Thursday, February 20, 2014

China Viewed as America's "Greatest Enemy" in Gallup Polling Data

A recently released Gallup World Affairs poll surveyed Americans, asking them to name the United States' greatest foreign enemy.  More Americans viewed China, not Iran or Russia, as America's greatest threat.

A majority of those polled (52%) apparently view China's growing economic power as a "critical threat" to the "vital interests" of America into next decade.

Eight years ago, 31% of Americans viewed Iran as the USA's "greatest enemy," compared with 16% today.  China's unfavorable ratings have held relatively steady in Americans' minds, despite the announcement of historic reforms late last year that would shift China's economy to a more consumer-driven model.

In 1979, when Gallup first gathered responses to these questions from a representative sample of Americans, China's GDP was not even one tenth that of of the United States. That year, nearly two out of three of Americans polled reported that they saw China favorably.  

Today, China's meteoric rise has led a majority of Americans (52%) to report China as the world's leading economic power. Further, many Americans are beginning to view China's growing military strength and newfound economic power as a threat to U.S. strategic interests.

Gallup notes that in 1959, President John F. Kennedy gave a speech, noting that when written in Chinese, the word "crisis" is composed of two characters, one representing danger, the other representing opportunity.  Americans clearly see the potential for danger in China, but it is worth noting that commercial trade with China continues to grow, creating opportunity as well. Since China joined the World Trade Organization in 2001, America's trade with China has grown dramatically.  

However, many U.S. government officials have openly criticized Chinese currency manipulation policies and tolerance of counterfeiting as well as human rights abuses.

Will BitCoins Survive a Growing Crisis of Confidence?

We previously discussed brand owners' and law enforcement's collective concern that the virtual cryptocurrency known as the BitCoin could spur even more online lawlessness.

It would appear that those fears, at least for now, have been allayed by a number of developments.

First, in October 2013, the FBI shut down SilkRoad, one of the largest online marketplaces where narcotics, guns and counterfeit goods were openly traded using BitCoins.

Then, the People's Republic of China banned financial companies based there from handling any BitCoin-related transactions. Joining suit, Russia banned the currency, making it illegal to trade in any currency other than the official roble.

Both nations' decisions have led to a growing crisis of confidence in the realistic viability of the currency, even as ATM machines trading in BitCoins made their debut in Austin and Seattle.

Finally, Mt. Gox, the Tokyo-based exchange where millions of dollars of investors' BitCoins are ostensibly stored, announced a freeze on any withdrawals of the currency, spawning protests outside the company's headquarters.

As of today, the rights to a BitCoin held by Mt. Gox was only $118, whereas a BitCoin sold on another still-functioning exchange was selling for $570.  Both represent a stark drop from the currency's recent high of over $1,000 in November 2013.

Still, speculators are continuing to invest many millions of dollars in the virtual currency, banking on a rebound. Some are even accusing Mt. Gox insiders of buying up the currency at the deflated price and re-selling them on other exchanges for a premium.

One thing is certain, if Mt. Gox enters a "death spiral," making it unable to pay back its investors, there is a real concern about the currency itself collapsing under its own weight.

Tuesday, February 18, 2014

T-Mobile Wins Preliminary Injunction Against Similar Magenta Color

A federal district court judge has granted T-Mobile a preliminary injunction against AT&T subsidiary Aio Wireless on basis that its color scheme infringes on T-Mobile's magenta color trademark. 
In the decision, Federal District Court judge Lee Rosenthal held that "T-Mobile has shown a likelihood that potential customers will be confused into thinking that Aio is affiliated or associated with T-Mobile based on the confused association between Aio’s use of its plum color and T-Mobile’s similar use of its similar magenta color." 
The order prohibits Aio from using a plum color in advertising, marketing, and in store design.
Aio Wireless is a low-cost, no-contract carrier owned and operated by AT&T. 
The prepaid service launched in 2013 and T-Mobile filed a lawsuit against the company's use of the plum color, which we reported on.
In the complaint, T-Mobile argued that Aio's plum color scheme and similar wireless services confused customers into thinking that the low-cost carrier was associated with T-Mobile. 
T-Mobile proved that it had a strong likelihood of success in the merits of its case. 
Part of T-Mobile's argument was that "AT&T set up Aio to compete directly with T-Mobile," and the court agreed, finding that "the record is clear that Aio wanted to capture T-Mobile customers." 
Some documents unearthed during early discovery in the case disclosed that AT&T knew Aio's color scheme was similar to T-Mobile's. 
According to the opinion, a company hired by AT&T for focus group testing sent a report "highlighting that because the plum color was so similar to T-Mobile magenta, focus-group members were initially confused into thinking that the commercials were affiliated with T-Mobile."
T-Mobile has defended its trademark on its magenta color vigorously, and in a statement, the company says that this latest ruling "validates T-Mobile's position that wireless customers identify T-Mobile with magenta and that T-Mobile's use of magenta is protected by trademark law."

Motorcycle Club Trademark Facing Unprecedented Law Enforcement Tactic

Law enforcement efforts to "break" an outlaw motorcycle gang have morphed into a bizarre and groundbreaking trademark dispute, which some legal commentators contend is an unprecedented and possibly unconstitutional overreach by law enforcement.

The dispute's origins began in October 2008, when a federal Grand Jury sitting in Los Angeles indicted 80 members of the Mongols Nation, LLC, a motorcycle club, for a variety of crimes including murder, narcotics distribution and conspiracy.  Agents for the Alcohol, Tobacco and Firearms (ATF) raided locations in six estates and arrested several dozen Mongols members, seizing guns, motorcycles and drugs.

At each location where ATF agents served arrest warrants, they also sought out and seized members' personal jackets, patches and other items bearing the Mongols' trademarked logo.

The Special Agent in charge of the ATF's Los Angeles field office, pointed out the significance of the Mongols trademark to the prosecution.  

"They live by that Mongols patch," he reportedly said.  "We take what's most dear to them....We're gonna break their back.  We'll do whatever we have to do to stop the violence."

Ultimately, everyone named in the indictment pleaded guilty and received sentences ranging from several months to many years in prison.

But an interesting wrinkle arose during the prosecution of the 2008 case. Federal Judge Florence Cooper ruled that the federal government had no right to seize the Mongols trademark.

Judge Cooper later passed away in 2010, and the trademark aspects of the dispute were then assigned to Judge David Carter who agreed that the trademark was inappropriately seized, but suggested a proper way to do it properly to the federal authorities. That approach would require a new indictment because the forfeiture remedy under the RICO Anti-Racketeering statute was not plead in the prior indictment.

As a result, Judge Wright, who heard the 2008 case, is now hearing the trademark dispute in the context of a more recent 2013 indictment that charges racketeering.

Now, the attorneys for the Mongols have sought to disqualify Judge Wright, claiming that he is unfairly "biased" against their clients.  At the core of their motion is an off the cuff comment that Judge Wright made on the record about how he "reluctantly" ruled in the Mongols favor on the trademark issue previously.

The interesting issue is that the federal government is not only claiming that it is entitled to seize the trademark registration originally owned by the Mongols, but that it is entitled to seize physical items and personal effects that utilize the logo such as jackets and patches.

Essentially, the government is attempting to hijack the seizure aspect of anti-counterfeiting remedies and utilize it for punitive measures.  That approach raises very interesting-- and disturbing--constitutional issues, say legal commentators.

Monday, February 17, 2014

Martinson Coffee's Advertising Campaign Risks Elvis Presley Estate Lawsuit

I recently came across a billboard on the side of a telephone booth (yes, those still exist) in New York City, and stopped dead in my tracks to snap a photograph of it.

The primary reason that the advertisement caught my attention was that about three years ago, I had considered approving a similar advertising campaign.  We considered utilizing a stock photograph of a cheesy Elvis Presley impersonator along with the tagline: "Not All Imitation Is Flattery."

Now, there is an ongoing debate in legal circles about whether such commercial use of a famous persona should be protected as free speech and constitute a form of parody or fair use, or whether such use could conceivably be an infringement of the late Elvis Presley's right of publicity and trade dress and trademark rights.

Absent such a finding of free speech or fair use, the unauthorized commercial use of a famous person's likeness can constitute an infringement of their right to publicity.  This right can be protected under state law, even long after their death, unless that right has lapsed, or the person's identity is in the public domain.

Last year, we reported on the legal developments involving Albert Einstein's likeness and how use of it embroiled General Motors in protracted litigation.

There has been much written in the academic literature about the fuzzy boundaries between unlawful imitation and flattery. For example, Touro Law Review published an article in 2012 about this subject.

Aware of how aggressive Elvis Presley Enterprises (EPE) has been in the past in protecting Presley's image and likeness, we had contacted EPE to discuss whether we could obtain a license. This standard "clearance" procedure is a prudent measure, regardless of whether a fair use/parody defense exists.

I was informed by EPE's representative that the Estate would not offer a license for Elvis' likeness to be used in this manner. (It is possible that the unflattering impersonator we were considering using may have played a role).

Regardless of the legal merits of EPE's position, out of respect for "the King's" intellectual property rights and to avoid the risk of litigation, we never approved or ran the advertisement.

Now, it would appear that Martinson Coffee had a similar idea, and decided to run the advertisement.

According to a press release issued by Martinson in October 2013, it is using a media blitz campaign, including with roving trucks emblazoned with the billboards. "The Martinson® Coffee trucks will appear in over two dozen locations during the campaign. The social media launch will run in conjunction with a city-wide advertising campaign. The ads, featured on New York commuter rail stations, subway stations and the like, will focus on proving why Martinson is the Real Joe."

I contacted Martinson Coffee's public relations department by e-mail, to ask if they had sought or received a license from EPE. This is what they said:

"We currently buy our images from a stock image company.  They provide all the licenses for all the images they own.

We don’t do anything on our end.  They vet those issues out prior."

In other words, the advertising agency utilized "stock photography" and assumed that the stock photography company had acquired and provided all relevant licenses.

But this assumption is usually factually and legally incorrect.

For example, iStockPhoto, Getty Images, ShutterStock and other "stock image" galleries offer a variety of "Elvis Impersonator" photographs.

However, the licenses offered for such stock photographs is typically "for editorial use only."  Their Terms of Use specifically state that "Files for Editorial Use Only cannot be used for any commercial purposes. These files may contain identifiable brands, locations or people without the proper legal releases needed for commercial use.  They may be used in blogs, magazine and newspaper editorial applications, or other non-commercial uses." Shutterstock explains the distinction on its website.

Therefore, assuming for argument's sake that Martinson acquired its Elvis impersonator image from such a third party stock image company, its commercial use would clearly fall outside the scope of the editorial use only license.

Consequently, Martinson could not avail itself of the license defense, and could not drag the third party stock image company into the case to indemnify (defend) it.

Further, whatever "releases" the stock image company acquired for use of the image would only involve the model depicted in the photograph -- not the Elvis Presley Estate, who has the legal right and obligation to protect the King's likeness.

Commentators have noted that EPE is strategic about its litigation targets. It is yet to be seen if Martinson Coffee incurs its wrath, as there is no word yet on whether a lawsuit has been filed. 

Stay tuned.

Thursday, February 13, 2014

Federal Appeals Court Prohibits "Pro-Life" License Plates

Most states offer specialty automobile license plates that reflect a variety of special interests and political viewpoints. The state typically charges a nominal sum for a specialty plate, and may contribute a percentage of the proceeds to a non-profit organization dedicated to that particular cause.

For example, Virginia offers a license plate that says:  "Friends of Tibet." According to the Department of Motor Vehicles, as a revenue-sharing plate, after the sale of the first 1,000 qualifying plates, $15 of the $25 fee is transferred to the Conservancy for Tibetan Art and Culture to support its programs in Virginia.  Virginia also offers a "Friends of Coal" plate, with funds going to the Virginia Department of Mines, Minerals and Energy to support its programs.

Other states offer plates with a wide variety of viewpoints and diverse causes represented. Florida offers a John Lennon "IMAGINE" logo license plate, supporting efforts to reduce hunger. Others range from anti-terrorism and anti-drug messages to those supporting the National Rifle Association, pro-environmental conservation efforts and many others.

However, the American Civil Liberties Union filed a federal lawsuit against the State of North Carolina, which had approved a license plate in 2011 depicting children on it, along with the phrase "CHOOSE LIFE." Each plate would cost $25, with $15 of that going to the Carolina Pregnancy Care Fellowship, an association of nonprofit pregnancy counseling centers.

The North Carolina legislature considered, but rejected, license plates that would have said "TRUST WOMEN" and "RESPECT CHOICE."

The ACLU's argument was that, by choosing a "pro-life" viewpoint without offering equal time to an "opposing" viewpoint, the government ran afoul of the First Amendment.

And yesterday, the United States Court of Appeals for the Fourth Circuit agreed with the ACLU. North Carolina has been banned from manufacturing the plates.

Sunday, February 9, 2014

Is "Dumb Starbucks" Free Speech or Just a Dumb Ploy Inviting a Lawsuit?

A new coffee shop has opened in Los Feliz, Los Angeles, titling itself "Dumb Starbucks."  The mock coffee shop utilizes a virtually identical logo to Starbucks' logo on all its products and signage, but places the word "Dumb" before everything.

According to news reports, the owners are claiming that their coffee shop is some kind of "pop art" installation intended to mock the massive Starbucks corporation.  They apparently claim that they are shielded from liability for trademark infringement or dilution by the First Amendment, and that their lawyers are fully in control of the situation.

Notably, the news reports also claim that their coffee is not for sale, but is handed out free of charge, which would tend be garner some sympathy for the argument that the whole excursion is a non-commercial artistic endeavor. However, the "FAQ" disclosed by the owners seems to suggest that the coffee is very much for sale.  It states, in relevant part:

"Although we are a fully functioning coffee shop, for legal reasons Dumb Starbucks needs to be categorized as a work of parody art. So, in the eyes of the law, our "coffee shop" is actually an art gallery and the "coffee" you're buying is actually the art. But that's for our lawyers to worry about. All you need to do is enjoy our delicious coffee!"

But what does that matter?  Under the federal Lanham Act, there is a requirement that the unauthorized use be "in commerce" to be considered an infringement. The Federal Trademark Dilution Act does not expressly contain such a commercial use requirement, but it would certainly be relevant to a court's consideration if the whole stunt has no commercial element.

Rather, here, it would appear the entire endeavor is a publicity stunt essentially inviting the Starbucks' chain to file a lawsuit. Even if Starbucks won, it might lose in the court of public opinion, for looking like it has no sense of humor. So the owners may be taking an expensive gamble.

That being said, Starbucks Corporation is inevitably going to be forced to sue this particular coffee shop, and the odds are that it will likely prevail in shutting it down in very short order. Perhaps that is the reason that news reports that there is a several hour wait to enter the shop.