1
Second Circuit Court allows
case against Google Adwords
program to proceed
The decision of the U.S. Court of Appeals for the Second Circuit
in Rescuecom Corp. v. Google Inc. could be a watershed event
for trademark owners in their ongoing battle against the Google
Adwords program. In Rescuecom, the Second Circuit reversed the
dismissal by the U.S. District Court for the Northern District of
New York of Rescuecom's trademark infringement claims and let
the 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 identified 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 revenue
from 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 trademarks
in its AdWords program and its Keyword Suggestion Tool were
not a "use in commerce" as that term is defined in the Lanham
ADWORDS Continued on Page 2
A r n s t e i n & L e h r i n t e ll e c t u al P r o p e r t y n e w s l e t t e r
Flea market landowner
not liable for contributory
trademark infringement
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 flea market.
The market is one of the largest open-air flea 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 alleged
that The Flea Market and Bumb were closely related to each
other and collectively owned the land, buildings, structures and
fixtures at the market. Vuitton further claimed that The Flea
Market pays Bumb for the right to lease the property to the
vendors.
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 infringement
requires 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 sell
counterfeit goods, it was required to show that Bumb supplied
counterfeit 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
| Summer 2009
2
ADWORDS Continued from Page 1
Act; therefore, Rescuecom failed to plead an essential element
of a Lanham Act claim. However, in its decision in Rescuecom,
the Second Circuit clarified the meaning of the Lanham Act term
“use in commerce,” agreeing with Rescuecom that when Google
serves up advertising or suggests keywords based on trademarks
this 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 generated
a “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 there
was 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 be
a 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 a
retail vendor who puts a store-branded generic product next to
a 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 placement
or trademark infringement will be decided at trial.
The Second Circuit's decision potentially opens up Google's
advertising practices to Lanham Act liability. The Second
Circuit's decision allows Rescuecom to move forward with this
case to show, if it can, that Google's practices create a likelihood
of confusion in the marketplace. More than half of the opinion
consists 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” definition to
the Lanham Act’s provisions against infringement. Although
the Appendix is not binding precedent from the Second Circuit,
it nevertheless extends this case far beyond keyword advertising
issues. - Joel B. Rothman
Source: Rescuecom Corp. v. Google Inc., U.S. Court of Appeals for the
Second Circuit, No. 06-4881, April 3, 2009
w w w. a r n s t e i n . c o m
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 Appeals
for the Ninth Circuit
had held that the
owner and operator
of the meet, who
supplied parking,
conducted advertis-
ing and retained the
right to exclude a
vendor for any reason at any time, and who was also aware that
vendors 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, a
separate entity. Bumb did not exercise any specific, direct control
over 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 the
complaint against Bumb. Vuitton’s broad statement that each of
the defendants informed the others of their actions, as well as the
lawful 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-specific mat-
ter, often depending on what the landlord knew or should have
known about what the tenant was selling, but landlords should be
aware that they could have exposure for trademark infringement
if they knowingly allow tenants to sell counterfeit goods. - Judith
L. Grubner
Source: Louis Vuitton Malletier v. The Flea Market, Inc., U.S. District
Court for the Northern District of California, No. C 09-01062 CW, June
10, 2009

Florida jettisons false light invasion of privacy action
The right of privacy is generally divided into three categories: the
right to be left alone, embarrassing disclosures and false light
invasion. Commercial use of the private information is not
required. False light invasion of privacy occurs when publicity
places a person in a false light before the public, such as the use of
a person’s name or picture without consent, in the form of a major
misrepresentation that would give offense to a reasonable person.
The Florida Supreme Court has ruled that false light invasion of
privacy is not a valid cause of action in Florida. The case arose
when Jews for Jesus published a newsletter account by a man
who had visited his ailing father and the father’s wife, the man’s
stepmother. The account read:
I had a chance to visit with my father in Southern Florida
before my Passover tour. He has been ill for sometime
and I was afraid that I may not have another chance to be
with him. I had been witnessing to him on the telephone
for the past few months. He would listen and allow me
to pray for him, but that was about all. On this visit,
whenever I talked to my father, my stepmother, Edie (also
Jewish), was always close by, listening quietly. Finally, one
morning Edie began to ask me questions about Jesus. I
explained how G-d [sic] gave us Y’Shua (Jesus) as the final
sacrifice for our atonement, and showed her the parallels
with the Passover Lamb. She began to cry, and when I
asked her if she would like to ask G-d for forgiveness for
her sins and receive Y’Shua she said yes! My stepmother
repeated the sinner’s prayer with me – praise G-d! Pray
for Edie’s faith to grow and be strengthened. And please
pray for my father Marty’s salvation.
The stepmother, claiming that this publication placed her in a false
light regarding her religious beliefs, filed suit against Jews for Jesus.
She also asserted claims for defamation and intentional infliction
of emotional distress. The trial court dismissed her complaint, as
well as two amended complaints. When she appealed, the Florida
Fourth District Court of Appeal rejected the defamation claim but
asked the Florida Supreme Court to answer the question whether
Florida recognized false light invasion of privacy.
The Florida Supreme Court discussed two concerns raised by other
courts that have rejected the tort of false light: (1) it is largely
duplicative of defamation, both in the conduct alleged and the
interests protected, and creates the potential for confusion because
many of its parameters, in contrast to defamation, have yet to be
defined; and (2) without many of the First Amendment protections
attendant to defamation, it has the potential to chill speech without
any appreciable benefit to society.
First, the Supreme Court noted that defamation law already
encompasses claims that would fall under the definition of false
light, such as “the concept that literally true statements can be
defamatory where they create a false impression.” The Court
A r n s t e i n & L e h r i n t e ll e c t u al P r o p e r t y n e w s l e t t e r
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referred to this as “defamation by implication” and cited several
Florida opinions that have discussed that tort.
Second, the Court applied Section 652E of the Restatement
(Second) of Torts to discuss the different standards applicable to
the tort of false light versus defamation, noting that “it is not…
necessary to the action for invasion of privacy that the plaintiff be
defamed. It is enough that he is given unreasonable and highly
objectionable publicity that attributes to him characteristics,
conduct or beliefs that are false, and so is placed before the public
in a false position … [where] the statement is highly offensive to
a reasonable person.” In contrast, “a defamatory statement is one
that tends to harm the reputation of another, by lowering him or
her in the estimation of the community or, more broadly stated,
one that exposes a plaintiff to hatred, ridicule, or contempt or
injures his business or reputation or occupation.”
For the Court, the critical issued boiled down to the fact that false
light is defined in subjective terms while defamation is defined
more objectively.
The Court also had First Amendment concerns, in that the false
light “highly offensive to the reasonable person” standard raised a
potential chilling effect on free speech because liability depended
too much on the subjective concerns of the plaintiff. Although
other states solved that problem by extending defamation
protections to false light claims, the Court rejected that suggestion
as one that should be left to the Florida legislature. In a parting
shot, the Court also noted that no case had been identified where a
claim based solely on false light was upheld, signaling to the Court
that the tort was irrelevant.
Finally, the Court held that the applicable standard in defamation
cases is the Restatement standard that the defamatory statement
prejudices the plaintiff in the eyes of a “substantial and respectable
minority” of the community. Thus, in future, plaintiffs who would
normally claim false light invasion of privacy must instead plead a
claim for implied defamation and meet the applicable standard for
the communication at issue.
Unlike Florida, Illinois recognizes a cause of action for false light
invasion of privacy. To prevail, a plaintiff must show that (1) he or
she was placed in a false light as a result of the defendant’s actions,
that is, that the publicity at issue is of and concerning him or her;
(2) the false light was offensive to a reasonable person; and (3) the
defendant acted with actual malice, that is, with knowledge that
the statements were false or with reckless disregard for their truth or
falsity. Muzikowski v. Paramount Pictures Corp., 322 F.3d 918, 927
(7th Cir. 2003). The malice requirement applies whether or not
the plaintiff is a public or private person. - Joel B. Rothman
Source: Jews for Jesus v. Rapp, Supreme Court of Florida, 997 So.2d 1098,
2008 Fla. LEXIS 2010, October 23, 2008
| Summer 2009
4
Sale of products with UPC code removed constitutes trademark infringement
Although consumers and retailers cannot read “unique produc-
tion code” symbols (“UPC,” also known as universal or uniform
product code) without the assistance of scanning devices, the
U.S. Court of Appeals for the Second Circuit has concluded that
removal of UPC symbols from genuine, branded products can
constitute trademark infringement. Even if a retailer is selling
a genuine product in its original packaging with the registered
trademark intact, altering or removing the UPC symbol can
subject the retailer to trademark infringement liability because it
interferes with the trademark owner’s ability to control the qual-
ity of its goods.
Zino Davidoff SA (“Davidoff”) sells high-end luxury goods for
personal consumption. Since 1988, Davidoff has sold DAVI-
DOFF COOL WATER branded colognes for men. In 1997, it
introduced a COOL WATER branded fragrance for women.
Davidoff licensed Coty to manufacture and market its COOL
WATER fragrances. Together they developed a comprehen-
sive quality assurance and anti-counterfeiting program. That
program includes placing a UPC symbol on the bottom of each
fragrance bottle and its package. Davidoff uses the UPC symbol
to detect counterfeit fragrance products and to detect and make
targeted recalls of products with quality problems.
Davidoff maintains the prestige of its brand by limiting sales
of COOL WATER fragrance products to luxury retailers. It has
refused to sell its products to CVS, a retail drugstore chain, but
CVS nevertheless sells COOL WATER products that it obtains
from other sources, including “gray market” goods. Gray
market goods are manufactured under the authorization of the
trademark owner and are legally purchased from authorized dis-
tributors (often outside the U.S.) but are imported by third par-
ties other than the trademark owner without the owner’s consent.
They differ from counterfeit products in that they are the genuine
goods of the trademark owner.
Davidoff products are among CVS’s top-selling fragrances. In
1998 and 2005, Davidoff caught CVS selling counterfeit COOL
WATER products. CVS assured Davidoff that it would remove
the counterfeit goods and sell only products from authorized
distributors in the future. However, when Davidoff discovered
more counterfeit products on CVS’s shelves in 2006, it brought
this case for trademark infringement and other claims.
When the U.S. District Court for the Southern District of New
York entered a temporary restraining order against CVS, the
court authorized Davidoff to inspect CVS’s inventory bearing
the COOL WATER mark. Davidoff discovered that its UPC
symbol had been removed from 16,600 items. The symbols
had been removed by cutting away portions of the box, using
chemicals to wipe away the symbols and grinding away the bot-
tom of the bottles. In many cases, it was clear that the packag-
ing had been opened. Davidoff then amended its complaint to
charge CVS with trademark infringement for removing the UPC
w w w. a r n s t e i n . c o m
symbols and the
District Court
granted Davi-
doff a prelimi-
nary injunction
prohibiting CVS
from selling
any Davidoff
trademarked
products with
the UPC symbol
removed.
CVS appealed
the preliminary
injunction, contending that it could not be committing trademark
infringement because it was selling genuine gray-market goods,
that is, real Davidoff products in their original packaging with
Davidoff’s visible and unaltered trademarks. But the Second
Circuit concluded that removal of the codes interfered with
Davidoff’s trademark rights regardless of whether the goods were
authorized for sale in the U.S.
CVS pointed out that Congress had failed to enact proposed
amendments to the Lanham Act to bar alteration or removal of
the UPC symbol but the Second Circuit noted that failed legisla-
tive proposals are “dangerous ground” because they could mean
that Congress believed the statute already covered the issue.
Where goods bearing a true trademark do not conform to the
trademark owner’s quality control standards or differ materi-
ally from the owner’s authorized products, they are no longer
considered genuine. Such goods do not have to be defective to
injure the owner’s reputation for quality. In order to show that
its quality control procedures have been subverted, a trademark
holder must prove that its procedures are “established, legitimate,
substantial, and nonpretextual,” that it abides by its procedures
and that sales of products not conforming to those procedures
will diminish the value of the mark. The Second Circuit agreed
with the District Court that Davidoff had met all of these require-
ments.
Because creating individual UPCs for every package is expen-
sive, counterfeiters omit the codes or use the same false code on
numerous packages. Davidoff’s UPC system allows it to identify
knock-offs by scanning for products that either lack codes or dis-
play codes known to be false. Davidoff abides by its procedures
in that it trains retailers, private investigators and U.S. Customs
officials to use its UPCs to identify and seize counterfeit goods.
Removal of Davidoff’s UPCs increases the risk that retail units
will be counterfeit, diminishing the value of its mark.
In addition, the Second Circuit noted that information imbed-
ded in the codes, such as where and when a particular unit was

produced, the ingredients used and the distribution path helped
Davidoff to identify the source of defective goods and allowed
easy and quick identification of distributed products, permitting
targeted recalls. The retailers and consumers do not have to be
aware of or understand that information for Davidoff to use it to
control product quality. The UPCs are bona fide quality control
devices relied on by Davidoff. They are not used merely to trap
unauthorized distributors and identify importers of gray-market
goods, which might not be a sufficient purpose to subject a re-
tailer to Lanham Act liability.
The damage caused by CVS to the packaging and the bottles was
visible to consumers, who could regard such mutilated packages
as stolen, defective, diverted from recall, or otherwise suspicious
or untrustworthy. Recipients of such products as romantic gifts
could see them as cheap or illicit, the sort of present “given by
Tony Soprano to Carmela,” according to the Court. That makes
luxury goods with damaged packaging materially different from
goods in intact packaging. As the threshold of materiality is
low for gray-market goods, a slight difference such as mutilated
packaging could endanger the trademark owner’s goodwill and
subject consumers to potential confusion. Davidoff’s evidence
that the absence of UPCs increased the risk that consumers would
purchase counterfeit or defective products was enough to demon-
strate that it would be irreparably injured by CVS’s actions, thus
justifying the preliminary injunction.
This appears to be the first federal appeals court decision that
removing or altering UPC symbols can constitute trademark
infringement, providing trademark owners with an additional
tool against unauthorized distributors. Although the UPC symbol
is not usually considered to be a trademark, in 1990 a federal
district court indicated that there were at least 10 registered marks
that included UPCs as part of their designs. Minturn Advertising,
Inc. v. Hermsen Design Assocs., Inc., 728 F. Supp. 430, 433 (N.D.
Tex. 1990). - Judith L. Grubner
Source: Zino Davidoff SA v. CVS Corp., U.S. Court of Appeals for the
Second Circuit, No. 07-2872-cv, June 19, 2009
Yoko Ono retains rights to London film
footage of John Lennon and family
The United States District Court for the District of Massachusetts
has dismissed claims by World Wide Video (“WWV”) against
Yoko Ono, widow of former Beatles member John Lennon, for
recovery of video tapes that WWV claimed to own, and allowed
Ono to keep possession of and the copyrights to those tapes. The
story of those tapes reads like a suspense novel.
In 1970, filmmaker Anthony Cox, Ono’s ex-husband, shot four
days of film footage of John Lennon, Yoko Ono, and their family
in and around London. In 1983, Cox registered with the U.S.
Copyright Office a copyright in the footage, which at that time
consisted of 24 videotapes and a short documentary motion pic-
A r n s t e i n & L e h r i n t e ll e c t u al P r o p e r t y n e w s l e t t e r
5
ture entitled "Portrait."
Cox assigned his rights to the videotapes to a company he con-
trolled, which later sold the videotapes to two individuals, John
Fallon and Robert Grenier, Jr. Fallon and Grenier then assigned
the rights to the company they controlled, World Wide Video, the
plaintiff in this case. Their estimate of the value of the tapes was
$10 million to a collector and up to $150 million if Ono agreed to
commercialization of the tapes.
Apparently the videotapes were then stolen, held for ransom,
transferred to other parties, threats were made to destroy them
and, in 2002, they were sold to Ono by the alleged thief for
$300,000, along with a transfer of the copyrights, alleged by
WWV to be forged. That same year, Ono publicly recorded the
transfer documents with the Copyright Office.
In 2005, WWV learned of Ono's claim of ownership when it
attempted to show a copy of a film about Lennon that contained
portions of the transferred tapes and Ono complained. Instead of
suing Ono right away to recover the tapes and its rights, WWV
waited until 2008 to file its suit.
In response to Ono’s motion for judgment on the pleadings
because the statute of limitations had run on WWV’s copyright
claim, the court ruled in Ono’s favor and threw out WWV's
claims. The court held that Ono's 2002 registration of the assign-
ment of the copyright in the videotapes with the Copyright Office
was “constructive notice” that began the running of the three-
year statute of limitations for copyright infringement. As WWV
should have known in 2002 that Ono was claiming rights in the
videos because of the “triggering event” that she recorded the
copyright transfer, WWV failed to file its suit in time and could
not recover against Ono. The recordation of the transfer was
“notice to the world of its existence.” In addition, WWV failed
to try to discover where the tapes had gone after expiration of
an agreement it had made with the alleged thief. Moreover, the
Court found that Ono’s recordation of the copyright transfer did
not infringe the copyright, even if WWV owned it. WWV simply
could no longer challenge Ono’s ownership of the tapes.
The court made light of WWV’s burden to check the records of
the Copyright Office to discover Ono’s 2002 recordation of the
copyright transfer. However, searching the Copyright Office
records for information about a particular creative work is not
that simple. For example, the two records for the “Portrait” vid-
eotape indicate that the copyright was registered in August 1983
by Anthony Cox and that a “bill of sale” was recorded in June
2002. Anthony Cox is listed as Party 1 and Lexon, Inc. as Party
2. Those were the parties to the original assignment in 1996 that
Cox made to a corporation he controlled. Neither WWV, which
obtained the copyright in 2000, nor Yoko Ono, who apparently
recorded the “bill of sale” in 2002, appear on the record. - Joel B.
Rothman
Source: World Wide Video, LLC v. Anthony Pagola and Yoko Ono Len-
non, U.S. District Court for the District of Massachusetts, No. 08-10391-
RWZ, June 24, 2009
| Summer 2009
6

South Dakota considers Landham Act abandonment test for state trademarks
Section 45 of the Lanham Act (15 USC §1127) provides a rebut- had not sold any DA-
table presumption that a trademark has been abandoned when the KOTA-branded products “The Court noted that
mark has not been used for three years. Although not adopting or collected any royal- although the South Da-
that presumption, the South Dakota Supreme Court has consid- ties from licensees of its kota trademark statute
ered it in the context of state trademark registrations. DAKOTA mark from
2001-2006. Cabela’s also
authorized the Secretary
Dakota Industries, Inc. (“DI”), a manufacturer of outerwear produced the deposition of State to cancel a state
products, registered the trademark DAKOTA for its products testimony of DI’s CEO trademark registration
with the Secretary of State of South Dakota in 1968 and renewed that DI had not made or
that registration in 2006. When Cabela’s.com, Inc. (“Cabela’s”)
that has been abandoned,
sold any DAKOTA-brand-
sold clothing using “Dakota Vest” and “Dakota Jacket,” DI sued ed products after 1997 the statute did not pro-
Cabela’s for state trademark infringement. Cabela’s moved for and that the DAKOTA vide any particular period
summary judgment, claiming that DI had abandoned the mark by mark had not been used of non-use that would
failing to make or sell any DAKOTA-branded goods after 1997 or licensed by DI since
and failing to collect royalties from licensees after 2001. 2000. DI’s CEO had also constitute abandonment.”
testified that he was “not
The trial court granted judgment to Cabela’s, finding that DI had going to waste any time or
not rebutted the evidence of abandonment. DI appealed, and the efforts” determining whether DI’s licensees were continuing to
South Dakota Supreme Court affirmed that decision. use the mark or even continued to exist.

Although the Supreme Court acknowledged that abandonment is
a defense to trademark infringement which the alleged infringer
has the initial burden to establish, the Court noted that once that
initial case of abandonment has been made, the trademark owner
is required to respond to that evidence with specific facts from
which current use of the mark can be shown or inferred.
Cabela’s produced evidence from DI’s business records that DI
That evidence, the Supreme Court observed, was sufficient to
make a prima facie case of abandonment, requiring DI to come
forward with specific facts about its current use of the mark. The
Court noted that, although the South Dakota trademark statute
authorized the Secretary of State to cancel a state trademark
registration that has been abandoned, the statute did not provide
any particular period of non-use that would constitute abandon-
ment. The trial court had looked to the federal Lanham Act for

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w w w. a r n s t e i n . c o m
 7

guidance. The trial court did not adopt the Lanham Act’s three-
year non-use presumption but also considered that DI’s non-use
stretched for almost six years.
DI contended that it had not abandoned the mark during either a
three-year or a six-year period because the mark was in use by its
licensees. It pointed to recently seen DAKOTA-branded cloth-
ing for sale by a company in Sioux Falls. However, DI’s attorney
admitted that those garments were sold to that company in 1997
and that DI did not have any evidence that the company was still
a licensee. Because DI failed to produce any evidence of actual
license agreements, income from licensing or affidavits from
current licensees, and no specifics about goods or licensees still
in the marketplace or alleged royalty-free oral licenses or license
supervision, the Supreme Court concluded that the mark was
indeed abandoned.
A state trademark registration, although providing protection for
a mark only within the boundaries of the state of registration, is
nonetheless an important tool for protection of marks that are not
used in interstate commerce or whose owner is not ready to incur
the expense of a federal registration. State trademark registra-
tions are relatively easy and inexpensive to obtain and maintain
compared to a federal registration. However, unlike federal
applications, which can be based on an intent to use a mark in the
future, state trademark applications require that the mark be in
current use within the state.
The DAKOTA mark at issue in this case would probably have
been difficult to register on the U.S. Principal Register, as it
would likely have been considered to be geographically descrip-
tive. State registrars may not consider that to be grounds for
rejection. - Judith L. Grubner

Section 45 of the Lanham Act also provides that a mark will be Source: Dakota Industries, Inc. v. Cabela’s.com, Inc., South Dakota
presumed abandoned if the owner’s course of conduct causes the Supreme Court, No. 24950, May 20, 2009
mark to “lose its significance as a mark.” Allowing unlicensed
third parties to use a mark can be evidence of such lost signifi-
cance.

The Intellectual Property Practice Group counsels clients on matters related to the protection of
trademarks, copyrights, domain names and trade secrets, including preparation and processing of
trademark and copyright applications, unfair competition, rights of privacy and publicity, review of
web sites and advertising claims, and preparation and registration of contest and game promotion
rules.

Judith L. Grubner Joel B. Rothman

Phone: 312.876.7885 Phone: 561.650.8480
Email: jlgrubner@arnstein.com Email: jrothman@arnstein.com

Ms. Grubner is a partner in the firm’s Mr. Rothman is a Florida board

Chicago office. She concentrates her certified Intellectual Property lawyer
practice on intellectual property, and a partner in the firm’s West Palm
specializing in trademarks, copyrights, Beach office. Mr. Rothman represents
domain names and sweepstakes, con- individual and corporate clients in
tests and game promotions. intellectual property infringement
litigation involving patents, trade-
Ms. Grubner is a speaker for the Chicago and Milwaukee marks, copyrights, trade secrets, trade libel and related
Bar Associations, the Midwest Society of Professional commercial matters. His litigation practice also includes
Consultants and Society of Professional Journalists. In significant focus on electronic discovery issues such as
July 2009 Ms. Grubner was named to the list of Leading e-discovery management and motion practice relating
Lawyers in Advertising & Media Law by Leading Lawyers to e-discovery.
Network.

A r n s t e i n & L e h r i n t e ll e c t u al P r o p e r t y n e w s l e t t e r | Summer 2009

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