Seattle Trademark Lawyer

Senegal citizen Elimane Tall got involved in counterfeiting. In 2003, he pled guilty to one count of “counterfeit of a registered mark” in violation of California Penal Code § 350(a)(2), which imposes criminal penalties on any person who “willfully manufactures, intentionally sells, or knowingly possesses for sale any counterfeit of a mark registered with the Secretary of State or registered on the Principal Register of the United States Patent and Trademark Office…” In 2004, Mr. Tall pleaded guilty to nine new counts of “counterfeit of a registered mark” and one count of “counterfeit of a registered mark with a prior,” which landed him in prison.

After serving his time, the U.S. Department of Homeland Security sought to have him deported under the Immigration and Nationality Act as an alien convicted of a crime of “moral turpitude.” The immigration judge adopted the government’s position that “fraud is so inextricably woven into the statute as to clearly be an ingredient of the crime,” and ruled that Mr. Tall’s counterfeiting crimes indeed involved “moral turpitude.”

Mr. Tall appealed to the Ninth Circuit, which affirmed the immigration judge in a published decision. Its analysis is interesting for trademark lawyers because it characterizes counterfeiting as a form of fraud and theft:

“Under the categorical approach, § 350(a) is a crime involving moral turpitude because it is an inherently fraudulent crime. Either an innocent purchaser is tricked into buying a fake item; or even if the purchaser knows the item is counterfeit, the owner of the mark has been robbed of its value. The crime is really a species of theft. All of the conduct punished by § 350(a), ‘willfully manufactur[ing], intentionally sell[ing], or knowingly possess[ing] for sale any counterfeit … mark,’ is inherently fraudulent because each type of conduct ‘involve[s] knowingly false representations to gain something of value.’”

That’s a pretty good summary why counterfeiting — and even trademark infringement — is worth fighting against.

The case cite is Tall v. Mukasey, 517 F.3d 1115, No. 06-72804 (9th Cir. Feb. 12, 2008).

In the Northern District of California case of Microsoft Corp. v. E&M Internet Bookstore, Microsoft brought suit against a company doing business as emeshop.net, and its alleged owner Chien-Wei Chen, for selling counterfeit Microsoft software on eBay.

Plaintiff and defendants reached a preliminary settlement in which defendants agreed to pay plaintiff $35,000. The parties did not finalize the agreement, however, because Mr. Chen stopped communicating with his attorneys. As a consequence, defendants’ counsel moved to withdraw from the case. The court then ordered defendants to appear in person and show cause as to why they should not be deemed to be in default. Defendants failed to appear.

Microsoft then moved for summary judgment. Defendants’ attorneys submitted a response stating they had not received any communication from Mr. Chen and that, as a result, they would not submit an opposition on defendants’ behalf. Defendants did not appear at the hearing despite being notified when the hearing would take place.

Not surprisingly, the court granted Microsoft’s motion. It summarized the facts as follows:

From April 17 until June 13, 2006, eBay sent defendants approximately 65 auction ‘takedown’ notices concerning Microsoft products that defendants had attempted to sell on eBay. On May 2, an investigator for Microsoft purchased two products from defendants — one unit of Windows XP Professional SP2 and one unit of Office 2003 Professional — that were later analyzed and determined to be counterfeit. Plaintiff also contends it received two complaints from customers regarding counterfeit products sold to them by defendants. In an e-mail to defendant Chen on May 26, a representative from Microsoft warned: ‘we have received samples of counterfeit software distributed through your eBay auctions so it is especially important to verify the legitimacy of your supplier(s).’ In a subsequent e-mail, the Microsoft representative cautioned defendant Chen against continued purchases of software from unauthorized distributors.”

The court found: “The record supports a finding of trademark infringement. Plaintiff has established that it held properly-registered trademarks and that defendants sold two counterfeit products over the internet on May 2, 2006. A reasonable consumer would likely be confused about the authenticity of a counterfeit product bearing the ‘Microsoft’ trademark. Indeed, Microsoft received calls from confused customers who had unknowingly bought counterfeit products from defendants. Defendants have submitted no evidence showing that a genuine issue of fact remains for trial. Plaintiff’s motion for summary judgment with respect to its trademark claim is therefore Granted.”

The court imposed a permanent injunction against the defendants enjoining them from selling counterfeit Microsoft software and from advertising such software on Internet auction sites. For damages, the court awarded Microsoft’s requested sum of $45,000 for trademark and copyright infringement, as well as $5,000 in attorney’s fees and costs.

The case cite is Microsoft Corp. v. E&M Internet Bookstore, Inc., 2008 WL 191346, No. 06-06707 (N.D. Calif., Jan. 22, 2008).

The Ninth Circuit yesterday addressed the question: “whether an award of statutory damages for trademark counterfeiting under 15 U.S.C. § 1117(c) precludes an award of attorney’s fees under 15 U.S.C. § 1117(b).” Reversing the Central District of California in the case of K and N Engineering, Inc. v. Bulat, the Ninth Circuit found that it does.

K&N makes aftermarket air filters and related products. In 2004, K&N learned that Sarah Bulat and Steve Wandel were selling unauthorized decals bearing K&N’s registered design mark on eBay. In all, Ms. Bulat and Mr. Wandel sold 89 sets of the decals (with two decals per set) for $267. K&N brought suit and the Central District of California granted it summary judgment on its infringement, counterfeiting, and dilution claims. K&N elected statutory damages under 15 U.S.C. § 1117(c). The Central District awarded it statutory damages in the amount of $20,000 and attorney’s fees in the amount of $100,000.

On appeal, Ms. Bulat and Mr. Wandel argued that K&N’s election to receive statutory damages precluded an award of fees. The Ninth Circuit’s three-judge panel unanimously agreed. It found:

“[A] plaintiff may eschew actual damages under § 1117(a) and elect to seek statutory damages under § 1117(c). Section 1117(c) provides: ‘In a case involving the use of a counterfeit mark (as defined in section 1116(d) of this title) in connection with the sale, offering for sale, or distribution of goods or services, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a) of this section, an award of statutory damages for any such use in connection with the sale, offering for sale, or distribution of goods or services in the amount of — (1) not less than $500 or more than $100,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or (2) if the court finds that the use of the counterfeit mark was willful, not more than $1,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.’

“Section 1117(c) makes no provision for attorney’s fees; nor does 15 U.S.C. § 1117(b) authorize such fees for a plaintiff seeking statutory damages under  § 1117(c). Section 1117(b)’s attorney’s fees provision applies only in cases with actual damages under § 1117(a).

“In this case, K&N elected to recover statutory damages under § 1117(c). Because of K&N’s election, the court did not assess or award K&N actual damages or profits under § 1117(a). Therefore, there is no statutory basis to award K&N attorney’s fees under § 1117(b).”

This seems like a strange result. Injured trademark owners opt for statutory damages because counterfeiters don’t keep records needed for the injured owners to prove damages or the counterfeiters’ profits. If a counterfeiter keeps good records, Section 1117(b) generally enables the injured trademark owner to obtain a judgment for “three times such profits or damages, whichever is greater, together with a reasonable attorney’s fee….” But if a counterfeiter doesn’t keep good records, the injured owner only gets statutory damages? I suppose the statute says what it says, but from a policy standpoint, this conclusion makes no sense.

The case cite is K and N Engineering, Inc. v. Bulat, No. 06-55393, __ F.3d __, 2007 WL 4394416 (9th Cir.).

The Los Angeles Times today reported that Hollywood’s striking writers have acquired the amptp.com and amptp.net domain names and launched a Web site that protests the Alliance of Motion Picture and Television Producers, which represents the studios in the parties’ labor dispute. AMPTP’s official site is associated with amptp.org.

The story begins with the observation: “When the Hollywood studios say they don’t know enough about the Internet to pay writers what they seek for the streaming and downloading of their shows, they might not be kidding.”

The protest site, which looks like the producers’ official site, states the Alliance was “heartbroken” that negotiations with the writers had failed “despite our best efforts, including sending them a muffin basket, making them a mixed CD and standing outside their window with a boombox blasting Peter Gabriel songs.” It also features links to news stories supporting the writers.

The story quotes me as saying I didn’t see a problem with the writers using the Alliance’s trademark in a domain name as long as the Web site is a protest site and doesn’t cause consumer confusion: “It’s perfectly defensible for a disgruntled party to use someone else’s trademark if the purpose is to protest. It would be improper only if the writers were attempting to confuse the public or sell something.”

Having now had the chance to see the site, it’s clear the site is protected as free speech. And, since it doesn’t sell anything, it does not even implicate the Lanham Act because it is not “commercial.” Even if it were commercial, I don’t think confusion is likely given the site’s lampooning content. If the writers nonetheless wanted to minimize possible liability, they could provide a disclaimer and link to the Alliance’s official site, per Taubman Co. v. Webfeats, 319 F.3d 770 (6th Cir. 2003). As a non-commercial site, however, likelihood of confusion shouldn’t enter into the analysis.

On Oct. 19, Microsoft Corp. filed three substantially similar lawsuits in the Western District against the John Does who allegedly own and operate Web sites that sell unauthorized reproductions of Microsoft software. The subject Web sites are www.Econo-Soft.com, www.DVDFilm.tv, and www.ChildAOGroup.com. In each complaint, Microsoft alleges it placed orders through the Web site; provided payment information; received a link to another Web site in which to download the software; downloaded the software; and determined that the software was an “unauthorized reproduction” of Microsoft’s software. The software included Microsoft’s FrontPage, Windows Vista, and Office 2007 software.

Microsoft seeks relief based on theories of trademark infringement, false designation of origin, copyright infringement, constructive trust, and accounting.

Defendants have not yet answered the complaints, which are viewable here, here, and here.

The case cites are Microsoft Corp. v. Does, No. 07-1700, 07-1701, and 07-1702 (W.D. Wash.)