The Green Jacket of the Masters Golf Tournament is Finally a Registered Trademark

The golf season is almost here for most individuals in the United States and, for golf enthusiasts, that means the Masters golf tournament. Last year, Tiger Woods won the iconic tournament in a dramatic return to the winners circle. However, while Tiger was putting on the green jacket as the winner of the Masters, a fight over that jacket was occurring with the United States Patent and Trademark Office (“USPTO”).

On February 21, 2019, Augusta National, Inc., applied to register the green jacket as a trademark. Initially, the USPTO denied registration of the green jacket with gold buttons because they deemed it a non-distinctive product design with functional elements, thus not eligible for registration. The USPTO subsequently denied registration because the jacket was deemed a decoration and ornamentation, not an inherently distinctive service mark, thus not eligible for registration. Regardless of the reasons, the green jacket that has been awarded to the winner of the Masters since 1949, when Sam Snead won the tournament, was initially deemed ineligible for trademark registration. Ultimately, the inherently distinctive green jacket prevailed in arguments with the USPTO and it received registration almost a year later.

For businesses, this illustrates a couple important points. First, that trademark law is used for trade dress, sounds, designs, and possible even smell, not just your standard logo or words. The second is that regardless of how distinctive and historical a trademark, the registration process requires expertise and knowledge of the overall prosecution process. Of course, the attorneys are Vandenack Weaver LLC are here to help with that prosecution, even if the trademark isn’t as famous as the green jacket. As for Tiger, we will have to wait and see if he can defend his title at the Masters.

 

VW Contributor: Alex Rainville
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Federal Trade Commission To Evaluate Endorsements and Testimonials in Advertising

On February 12, 2020, the Federal Trade Commission (“FTC”) announced that it is seeking public comment regarding endorsements and testimonials in advertising, including those on consumer review websites. The FTC is interested in learning about the connections between the endorser, reviewer, the underlying business, and the medium in which the endorsement is posted.

The FTC is charged with enforcing the Endorsement Guides, as enacted in 1980 and amended in 2009. The Guides provide rules for businesses and other organizations to follow when using endorsement and testimonial advertising, including a requirement to disclose material connections of the endorser. The intent is to ensure that the consumer understands the connections in order to properly evaluate the credibility of the endorsement and testimonial. Based on the evolution of technology, the FTC is particularly concerned with the use of consumer review websites and whether they properly disclose the various connections and incentives.

The FTC is accepting comment from the public regarding these rules and, based on statements from commissioners on the rise of influencers and fake reviews, this could be an area that the FTC decides to revise rules and have stricter enforcement. For businesses and organizations that use consumer reviews and endorsements as a form of advertising, this is the time to ensure that the advertising and marketing efforts comply with the Guides.

VW Contributor: Alex Rainville
© 2020 Vandenack Weaver LLC
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Separating Claim Recovery and Lawsuit Fees: 2nd Circuit Paves Way for Better Negotiations in FLSA Claims

In Fair Labor and Standards Act (FLSA) lawsuits, recovering damages for claims is typically only one part of the discussion when negotiating settlements. Employers engaged in FLSA lawsuits and settlement negotiations with employees and their representative counsel, can quickly become aware that lawsuit costs and plaintiff’s attorney fees are a factor in the overall bargaining process. On February 4, 2020, the Second Circuit, in Fisher v. SD Protection Inc., 2020 WL 550470 (2d Cir. 2020) held that attorneys’ fee awards in FLSA claim settlements are not limited by the principle of “proportionality” in that such fees are not limited or subject to a 1/3 cap based on the amount of the overall settlement.

In the Second Circuit, settlements in FLSA lawsuits were typically subject to strict court scrutiny court review to ensure that the agreed upon terms, including the amount of attorneys’ fees, were fair and reasonable. Thus, many of the district courts within the Second Circuit applied the rule of “proportionality” and refused to approve fee amounts greater than an amount 1/3 of the total settlement.

In Fisher, however, the Second Circuit held that such a rule is at odds with the purpose of the FLSA and has the potential to discourage competent lawyers from taking on cases for low-wage workers due to such limitations on collecting attorneys’ fees. The issue in Fisher arose from a wage dispute brought by an hourly employee, which is a normal cause of action under FLSA lawsuits. The employee sued under the FLSA based on the employer’s alleged failure to pay overtime and provide mandatory accurate wage statements.

The parties reached a settlement before a class was certified, with the total settlement amount at $25,000, including fees and costs. In submitting approval for the settlement from the district court, the parties disclosed that the plaintiff would be paid only $2,000 of that amount, with the remaining $23,000 going to the employee’s attorney. The district court judge disagreed with the terms and reduced the attorneys’ fee to only $8,250, or 1/3 of the total settlement amount as a matter of general policy.

The plaintiff appealed the district judge’s actions to the Second Circuit, and in a detailed decision, the Court reversed and remanded, disapproving of the district court’s requirement of “proportionality” between the amount of the settlement and the size of the fee award. The Second Circuit held that such a rule is not mandated by either the text or the purpose of the FLSA statute. While acknowledging that the proposed split of $23,000 to the plaintiff’s attorney and $2,000 to the plaintiff “understandably gave the district court pause,” the Court rejected an “explicit percentage cap” on fee awards. The Second Circuit justified this decision as in most FLSA wage dispute cases, the plaintiffs are generally hourly workers, and favorable settlement outcomes result in limited recovery. Limiting attorney fees can dissuade competent attorneys from taking on FLSA cases when fee recovery would be proportional to only 1/3 of total recovery. The Second Circuit also criticized the district court judge for rewriting the settlement agreement instead of just simply rejecting the agreement and having the parties revise it. The Second Circuit concluded that in rewriting the agreement, the district court judge exceeded his authority.

The ruling in Fisher is good news for employers in the negotiation process of FLSA lawsuits. In practice it should allow for more free negotiating of settlements, without limitations imposed on fee awards. This ruling will hopefully foster settlements and drive down costs for all parties involved.

VW Contributor: Ryan J. Coufal
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New Rules at the Trademark Office

Effective February 15, 2020, the United States Patent and Trademark Office (“USPTO”) implemented several new rules for applicants and registrants. While these rule changes are not substantive in nature, the procedural and administrative updates are likely to cause substantive disruption for certain trademark owners and applicants. Although it is arguable what will have the largest impact, the update to the specimen requirements are likely to create new challenges.

The USPTO revised the items that are deemed an acceptable specimen. The change is designed to ensure that the specimen submitted clearly depicts the trademark in use with the specific good or service provided. By way of example, mock-ups, designs on their own, and labels without clear association with the good or service are no longer accepted. Another change includes the USPTO designating email as the only method for formal correspondence. This procedural change includes a new requirement that all registration applications must be submitted electronically, with limited exception. For attorney’s filing on behalf of a client, the attorney will also need to provide the email address for the client, as opposed to just the attorney. This requirement applies to proceedings in front of the trademark trial and appeal board as well as registration applications.

These procedural changes are the latest updates to take effect as the USPTO attempts to modernize and combat fraudulent registrations and applications. For those with a registered trademark, these changes will apply to the next required filing or, if the USPTO so elects, to an audit of the registered mark. This means that trademark owners should ensure that they continuously use their trademarks in commerce in the manner described in the trademark registration.

VW Contributor: Alex Rainville
© 2020 Vandenack Weaver LLC
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Seventh Circuit Follows Fifth Circuit in Holding FLSA Collective Action Opt-In Notices Should Not be Sent to Employees with Valid Arbitration Agreements

On January 24, 2020 in the case of Bigger v. Facebook, Inc., the Seventh Circuit held that a federal district trial court should not authorize notice of a Fair Labor and Standards Act (FLSA) collective action suit to employees of the defendant company who are ineligible to join the suit because they entered into agreements to resolve disputes exclusively via arbitration. The Seventh Circuit warned that without such limitations, FLSA collective actions run the risk of abuse for being too broad to opt-in and cause unfair harm to employers.

The appellate decision stems from FLSA collective action claims. Typically, early on in these types of litigation cases, plaintiffs will request that courts authorize written notice to potential plaintiffs of the opportunity to join in the collective action suit, in order to certify the collective class. These notices are generally sent to current or previous employees of a defendant employer, allowing them the opportunity to “opt-in” as another plaintiff in the suit.

In Bigger v. Facebook, Inc., a former Client Solutions Manager claimed that Facebook misclassified her as an overtime-exempt employee in violation of the FLSA. Plaintiff Bigger asked the United States District Court for the Northern District of Illinois to conditionally certify a collective action class and to authorize opt-in notice to a national collective of fellow Facebook Client Solutions Managers. In opposition to the request for notice, Facebook argued that most of the employees Bigger proposed to notify had previously entered into arbitration agreements. Facebook asserted these employees should not be classified as potential opt-in plaintiffs due to being limited to resolving disputes with Facebook through arbitration. Thus, Facebook asserted these employees should not receive any notice. The District Court held it was too early to make merits determinations at the conditional certification stage of an FLSA collective action and therefore authorized notice to the entire group plaintiff proposed, regardless of whether they had signed arbitration agreements or not.

Upon appeal, the Seventh Circuit held that the District Court should have allowed Facebook to prove that a large number of its employees had entered into arbitration agreements. The Seventh Circuit noted that the ruling is to protect employers from unfair or “dangerous” harm by stating, “notice giving, in certain circumstances, may become indistinguishable from the solicitation of claims . . . .” The Seventh Circuit thus concluded that district courts must give employers a chance to show that potential notice recipients have valid arbitration agreements.

The Seventh Circuit’s decision in Bigger followed the similar Fifth Circuit ruling last year of In re JPMorgan Chase and Company, 916 F.3d 494 (5th Cir. 2019). The rulings in these cases present a number of considerations for employers. On one hand, these rulings can make it harder for plaintiff’s counsel to use opt-in notices to identify potential plaintiffs for FLSA claims. While on the other hand, employers could run the risk of bearing the cost of arbitration for hundreds of potential FLSA claims upfront if such an issue were to arise, but be limited to arbitration.

VW Contributor: Ryan Coufal
© 2020 Vandenack Weaver LLC
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Scandalous Trademarks: What You Need to Know.

The Lanham Act, which governs trademarks that are registered through the United States Patent and Trademark Office (“USPTO”), expressly prohibits the registration of marks that are deemed scandalous, immoral, or deceptive. This prohibition has historically prevented brands from using marks that could fall into this category, even if the mark is appropriate for the situation. However, in 2019, this prohibition was expressly overridden and these types of marks are now eligible for registration and protection under the Lanham Act.

During the summer of 2019, the United States Supreme Court determined that the prohibition against scandalous marks contained in the Lanham Act is an unconstitutional prohibition on protected speech. See Iancu v. Brunetti, 488 U.S. ___ (2019). Essentially, the Court decided that this amounted to viewpoint discrimination, in violation of the First Amendment. As a result, the USPTO is required to accept and consider scandalous trademark registration applications.

For businesses, artists, and musicians that utilize what was deemed scandalous marks by the USPTO as part of their operations, now is the time to act to protect the intellectual property. Although the USPTO hasn’t reported a rush applications that fit this category, now that these previously un-protected marks are protectable, it is expected that the volume of applications will increase.

VW Contributor: Alex Rainville
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Supreme Court to Determine Whether Fossil Must Turn Over Profits for Trademark Infringement

Fossil, Inc., the luxury goods retailer, could owe a manufacturer, Romag Fasteners, Inc., its profits for infringing on Romag’s trademark. The issue of whether Fossil owes Romag approximately $6.7 million dollars in profits gained by using the infringing trademark depends on whether the remedy of disgorgement of profits by a party infringing on a trademark requires willfulness by the infringing party.

The issue arises from Fossil using a magnetic snap fastener on some of its bags, purchasing some of the fasteners directly from Romag. However, Fossil also purchased some fasteners that looked nearly identical to those of Romag from another source, likely knowing that the fasteners were counterfeit and infringed on the trademark of Romag. Despite this knowledge, Fossil proceeded to use them anyways in “callous disregard” to the rights of Romag. In a moment of luck for Romag, an employee discovered the counterfeit products when visiting a Macy’s, finding the Fossil bags with the counterfeit fastener. Romag successfully argued that Fossil infringed on their trademark rights, but an open question regarding the remedy remains. The United States Supreme Court will determine whether the remedy includes the profits of Fossil, and such decision will be based on whether Fossil must willfully infringe on Romag’s trademark rights or if “callous disregard” is sufficient to entitle Romag to the profits of Fossil.

This case highlights the broader importance of protecting the brand and intellectual property of a company. Traditionally, this means taking active steps to ensure that the trademarks, copyrights, trade secrets, and patents are protected under applicable law, but it should also mean proactively verifying that the initiatives of the company don’t infringe on the rights of another. Failure to take consider trademark rights, as Fossil is learning the hard way, could result in disgorgement of profits.

VW Contributor: Alex Rainville
© 2020 Vandenack Weaver LLC
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