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Arnstein & Lehr LLP Intellectual Property Newsletter - Summer 2009

Arnstein & Lehr LLP Intellectual Property Newsletter - Summer 2009

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Published by Arnstein & Lehr LLP
The Intellectual Property Newsletter from Arnstein & Lehr's Intellectual Property Practice Group discusses several recent cases that effect law pertaining to trademarks and other IP issues. This is the Summer 2009 issue.
The Intellectual Property Newsletter from Arnstein & Lehr's Intellectual Property Practice Group discusses several recent cases that effect law pertaining to trademarks and other IP issues. This is the Summer 2009 issue.

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Published by: Arnstein & Lehr LLP on Sep 01, 2009
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Arnstein & Lehr inteLLectuAL ProPerty newsLetter | summer 2009
Flea market landownernot liable or contributorytrademark inringement
sd c c alla aga Ggl Addpga  pd
 ADWORDS Continued on Page 2 
Louis Vuitton (“Vuitton”), the well-known manufacturer of luxury goods such as handbags and luggage, and owner of nu-merous registered trademarks, discovered that counterfeits of its
 products were being sold by vendors at the San Jose ea market.The market is one of the largest open-air ea markets in the
country, covering 120 acres of land where over 2,000 vendors
occupy eight miles of aisles. Vuitton sued The Flea Market, Inc.
and Bumb & Associates (“Bumb”), along with three of Bumb’s
individual partners and two other individuals. Vuitton allegedthat The Flea Market and Bumb were closely related to each
other and collectively owned the land, buildings, structures and
xtures at the market. Vuitton further claimed that The FleaMarket pays Bumb for the right to lease the property to thevendors.
Vuitton alleged that Bumb committed contributory trademark infringement by knowingly allowing vendors at the market to
sell counterfeit Vuitton goods. Bumb moved to dismiss the
complaint because Vuitton failed to allege enough facts to hold
Bumb liable.The U.S. District Court for the Northern District of Califor 
-nia noted that a claim of contributory trademark infringementrequires that the defendant either (1) intentionally induce a third party to infringe the trademark owner’s mark or (2) supply a product to a third party with actual or constructive knowledge
that the product is being used to infringe the mark. As Vuit
-ton did not claim that Bumb induced any of the vendors to sellcounterfeit goods, it was required to show that Bumb suppliedcounterfeit products to the vendors with knowledge that the
goods were being used to infringe Vuitton’s trademarks.In determining whether Vuitton had properly claimed that Bumb
VUITTON Continued on Page 2 
The decision of the U.S. Court of Appeals for the Second Circuit
 Rescuecom Corp. v. Google Inc.
could be a watershed eventfor trademark owners in their ongoing battle against the Google
Adwords program. In
, the Second Circuit reversed thedismissal by the U.S. District Court for the Northern District of  New York of Rescuecom's trademark infringement claims and letthe case against Google go forward.
Google’s AdWords program allows advertisers to purchase terms(“keywords”) that trigger the appearance of the advertiser’s adver-tising and a link to the advertiser’s website whenever a searcher 
enters that term into the Google search engine. The search term
can be a word describing goods or services, the name of a competi-
tor or a trademark. Google’s Keyword Suggestion Tool recom
-mends keywords to purchasers relating to their area of commerce
to improve the effectiveness of their advertising.
The results of such purchased keywords can appear above the col-umn of returned “hits” under the label “Sponsored Link” but they
are not identied as purchased ads. Rescuecom argued that they
may appear to a searcher to be the most relevant entries respond-
ing to the search. It claimed that Google makes 97% of its revenuefrom AdWords sales. The Keyword Suggestion Tool recom
mended to Rescuecom’s competitors the purchase of Rescuecom’s
trademark as a search term and some of those competitors made
that purchase.The District Court relied on the prior Second Circuit precedent in
1-800 Contacts, Inc. v. WhenU.com, Inc.
, 414 F.3d 400 (2d Cir.2005) to determine that Google's use of the plaintiff's trademarksin its AdWords program and its Keyword Suggestion Tool werenot a "use in commerce" as that term is dened in the Lanham
VUITTON Continued from Page 1
supplied counterfeit
 products, the Court
considered the ex-tent of control exer-cised by Bumb over the vendors’ means
of infringement. In
the context of swap
meets, the U.S.Court of Appealsfor the Ninth Circuit
had held that theowner and operator of the meet, whosupplied parking,conducted advertis-ing and retained theright to exclude avendor for any reason at any time, and who was also aware thatvendors were selling counterfeit goods at the meet, was liable
for contributory infringement. The Ninth Circuit found that the
owner was liable because it supplied the necessary marketplace
for the sale of the counterfeits.
 Fonovisa, Inc. v. Cherry Auction, Inc.
, 76 F.3d 259 (9th Cir. 1996).
However, in this case Bumb was not the operator but merely
the property owner who leased the land to The Flea Market, aseparate entity. Bumb did not exercise any specic, direct controlover the vendors’ business operations. Because Vuitton failed to
allege that Bumb had a relationship with any of the vendors so
that it could control their actions, the District Court dismissed thecomplaint against Bumb. Vuitton’s broad statement that each of 
the defendants informed the others of their actions, as well as thelawful and unlawful activities at the market, was not supported by
any facts so the District Court dismissed it as a mere “blanket as
-sertion” that failed to provide Bumb with fair notice of the factual
grounds for the complaint against it.
The Louis Vuitton web site states that they have undertaken
“more than 13,000 counterfeiting proceedings and 6000 raids,leading to the arrest of almost 1000 counterfeiters.” Other own
-ers of famous trademarks can be expected to conduct similar 
campaigns. Whether a landlord can be held responsible for trademark infringement by its tenant is a fact-specic mat
-ter, often depending on what the landlord knew or should haveknown about what the tenant was selling, but landlords should beaware that they could have exposure for trademark infringement
if they knowingly allow tenants to sell counterfeit goods.
- Judith L. Grubner 
 Louis Vuitton Malletier v. The Flea Market, Inc., U.S. District Court for the Northern District of California, No. C 09-01062 CW, June10, 2009
Act; therefore, Rescuecom failed to plead an essential elementof a Lanham Act claim. However, in its decision in
the Second Circuit claried the meaning of the Lanham Act term“use in commerce,” agreeing with Rescuecom that when Google
serves up advertising or suggests keywords based on trademarksthis constitutes a use in commerce under the Act even if the ads
do not display Rescuecom’s trademark.The Second Circuit concluded that Rescuecom’s case was materi
-ally different from the situation in
1-800 Contacts
, because that prior case involved a situation where the search term generateda “pop-up” ad in a separate browser window when a particu-
lar website address was entered. The competitor’s brand was
displayed in a window frame surrounding the ad so that therewas no confusion about the pop-up being an advertisement by
a third party, not the trademark owner. The website address
involved in
1-800 Contacts
was never claimed by the owner to bea trademark, so a trademark was not used to trigger the offending
advertising. Also, the pop-up program randomly triggered ads,
it did not allow an advertiser to purchase a keyword to trigger an
ad. In contrast, Google displays, offers and sells trademarks as
search terms to its advertisers and encourages them to purchase
the trademarks of others as search terms. Therefore, Google uses
and sells trademarks in the sale of its advertising services that
are rendered in interstate commerce. Those uses are not merely“internal” to Google’s search algorithm.The Second Circuit also rejected Google’s argument that its use
of keywords to generate sponsored ads was no different than aretail vendor who puts a store-branded generic product next toa trademarked product to encourage consumers to consider the
less expensive generic product. That practice, the Court noted, is
 benign because it does not cause a likelihood of consumer confu-
sion. Retailers are not paid by off-brand producers to deliver the
off-brand instead of the famous brand consumers were actually
seeking. Whether Google’s practice is benign product placementor trademark infringement will be decided at trial.The Second Circuit's decision potentially opens up Google'sadvertising practices to Lanham Act liability. The SecondCircuit's decision allows Rescuecom to move forward with thiscase to show, if it can, that Google's practices create a likelihoodof confusion in the marketplace. More than half of the opinionconsists of an extensive Appendix entitled “On the Meaning of ‘Use in Commerce’ in Sections 32 and 43 of the Lanham Act”that discusses how to apply the “use in commerce” denition tothe Lanham Act’s provisions against infringement. Althoughthe Appendix is not binding precedent from the Second Circuit,
it nevertheless extends this case far beyond keyword advertising
- Joel B. Rothman
 Rescuecom Corp. v. Google Inc., U.S. Court of Appeals for theSecond Circuit, No. 06-4881, April 3, 2009
 ADWORDS Continued from Page 1
Arnstein & Lehr inteLLectuAL ProPerty newsLetter | summer 2009
Te right o privacy is generally divided into three categories: theright to be let alone, embarrassing disclosures and alse lightinvasion. Commercial use o the private inormation is notrequired. False light invasion o privacy occurs when publicity places a person in a alse light beore the public, such as the use o a person’s name or picture without consent, in the orm o a majormisrepresentation that would give oense to a reasonable person.Te Florida Supreme Court has ruled that alse light invasion o privacy is not a valid cause o action in Florida. Te case arose when Jews or Jesus published a newsletter account by a man who had visited his ailing ather and the ather’s wie, the man’sstepmother. Te account read:I had a chance to visit with my ather in Southern Floridabeore my Passover tour. He has been ill or sometimeand I was araid that I may not have another chance to be with him. I had been witnessing to him on the telephoneor the past ew months. He would listen and allow meto pray or him, but that was about all. On this visit, whenever I talked to my ather, my stepmother, Edie (also Jewish), was always close by, listening quietly. Finally, onemorning Edie began to ask me questions about Jesus. Iexplained how G-d [sic] gave us Y’Shua (Jesus) as the nalsacrice or our atonement, and showed her the parallels with the Passover Lamb. She began to cry, and when Iasked her i she would like to ask G-d or orgiveness orher sins and receive Y’Shua she said yes! My stepmotherrepeated the sinner’s prayer with me – praise G-d! Pray or Edie’s aith to grow and be strengthened. And pleasepray or my ather Marty’s salvation.Te stepmother, claiming that this publication placed her in a alselight regarding her religious belies, led suit against Jews or Jesus.She also asserted claims or deamation and intentional infictiono emotional distress. Te trial court dismissed her complaint, as well as two amended complaints. When she appealed, the FloridaFourth District Court o Appeal rejected the deamation claim butasked the Florida Supreme Court to answer the question whetherFlorida recognized alse light invasion o privacy.Te Florida Supreme Court discussed two concerns raised by othercourts that have rejected the tort o alse light: (1) it is largely duplicative o deamation, both in the conduct alleged and theinterests protected, and creates the potential or conusion becausemany o its parameters, in contrast to deamation, have yet to bedened; and (2) without many o the First Amendment protectionsattendant to deamation, it has the potential to chill speech withoutany appreciable benet to society.First, the Supreme Court noted that deamation law already encompasses claims that would all under the denition o alselight, such as “the concept that literally true statements can bedeamatory where they create a alse impression.Te Courtreerred to this as “deamation by implication” and cited severalFlorida opinions that have discussed that tort.Second, the Court applied Section 652E o the Restatement(Second) o orts to discuss the dierent standards applicable tothe tort o alse light versus deamation, noting that “it is not…necessary to the action or invasion o privacy that the plainti bedeamed. It is enough that he is given unreasonable and highly objectionable publicity that attributes to him characteristics,conduct or belies that are alse, and so is placed beore the publicin a alse position … [where] the statement is highly oensive toa reasonable person.In contrast, “a deamatory statement is onethat tends to harm the reputation o another, by lowering him orher in the estimation o the community or, more broadly stated,one that exposes a plainti to hatred, ridicule, or contempt orinjures his business or reputation or occupation.For the Court, the critical issued boiled down to the act that alselight is dened in subjective terms while deamation is denedmore objectively.Te Court also had First Amendment concerns, in that the alselight “highly oensive to the reasonable person” standard raised apotential chilling eect on ree speech because liability dependedtoo much on the subjective concerns o the plainti. Althoughother states solved that problem by extending deamationprotections to alse light claims, the Court rejected that suggestionas one that should be let to the Florida legislature. In a partingshot, the Court also noted that no case had been identied where aclaim based solely on alse light was upheld, signaling to the Courtthat the tort was irrelevant.Finally, the Court held that the applicable standard in deamationcases is the Restatement standard that the deamatory statementprejudices the plainti in the eyes o a “substantial and respectableminority” o the community. Tus, in uture, plaintis who wouldnormally claim alse light invasion o privacy must instead plead aclaim or implied deamation and meet the applicable standard orthe communication at issue.Unlike Florida, Illinois recognizes a cause o action or alse lightinvasion o privacy. o prevail, a plainti must show that (1) he orshe was placed in a alse light as a result o the deendant’s actions,that is, that the publicity at issue is o and concerning him or her;(2) the alse light was oensive to a reasonable person; and (3) thedeendant acted with actual malice, that is, with knowledge thatthe statements were alse or with reckless disregard or their truth oralsity.
 Muzikowski v. Paramount Pictures Corp.
, 322 F.3d 918, 927(7th Cir. 2003). Te malice requirement applies whether or notthe plainti is a public or private person.
- Joel B. Rothman
 Jews for Jesus v. Rapp, Supreme Court of Florida, 997 So.2d 1098, 2008 Fla. LEXIS 2010, October 23, 2008 
Florida jettisons alse light invasion o privacy action

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