New Trademark Infringement Case Filed in DRI --- Selling Good Stuff Cheap Can Get You in Trouble

Swarovski Aktiengesellschaft v. Building #19, Inc., No. 11-627 ML (D.R.I. filed Dec.14. 2011)

A new trademark infringement case was filed in the District of Rhode Island in December.  The case involves the sale of genuine Swarovski crystal products by Building #19, Inc., which obtained the products from a salvage company after the warehouse in which the products had been stored was damaged in a tornado.  For those of our readers outside New England, Building #19 is an iconic chain of discount stores known for selling items it obtains at fire sales, liquidations, bankruptcies and other unfortunate events.  The chain’s motto is “GOOD STUFF CHEAP,” which is all you really need to know. 

According to Swarovski’s Complaint, Building #19 acquired over $1.5 million of Swarovski crystal products from an insurance salvage company.  At least some of the crystal products came from a warehouse that had been damaged in a tornado, but Swarovski claims it was not a Swarovski warehouse.  As can be expected in a disaster like this, the packaging for some of the products was damaged.

In  December, Building #19 advertised a “One Day Event” for “SWAROVSKI CRYSTAL” in the Providence Journal and on its website, and allegedly used the Swarovski name liberally in website ads and in in-store materials promoting the sale.  The next weekend, Building #19 advertised a similar sale at its Weymouth, Massachusetts store.  Swarovski took offense to the use of its name and trademark on the web ads, on Building #19’s Facebook page and on the in-store promotional materials.  Apparently, Swarovski feels that the ads made it look like Swarovski sponsored or otherwise approved of the sales.

Swarovski’s complaint alleges that Building #19’s advertising constitutes federal and common law trademark infringement, trademark dilution, federal and state unfair competition, deceptive trade practices under R.I.G.L. Section 6.13.1-2, and injury to business reputation under R.I.G.L. section 6-2-12.  The complaint seeks injunctive relief, damages, treble damages for willful infringement, punitive damages, and an order requiring Building #19 to produce corrective advertising.

The case has been assigned to Judge Lisi.

Supreme Court Upholds Congress’s Authority To Determine Scope Of Copyright Protection

Golan v. Holder, No. 10-545 (U.S. Jan 18, 2012)

            Last week, the United States Supreme Court confirmed once again that Congress has broad power to determine what works are protected by copyright and the length of that protection.  In Golan, the Court upheld a ruling by the federal appeals court that Congress did not exceed its Constitutional authority when it enacted the Uruguay Round Agreements Act (URAA) in 1994 and granted copyright protection to certain foreign works that previously had not been protected in the United States.

Background

            The Berne Convention for the Protection of Literary and Artistic Works (Berne Convention) is the principal treaty for determining how works protected by copyright in the author’s home country will be treated in other countries.  Each of the 164 countries that has become a member the Berne Convention agrees to provide a minimum level of copyright protection for works of its authors, and to treat authors from other member countries at least as well as it treats its own authors.  In particular, Article 18 of the Berne Convention requires member countries to protect the works of the authors of other member countries unless the work’s copyright term has expired in either the country where protection is sought or the country of origin.

            When Congress enacted legislation in 1988 so that the U.S. could become a member of the Berne Convention, the law said nothing about how the United States would treat foreign works protected in their countries of origin, but not in the United States.  (For example, Tchaikovsky’s Peter and the Wolf had never been protected by copyright in the United States because the United States did not have a copyright treaty with Russia to protect works of Russian  authors and composers).  The completion of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) mandated implementation of certain provisions of the Berne Convention, including Article 18, under the threat of economic sanctions.

            In 1994, Congress responded.  Section 514 of the URAA (codified at 17 U.S.C. section 104A) grants copyright protection to works still protected n their country of origin, but not protected in the United States because: (a) the United States did not provide copyright protection to works of that country at the time the work was published; (b) the United States did not protect sound recordings fixed before 1972; or (c) the author had not complied with certain statutory requirements in the US law. The effect of Section 514 was to take works that previously were in the “public domain” and not protected under U.S. copyright law and to give them copyright protection.

            Orchestra conductors, musicians, publishers and others who formerly enjoyed free access to works Section 514 removed from the public domain brought suit to challenge Congress’s authority under the Copyright Clause to enact Section 514  Although the District Court agreed, the Tenth Circuit Court of Appeals reversed, and upheld Congress’s authority to enact Section 514.

Supreme Court Ruling

            The Supreme Court ruled 6-2 that Section 514 does not exceed Congress’s authority under the Copyright Clause.  The Court rejected the argument that the language that Congress can provide copyright protection “for a limited time” means Congress cannot extend copyright protection to works in the public domain.  The Court found that its 2003 decision in Eldred v. Ashcroft was largely dispositive.  In that case, the Court ruled that Congress has the authority under the Copyright Clause to extend the copyright term of certain works by 20 years, and that the term “limited” does not  mean that the term is “fixed” or “inalterable.”  The Court reviewed the history of amendments to the Copyright Act and found a number of situations where Congress has protected works that had been unprotected.  Finally, the Court saw no reason to reject Congress’s determination that adherence to the Berne Convention would serve the objectives of the Copyright Clause.

Takeaways

            Two definitive rulings in a decade on the authority of Congress under the Commerce Clause will hopefully put the challenges to rest.  The Supreme Court clearly has told us that Congress has the authority to extend copyright protection to works that previously have not been protected, and to extend the term of copyright protection.  In Eldred, the Court told us that  Congress’s authority is not unlimited, but to date Congress has not pushed the limits of its authority so much as to cause the Court concern.

These cases also serve to warn those who use uncopyrighted works in their businesses, and those who advise them, that “nothing is forever.”  Congress could change the status of the copyrighted works in the future.  Such users should keep this in mind when developing business plans and models based on uncopyrighted works.

November and December 2011 IP Cases Filed in US District Court of RI

There were 3 new intellectual property (patent, trademark and copyright) case filings in November and December 2011 at the U.S. District Court for Rhode Island. This brings the final total to 13 new IP case filings (3 patent and 9 trademark and 1 copyright) for the year, which is a 32% decrease over the 19 new IP case filings in 2010.

The new cases in November consist of 1 trademark and 1 copyright case.  The new filing in December is a trademark case.  These cases will be highlighted in an upcoming blog post.

These numbers only include cases that have been designated in the court's database as a patent, trademark or copyright case. There are other cases pending where the complaint may include trademark or other intellectual property claims, or where intellectual property counterclaims may have been asserted. But unless the case is designated as such in the court's database, we are not counting it here

Congressman Langevin Voices Oppostion to SOPA

Kudos to Congressman Jim Langevin for being the first of Rhode Island's Congressional delegation to voice opposition to the proposed Stop Online Piracy Act (SOPA).  Last Friday Langevin voiced his concerns about the effect the bill would have on the "security and openness of the Internet."   Langevin told politico.com's "Politico Morning Tech" that the bill “would interfere with efforts to increase transparency and security online by allowing U.S. companies to actively seek to shut down other companies’ websites, without court order or government involvement, while undermining initiatives like DNSSEC that help increase trust online.”

SOPA is pitting the entertainment communities against the technology communities.  The proposed bill attempts to stop rogue offshore websites that steal and copy American content (movies, music, etc.) by permitting the Attorney General to obtain a court order requiring Internet Service Providers (such as Comcast or Cox) to prevent access to a website within five days.  Proponents say the bill is necessary to protect U.S. intellectual property against infringement by foreign websites.  Opponents argue that the bill violates the First Amendment, and will "cripple the Internet."

Hearings on SOPA are expected to resume this month.