an illegitimate benefit.

The new law prohibits the registration or use of a mark identical or similar to a prior mark with a reputation although covering different goods and/or services, provided that the new mark seeks takes advantage of or is detrimental to the distinctive character or the repute of the prior mark.

Singapore: The United States and Singapore Free Trade Agreement   top

The United States-Singapore Free Trade Agreement (USSFTA) was signed on May 6, 2003 by the United States and Singapore. It is scheduled to come into force January 1, 2004 subject to ratifications by the national legislatures of both countries. The text of the agreement is located at http://www.ustr.gov/new/fta/Singapore/final/text final.PDF.

The USSFTA covers trade in goods, rules of origin, customs administration, technical barriers to trade, trade remedies, cross border trade in services, financial services, temporary entry, telecommunications, e-commerce, investment, competition, government procurement, intellectual property protection, transparency, general provisions, labor, environment, dispute settlement.

It is anticipated that the USSFTA will increase protection of famous trademarks in Singapore and broaden the definition of a trademark to permit registration of scent and sound marks in Singapore.

Taiwan: New Trademark Law   top

A new trademark law is to come into effect on November 28, 2003 in Taiwan. Among the changes are the broadening of the definition of a trademark to permit registration of color, sound and 3-D marks, the possibility of filing multi-class applications, the abolition of defensive and associated trademark registrations, elimination of the requirement of proof of use on renewal, and the introduction of a consent practice for non-identical marks.

United Kingdom: Court of Appeals Decision in Arsenal v. Reed Revisited   top

This is further to the reports on this case in the AFS Newsletters of May 15, 2002 and July 16, 2002.

Arsenal Football Club plc ("AFC") is the owner of the registered United Kingdom trademarks ARSENAL and GUNNERS and two designs marks composed of a cannon and a crest covering clothing (collectively "the ARSENAL marks"). Reed has sold AFC memorabilia for 30 years without a license from AFC. Reed's goods include scarves bearing the ARSENAL marks.

AFC brought an action against Reed for passing-off and trademark infringement. The claim for passing-off was dismissed. In respect to the infringement action, Reed defended by asserting that his use of the ARSENAL marks did not constitute "use in a trade mark sense", but served as "badges of allegiance". The court indicated it accepted Reed's arguments, but citing conflicting precedent, referred the case to the European Court of Justice ("ECJ") for instruction on the issue.

In November 2002 the ECJ held that the right of a proprietor of a registered trademark to prevent third parties from using an identical mark for identical goods is not limited to cases where the third party use may mislead as to source or origin but also exists where such unauthorized use may give rise to confusion over quality or reputation of the goods and concluded that the use of a mark as a badge of loyalty or affiliation may constitute trademark infringement.

In December, the Court in the United Kingdom hearing the case ruled that Reed had not infringed Arsenal's marks finding that the ECJ had exceed its jurisdiction by including a finding of fact as to the nature of Reed's use in its decision.

Arsenal appealed to the Court of Appeal in the United Kingdom and on May 21, 2003 the Court of Appeal overturned the UK trial court's decision embracing the decision of the ECJ and stating that when looking at questions of infringement, the appropriate question is whether the use complained of is likely to damage the property right of the trademark proprietor and impair the function of the trademark.

Reed has the right of a final appeal to the House of Lords.

United Kingdom: Bona Fide Use    top

Gerber Foods International Ltd. ("GFI") has used the GERBER trademark for foods and beverages in the United Kingdom since 1925. In 1988 and 1992 GFI filed trademark applications for GERBER PRIDE and GERBER. These applications encountered citations of GERBER and GERBER & Design in the name of Gerber Products Company ("GPC").

GFI moved to cancel the cited registrations in the name of GPC on the grounds of non-use under section 26(1)(b) of the 1938 UK Trade Mark Act. Section 26(1)(b) provides:

".. a registered mark may be taken off the register ... on the ground ... that up to one month before the date of the application [to remove the mark] a continuous period of five years or longer elapsed during which the trade mark was registered and during which there was no bona fide use thereof in relation to the goods ..."

GPC defended its registrations based on, inter alia, test marketing involving the sale of $300 worth of baby food bearing the GERBER marks in a limited portion of the United Kingdom in 1989.

At an administrative proceeding within the Trade Mark Office, the Examiner held that the test marketing was not sufficiently "substantial" to constitute use within the terms of the Act. GPC filed an appeal to court.

In the court action, the court ruled that the language of Section 26(1)(b) means honest use. The court stated that the Trade Mark Office Examiner erred in concluding that "the low level of sales taken together with the one-off nature of trade and absence of follow-up activity ... must mean that it cannot be held to be bona fide use".

GFI filed an appeal from the High Court's decision to the Court of Appeal. The Court of Appeal upheld the High Court's decision finding that "the key test of bona fide use ... is whether ... it can be described as "a pretended use". An honest intention to make use of the mark ... should be considered bona fide".

Because the cancellation act was filed prior to 1994, the action was brought under the old 1938 United Kingdom Trade Mark Act. However, the Court of Appeal indicated that the test applied in the instant case may also be applicable to Article 46(1) of the 1994 Trade Mark Act which speaks of "genuine use".

United States: Havana Club Redux   top

In 1996 Bacardi-Martini USA, Inc. commenced sale in the United States of a rum under the trademark HAVANA CLUB. Havana Club Holding S.A. ("HCH"), a Cuban company and registrant of record of a United States trademark registration for HAVANA CLUB covering alcoholic beverages, sued Bacardi for trademark infringement.

The infringement action was dismissed by the Federal District Court on the grounds that the Court was prohibited from enforcing HCH's trademark rights by section 211 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act. Section 211 prohibits courts from upholding trademarks used in connection with a business or assets that the Castro government confiscated unless the original owner of the trademark expressly consented. In 2000, the Second circuit Court of Appeals upheld the decision of the District Court.

On behalf of Pernod-Ricard, a French company and a member of the joint venture which created HCH, the European Union ("EU") filed a complaint with the World Trade Organization ("WTO"). The EU alleged that Section 211 violated certain provisions in the TRIPs provisions of the WTO Agreement, including the provisions that obligate WTO members to provide protection for trademarks, trade names, or commercial names and requiring that certain procedures for enforcing intellectual property rights covered by the Agreement are available to right holders in the member countries. The EU also argued that Section 211 violated provisions in TRIPs that obligate members to treat nationals of other member countries no less favorably than their own nationals.

In 2001 the WTO Panel issued a preliminary ruling confirming that Section 211 violates the national treatment requirement of TRIPs as it denies trademark owners access to the courts to enforce their intellectual property rights. However, the Panel also concluded that the TRIPs Agreement does not cover trade names and that it does not regulate the question of how WTO members should determine ownership of intellectual property rights. The EU appealed the decision to the WTO Appellate Body.

In 2002, the WTO Appellate Body reversed the Panel's holding that WTO members are obligated to protect trade names, but upheld the right of WTO members to determine their own criteria for trademark registration, including the right to refuse registration of confiscated marks.

Subsequent to the WTO Appellate Body decision and also in 2002, the United States reached a settlement with the EU by promising to implement legislation to address the ruling of the WTO.

That settlement would appear to have brought an end to the issue. However, to date, the United States has not revised Section 211 and has recently indicated that no amendment is necessary to bring the section into conformity with the WTO agreement. The EU is now considering what action to take should the United States fail to address the issue.

United States: In Re California Innovation - Geographic Trademarks   top

Julie Seyler, Partner, Abelman, Frayne & Schwab

In re California Innovations, USPQ2d (CACF 2003) ("CAI"), the Court of Appeals for the Federal Circuit reviewed and revised the standards for analyzing marks deemed to be geographically deceptively misdescriptive under Section 1052(e)(3) of the Lanham Act ("Section 2(e)(3)"). The review was predicated on an analysis of how implementation of the North American Free Trade Act ("NAFTA") affected geographic marks.

Prior to the Court's decision in CAI, a mark was deemed to be geographically deceptively misdescriptive under Section 2(e)(3) if the mark was geographic in significance and the goods did not come from the place so named. This is no longer a sufficient test. The Trademark Office must now also establish that the misrepresentation is material to the consumer's decision to purchase. The threshold for refusing registration has been raised to a materiality test.

As the Court explained:

"Due to the NAFTA changes in the Lanham Act, the PTO must deny registration under Section 1052(e)(3) if (1) the primary significance of the mark is a generally known geographic location, (2) the consuming public is likely to believe the place identified by the mark indicates the origin of the goods bearing the mark, when in fact the goods do not come from that place, and (3) the misrepresentation was a material factor in the consumer's decision".

Prior to this decision, the Trademark Office frequently refused a mark it considered geographically misdescriptive on the basis of Section 2(e)(3), geographic deceptive misdescriptiveness, and Section 2(a), deceptiveness. As a result of this decision, we can expect that future refusals relating to such marks will issue only under Section 2(e)(3).

Yugoslavia: Renamed State Community of Serbia and Montenegro   top

On February 4, 2003 the Parliament of the Federal Republic of Yugoslavia adopted "The Constitutional Charter of the State Community of Serbia and Montenegro". Upon adoption of the Charter, the Federal Republic of Yugoslavia was renamed the State Community of Serbia and Montenegro. The existing Intellectual Property Office in Belgrade will survive this transformation and all trademark rights valid in the former Yugoslavia will remain valid in the State Community of Serbia and Montenegro.

A new federal court is to be named to handle administrative lawsuits against the decisions of the Intellectual Property Office. Until the new court is formed, the existing federal court will continue to handle such cases. Local district courts will continue to handle the enforcement of intellectual property rights.

Patents

European Union: Industrial Design Protection    top

RECENT DEVELOPMENTS IN PROTECTING DESIGNS IN EUROPE

Anthony J. Natoli, Associate, Abelman, Frayne & Schwab

While the introduction of the Euro has made headlines and affected global financial systems, far-reaching changes have simultaneously occurred in the intellectual property regulations throughout the European Union ("EU"). The harmonization between member states of the expanding EU has been extended in recent months to include industrial designs for the protection of the ornamental appearance of part or all of a product.

Previously, industrial designs were protected on a nation-by-nation basis across the EU, presenting high initial costs to comply with the numerous formalities of different national offices, such as translations and fees.

To promote the streamlining and uniformity of the protection of designs, the European Union has adopted regulations establishing:

  1. Unregistered Community Designs ("UCD");
  2. Registered Community Designs ("RCD"); and
  3. an Office for Harmonization in the Internal Market for registering new RCDs.

UNREGISTERED COMMUNITY DESIGNS

Since March 6, 2002, the EU has recognized and enforced UCDs. Accordingly, all new designs after that date are automatically afforded immediate protection throughout the EU on public disclosure.

Although unregistered, a UCD must be a new design, which has "individual character"; that is, it must be apparent to the public that the design has a different overall impression from all previous products and designs. The design is not necessarily limited to the purely aesthetic appearances of a product, but may also include functional aspects contributing to the overall appearance of the product, provided that such aesthetic and/or functional features are visible to the public.

Infringement of a UCD may only occur through deliberate copying of the design, and a UCD may be enforced only up to three years from public disclosure within the EU. Each EU member state is to designate a Community Design Court for adjudicating disputes involving UCDs.

REGISTERED COMMUNITY DESIGNS

Since January 1, 2003, the EU has recognized, registered, and enforced RCDs. Although applications for RCDs are examined, the examination process is perfunctory in only considering formalities, and does not involve a review of the design on substantive issues.

As with UCDs, RCDs must be a new design with individual character, which may also include functional aspects contributing to the overall appearance of the product, provided that such aesthetic and/or functional features are visible to the public.

However, infringement of an RCD is not limited to the deliberate copying of the design; even independent creation by a competitor of a similar design may constitute infringement. An RCD conveys a monopoly right on the design for 25 years from the filing date, as opposed to only three years protection from public disclosure of a UCD. Although the filing fees for registration are modest, additional renewal fees will be due every five years over the 25 year lifetime of the RCD.

The examination process is projected to take three months, and is based solely on application formalities. The RCD application may be filed within a one-year grace period after public disclosure, allowing applicants to show their designs and products incorporating their designs at exhibitions, trade shows, etc. Furthermore, filed RCDs are to be published in a central register, but an applicant for an RCD may request that publication be deferred and kept confidential for up to thirty months. By deferring publication, the applicant may register designs well in advance of public disclosure such as the launch of a product having the registered design.

In addition, injunctions for infringement are available which would span across the entire EU. Accordingly, for the modest investment of registration and renewal fees, an RCD may present a significant monopoly for an industrial design throughout the EU.

As with UCDs, the designated Community Design Court in each member state adjudicates disputes involving RCDs in its jurisdiction.

OFFICE FOR HARMONIZATION IN THE INTERNAL MARKET

Located in Alicante, Spain, the Office for Harmonization in the Internal Market (OHIM) acts as a central repository for applications for RCDs. Although individual intellectual property offices in member states of the EU may still receive applications for RCDs, all new applications are forwarded to the OHIM for processing, granting, and publishing in the RCD register.

The OHIM allows applicants to register designs using a single application, as opposed to the previous nation-by-nation filings necessary to protect designs.

In addition, in response to the Community Design Courts in member states adjudicating disputes resulting in invalidation of an RCD, the OHIM may be requested to annul such invalidated RCDs.

The OHIM and the new RCD application procedures present advantages over other multi-national design systems in Europe, such as proceedings under the Hague Agreement through the World Intellectual Property Organization which is applicable in only a limited number of European nations. On the contrary, the OHIM and RCDs are coextensive with the entire EU, providing uniformity and simplicity in protecting designs throughout Europe.


Domain Names and Other Internet Matters

European Union: .eu Scheduled to Be Activated   top

The European Commission recently confirmed the appointment of a Belgian-led consortium named European Registry of Internet Domains (EURID) to manage the .eu domain. The .eu domain system is expected to be operative by the end of 2003 or early 2004.

Iran: .ir Domain Space Opens   top

Iran has begun accepting domain name applications in the .ir domain name space. Registration is open to persons located in Iran as well as foreign organizations that are engaged in activity connected with Iranian interests or transnational activity not in conflict with the laws and practices of Iran.

Spain: .com.es to be released   top

The Spanish Domain Name Registry will release five new second level suffixes: .com.es (for individuals or commercial entities), .org.es (for not for profit organizations), .nom.es (for individuals), .gob.es (for Spanish governmental agencies), and .edu.es (for educational or research entities).

Previously domains could only be registered directly under the suffix .es.

The new suffixes are available to persons or entities having interests in or maintaining links with Spain

United States: Trademark Rights Do Not Extend to Post-Domain Paths   top

In Interactive Products Corporation v. a2z Mobile Office Solutions the Sixth Circuit denied plaintiff's claim of trademark infringement in respect to defendant's use of the plaintiff's trademark in the path of the URL: a2zsolutions.com/desks/floor/laptraveler/dkfl-lt.htm (emphasis added).

Interactive Products Corporation ("IPC") owns the registered trademark LAP TRAVELER in respect of computer stands. Mobile Office Solutions ("MOS") sells computer stands and at one time sold IPC's products. IPC had requested MOS remove all reference to LAP TRAVELER from the website, but MOS had not removed the reference in the URL.

Finding that such use does not typically signify source, but merely reflects the arrangement of data on the host computer, the Court stated that "it is unlikely that the presence of another's trademark in the post-domain path of a URL would ever violate trademark law".


Discussions

LOST IN TRANSLATION: TRADEMARKS AND TRANSLATION   top

Frank Terranella, Associate, Abelman, Frayne & Schwab

It’s no longer enough to market a brand name in the United States. Now, more than ever, a brand must have international selling power. That being the case, it’s quite important that the trademark you choose not have any pejorative connotations abroad. This can not only be very embarrassing, but very costly. Here are some famous examples:

  • When Procter & Gamble chose PUFFS as the name of its tissues, it didn’t realize that PUFF in colloquial German means a brothel.
  • Colgate introduced a toothpaste in France called CUE without realizing that CUE was also the name of a well-known French adult entertainment magazine.
  • Bacardi chose PAVIAN as the name of its fruity drink without knowing that PAVIAN means "baboon" in German.
  • Clairol tried to sell a curling iron called the MIST STICK in Germany without success. They didn’t know that MIST is German slang for manure.
  • And when the high IQ bunch chose MENSA as the name of their organization, they overlooked the fact that MENSA in Spanish means "stupid."

The perils of language run both ways. A good example is a Japanese tourist agency called Kinki Nippon Tourist Company which couldn’t understand why English-speaking tourists expected a more sexual tour. Another example is the Swedish company Electrolux which first marketed their vacuum cleaner in English-speaking countries with the slogan, "Nothing Sucks Like Electrolux."

In some cases, the problem creeps in with the translation:

  • Braniff Airlines had a slogan showing off the luxurious upholstery of its seats. However, when they translated "Fly in Leather" to Spanish, it came out "Fly Naked."
  • Coors had a slogan "Turn it Loose" which, when translated to Spanish, became "Suffer from Diarrhea."
  • Pepsi’s slogan, "Pepsi Brings You Back to Life" when translated into Chinese became "Pepsi Brings Your Ancestors Back From The Grave."
  • Also in China, Kentucky Fried Chicken’s "Finger-Lickin’ Good" became "Eat your fingers off."
  • Even Frank Perdue had a problem with translation. His slogan "It takes a tough man to make a tender chicken," came out in Spanish as "It takes a sexually stimulated man to make a chicken affectionate."

The lesson is to take care when translating a mark or when choosing a trademark to be sure that the mark you use has no negative meanings in the local language. The best way to assure that is to have our associates who live in the country where the product will be marketed clear the mark. Taking care with trademark translations is a must to avoid embarrassment and loss of goodwill.

Speaking of embarrassment, the Parker Pen Company was marketing a ballpoint pen in Mexico and its ads were supposed to say that "It won’t leak in your pocket and embarrass you." Unfortunately, rather than using a form of the verb "embarazar" meaning "to embarrass," they chose the word "embarazado" which means "pregnant." Thus, the advertisement read, "It won’t leak in your pocket and make you pregnant."

UNITED STATES SUPREME COURT LIMITS PUNITIVE DAMAGES   top

Richard L. Crisona, Of Counsel, Abelman, Frayne & Schwab

The United States Supreme Court has imposed new limits on the availability of punitive damages to the winning plaintiff in a case based on state law claims. In State Farm Mutual Automobile Insurance Company v. Campbell, 538 U.S. ___ (2003), the Court struck a $145 million punitive damages award, finding that it "was neither reasonable nor proportionate to the wrong committed, and it was an irrational and arbitrary deprivation of the property of the defendant". (Slip op. at 19). The $1 million compensatory damages award to the plaintiff had not been challenged on appeal, and therefore was not overturned by the Court.

The State Farm case grew out of an automobile accident that had been caused by Curtis Campbell in 1981. When Campbell and his wife were sued because of the accident, their insurance company, State Farm, refused to settle with the plaintiffs for the $50,000 policy limits, and instead "ignored the advice of one of its own investigators and took the case to trial, assuring the Campbells that ‘their assets were safe, that they had no liability for the accident, that [State Farm] would represent their interests, and that they did not need to procure separate counsel’". (Slip Op. at 2). The jury returned a $185,849 verdict against the Campbells, and "State Farm refused to cover the $135,849 in excess liability. Its counsel made this clear to the Campbells: ‘You may want to put for sale signs on your property to get things moving’". (Slip Op. at 2). Although State Farm eventually paid the excess verdict, the "Campbells nonetheless filed a complaint alleging bad faith, fraud, and intentional infliction of emotional distress". (Slip Op. at 3). After the case against State Farm was tried, the "jury awarded the Campbells $2.6 million in compensatory damages and $145 in punitive damages, which the trial court reduced to $1 million and $25 million respectively. Both parties appealed, and the Utah Supreme Court reinstated the $145 punitive damages award, finding State Farm’s bad faith conduct to have been both reprehensible, and to have been carried out "for over 20 years in numerous States". (Slip. Op. at 4).

Although he United States Supreme Court acknowledged "that State Farm’s handling of the claims against the Campbells merits no praise", it nevertheless reversed the $145 million award, finding the case to be "neither close nor difficult". (Slip Op. at 8-9). The Court noted that while it did "not suggest there was error in awarding punitive damages based upon State Farm’s conduct toward the Campbells, a more modest punishment for this reprehensible conduct could have satisfied the State’s legitimate objectives, and the Utah courts should have gone no further". (Slip Op. at 9). Although it left it to the Utah courts to re-calculate an appropriate punitive damages award in accordance with its opinion, the Court noted that the facts of the case "likely would justify a punitive damages award at or near the amount of compensatory damages" -- $1 million. (Slip Op. 18).

In reaching its decision, the Court made a number of observations about the appropriate limits on punitive damages:

First, the Court noted that it "should be presumed that a plaintiff has been made whole for his injuries by compensatory damages, so punitive damages should only be awarded if the defendant’s culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence". (Slip Op. at 8).

Second, the Court ruled that punitive damages cannot be used by a single state court to "expose, and punish, the perceived deficiencies of" a defendant’s "operations throughout the country", because a "State cannot punish a defendant for conduct that may have been lawful where it occurred". (Slip. Op. at 9-10).

Third, the Court stated that "few awards exceeding a single-digit ratio between punitive and compensatory damages . . . will satisfy" the Constitutional requirement of due process. (Slip Op. at 14). In other words, the Court ruled that punitive damages of ten times or more of compensatory damages will only very rarely be upheld. And in still further limiting language, the Court noted that when "compensatory damages are substantial [such as the $1 million award in this case], then a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of" that permitted by the Constitution. (Slip Op. at 15).

The State Farm decision reaffirms the Supreme Court’s recently shown hostility to punitive damage awards. The Court’s rulings limiting the availability of punitive damages for out-of-state conduct, and expressing strong skepticism of high ratios between punitive and compensatory damages, should exert a downward influence on these awards in the lower courts.

Interestingly, the United States patent statute, 35 U.S.C. § 284, permits a court to increase damages "up to three times the amount found or assessed". It is uncertain how the federal judiciary will apply the reasoning of State Farm to a statute which contemplates treble damages, but logic suggests that the decision may reduce the amounts awarded, and the multiplication of damages beyond doubling will be less likely than in the past.

A Comparison Of The Trademark Laws Of The U.S. With Canada: What U.S. Attorneys Need To Know About Filing Canadian Trademark Applications To Keep From Shooting Themselves In The Foot   top

Robert E. Lee, Jr., Of Counsel, Abelman, Frayne & Schwab

Because the Canadian and U. S. trademarks are derived from English common law and since both countries have INDEPENDENTLY developed use-based trademark systems consisting of a blend of common law, state law and federal statutory rights, one would expect for the federal trademark registration systems in the U.S. and Canada to be similar. Therein lies the root of the problem. Both countries have trademark laws that recognize trademarks, service marks and certification marks; allow for use-based and intent to use filings; require use as a condition of registration; have opposition procedures whereby third parties can oppose applications before they register; have priority dates that on registration relate back to the date of application; and have terms of 10 and 15 years, respectively, that are renewable. Because the two systems have so many similarities, there is a tendency for their differences to be ignored or glossed over. You can do this just so far and then the DISSIMILARITIES start to catch up. FOUR CRITICAL aspects of Canadian trademark law that need to be taken into account in making filing decisions are discussed below.

(1) The statutory rights that are packaged with a Canadian federal registration are very different from the rights you receive with a U.S. federal registration. A registrant in Canada is granted the exclusive right to use the mark in connection with the claimed goods or services. This is a much more formidable grant than in the U.S. where the registrant merely receives the right to preclude others from using the mark. Thus, in Canada, the registrant acquires a positive right; while in the U.S., in essence, all that you get with the registration is a free pass to court to sue another party. Examples that highlight these basic differences follow.

If your client is doing business in Canada in only a small town in one province and has no expansion plans, is a Canadian federal registration still justifiable? You bet! Your common law trademark rights in Canada notwithstanding and irrespective of whether your business is small or large, argument can be made that you should seek to federally register your name or mark Under similar conditions in the U.S., a party may reasonably opt to rely on its common law trademarks and not attempt to federally register the mark.

As another example, assume a composite work is involved. To achieve maximum protection in the U.S., normally you would divide the mark into portions that arguably present distinctive commercial impressions, e.g., the word mark and the design, and you would file on them separately. In contrast, in Canada, the driving force is to protect the mark as a whole so that your primary application should be for the collective overall mark.

(2) Canada has a classless product classification system that is unique. In preparing an application, you list the specific goods and services of interest. Thus, you can cover whatever goods and services you want to cover inexpensively in a single application on paying a single application fee. And although your registration will ultimately be limited to the goods and services that you use with the mark, the usual procedure is to file comprehensively and deal with the proof of use issues later.

In Canada, potential proof of use can be of several varieties. Proof of use can be: (a) use of the mark on or in connection with the designated goods or services in Canada (traditional); (b) confirmation of use and registration of the mark for the goods and services in another country - for details see Paragraph (3) below (use and registration); or (c) "making known" in Canada -for details see Paragraph (4) below (making known).

Filings can be made in Canada based on use, intent to use, use and registration and carry-over use - so you have total flexibility, and you can use different basis for different goods and services. Any intent to use cases will have to be converted to actual use before registration.

(3) If a mark is used and registered in another country, proof of such use and registration can be utilized to satisfy the use requirement in Canada. If you intend to rely on your U.S. registrations to establish use in Canada, optimally you should consider filing a special U.S. application for this purpose. Thus, composite design and word marks are usually fragmented for filing purposes into portions that make separate commercial impressions which is fine for the U.S. But instead of filing multiple cases in Canada, arguably what you really want to file is the composite mark on everything you can establish proof of use for - which means you will probably need to file a new U.S. application to cover all the items that you have actual use for under the composite mark in the U.S.

(4) "Making known" is a uniquely Canadian concept. Instead of considering Canada to be closed at its borders for purposes of showing local use, spill- over usage from the U.S. (which can be electronic, print advertising or the activities of Canadian citizens ) is allowed to qualify for Canadian usage. For example, if it can be documented that Canadian citizens regularly drive across the border and buy branded motor fuel in the U.S. and return with it in their tanks, it is treated as actual use in Canada.. Web sites will probably be used in an attempt to show local use in the future.



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