Arnstein & Lehr inteLLectuAL ProPerty newsLetter | winter 2009

Federal Circuit reuses registrationto Hotels.com as genericSeventh Circuit redefnesphotographer’s copyright interest

PHOTOGRAPHER Continued on Page 3

Single word “.com” domain names are popular as they are easy toremember. However, if that single word is the generic word for thegoods or services being offered, such as “cruise,” “tea,” “jewelry,”or the like, adding “.com” to that word is probably not going to cre-ate a composite word that will be a registrable trademark. The U.S.Court of Appeals for the Federal Circuit has issued several decisionsrefusing registration to such composite terms as generic, despite evi-dence that the applicant provided to show that the public perceivedthe proposed mark as distinctive and indicative of the source of thegoods or services.The Federal Circuit recently issued another such decision, concludingthat HOTELS.COM is generic and non-registrable for the servicesof “providing information for others about temporary lodging; travelagency services, namely making reservations and bookings for temporary lodging by means of telephone and the global computer net-work.” The decision relied in part on

In re Reed Elsevier Props. Inc.

,482 F.3d 1376 (Fed. Cir. 2007), in which the Federal Circuit previ-ously denied registration for LAWYERS.COM because the term wasgeneric for online database services “featuring information exchange

in the elds of law, legal news and legal services.”

In this case, the trademark examiner denied registration to Hotels.com LP for “HOTELS.COM” because it was merely descriptive of

hotel reservation services and there was insufcient evidence that it

had acquired distinctiveness. The examiner indicated that the mark might also be generic for those services but did not make that deter-

mination. The signicance of a generic nding is that, although it is

possible to register a descriptive term (either on the Principal Register with evidence that the mark has acquired distinctiveness or on theSupplemental Register without such evidence), a generic term cannot be registered.

HOTELS.COM Continued on Page 2

Gracen v. Bradford Exchange

, 698 F.2d 300 (7th Cir. 1983), theU.S. Court of Appeals for the Seventh Circuit appeared to suggestthat the creator of a derivative work (a work based on one or more preexisting works, such as an art reproduction or other form inwhich a work is recast, transformed or adapted) needed permissionfrom the owner of the copyright in the preexisting underlying work in order to register a copyright in the derivative work. The Court

has now claried that a photographer who creates photos depicting

copyrighted subject matter with the owner’s permission has a legalright to register the copyright in those photos, as long as the photossatisfy the other requirements for a copyright registration and the parties did not have an agreement providing otherwise.The controversy concerned photos taken by Daniel Schrock, a pho-tographer hired by Learning Curve International to take photos of

its licensed “Thomas & Friends” toy train gures for use in pro

-motional materials. After Learning Curve stopped using Schrock’sservices but continued to use some of the photos in promotionalmaterials, Schrock registered copyrights in the photos and suedLearning Curve and its licensor, HIT Entertainment, for copyrightinfringement.The U.S. District Court for the Northern District of Illinois grantedsummary judgment to Learning Curve and HIT on the basis thatSchrock did not own the copyrights in the photos and could not reg-ister them (registration is a prerequisite to a copyright infringementsuit). The court held that the photos were “derivative works” of the Thomas & Friends characters, owned by HIT, and that Schrock needed Learning Curve’s permission to register copyrights in the photos.In reversing that decision, the Seventh Circuit assumed without de-ciding that the photos were indeed derivative works and concludedthat the right to register the copyright for a derivative work arises

www.Arnstein.com

HOTELS.COM Continued from Page 1

On appeal to the Trademark Trial and Appeal Board (“TTAB”),Hotels.com argued that HOTELS.COM is not generic becauseHotels.com does not provide lodging and meals for its web siteusers and the examiner did not carry the heavy burden of proof of showing that the term was generic. Hotels.com further contendedthat HOTELS.COM had become a term widely accepted and rec-ognized by the public and has thereby gained distinctiveness (or “secondary meaning”).Hotels.com’s evidence included 64 declarations from customers,vendors and competitors stating that the term HOTELS.COM was

not a common or generic name of any product, service or eld of

study. It also submitted a “national probability double blind tele-

phone survey” (of the type used to show that “Teon” was not

generic) that resulted in its expert’s conclusion that approximately76% of respondents regarded the mark HOTELS.COM as a brandname for a business that makes hotel reservations and provides in-formation about hotels. However, the TTAB rejected the declara-tions because they were identical form documents that did not ex- plain the conclusion. It rejected the survey results on the groundsthat the methodology did not adequately instruct the consumers inthe difference between a brand name and domain name.The TTAB also analyzed the dictionary, encyclopedia and thesau-

rus denitions of “hotel,” “temporary lodgings,” and “.COM” in

concluding that HOTELS.COM was a generic term for the ser-vices. In addition, the TTAB considered various other domainnames that contain the term “hotel,” as well as other web sites that provide hotel information and reservation services and found that“it is clear from the website and promotional materials of the applicant as well as the websites of third-parties that consumers who

are interested in nding information about hotels or making res

-ervations at hotels, would immediately understand that HOTELS.

COM identies a website that provides such services.” The TTAB

found that, to be competitive, third parties need to use the word“hotel” as part of their own domain names. It reasoned that theword “hotels,” as included in a domain name, indicates the genusof hotel information and reservation services and thus supports thedetermination that HOTELS.COM is generic.On appeal to the Federal Circuit, Hotels.com argued that the

TTAB’s reasoning was awed because the contested term is not

simply the single word “hotels” but the composite term HOTELS.COM. It pointed out that HOTELS.COM is used to indicate aninformation source and travel agency—something other than the plain meaning of “hotel” - so HOTELS.COM is not a generic termfor a “hotel” such that addition of “.com” negated a genericness

nding.

The Federal Circuit found that the TTAB considered that hotelswere the “focus” and a “key aspect” of the services and had re-viewed Hotels.com’s advertisements, where it appeared that HO-TELS.COM had the same meaning as the word “hotels” by itself.The Court concluded that the TTAB correctly separated the word

“hotel” from the sufx “.com,” which would not add to the regis

-trability of the term. The Court concluded that addition of “.com”to “hotel” did not produce a new meaning in combination and didnot indicate source, only that Hotels.com operates a commercialInternet web site that provides information about hotels.

Although the Court did not specically consider whether the sur

vey evidence was sufcient to show secondary meaning, it consid

-ered the entirety of the evidence before the TTAB, including the

large number of similar usages of “hotels” with a “.com” sufx,in addition to the ordinary meaning and dictionary denition of

“hotels,” combined with the standard usage of “.com” to show a

commercial internet domain, and found that there was sufcientevidence before the TTAB to support its ndings that the mark was

indeed generic.It appears that the Federal Circuit will not deviate from the po-sition that even strong evidence of secondary meaning will notsave a “.com” mark joined with a generic term. Most recently,the Court applied both the LAWYERS.COM and the HOTELS.COM cases to reject registration of 1800MATTRESS.COM asgeneric. In

Re 1800MATTRESS.COM IP, LLC.,

2009 U.S. App.LEXIS 24383 (Nov. 6, 2009). It has long been the position of

the U.S. Patent and Trademark Ofce (“USPTO”) that addition

of a top level domain name such as .com, .net or .org will not addto the registrability of a mark, because such terms are merely de-scriptive of Internet commerce.

Trademark Manual of Examining Procedures

§ 1209.03(m). However, the USPTO does recognizethat there could be rare cases where addition of a top level domaincould improve the registrability of a mark.An ironic note was that the TTAB disagreed with the examiner that

the evidence of secondary meaning was insufcient. If the Federal

Circuit had concluded that the mark was merely descriptive rather than generic for the services and sent the case back to the TTAB,the Board would have approved the application based on the mark having acquired distinctiveness.

Source:

In re Hotels.com, 573 F.3d 1300 (Fed. Cir. 2009)

Arnstein & Lehr inteLLectuAL ProPerty newsLetter | winter 2009

This trademark infringement and breach of contract actiondemonstrates the importance of clearly spelling out, in detail, theintent of the parties in every trademark licensing transaction.J.A. Apparel Corp. (“JA”) thought it was unambiguously obtainingexclusive rights to market men’s clothing under the Joseph Abboudname when it purchased from the world-famous designer and philanthropist the commercial use of the name “Joseph Abboud,”and trademarks containing that name for $65.5 million. Abboud,however, had other ideas.Since 1988, JA manufactured, marketed and sold products using“Joseph Abboud” trademarks under a license from Abboud. New licenses were issued to JA by Abboud in 1996. In 2000,Abboud sold certain assets to JA, including the “names, tradenames, service marks, logos, insignias, and designations,” relatedtrademark registrations and applications and “all other Intellectual

Property.” The agreement dened “Intellectual Property” as “all

of the trademark registrations, service mark registrations andapplications and copyright registrations and applications currentlyused by [Abboud] in connection with the Trademarks.” JA andAbboud also entered into a personal service agreement under which Abboud agreed not to compete with JA until 2007. Near the end of Abboud’s non-compete period, he made plansto market a new line of high-end men’s clothing under the brand “jaz” and to use his name in advertising that line so thatcustomers would know he was the designer. JA objected becauseit believed that it had purchased all rights to use the Abboud namein connection with the sale of men’s clothing.The U.S. District Court for the Southern District of New York agreed with JA that the agreement was unambiguous and thereforerefused to consider Abboud’s evidence about the meaning of the provisions in the agreement. The District Court ruled in JA’sfavor, concluding that JA received “all of Abboud’s rights to usehis name for commercial purposes” and that Abboud’s planneduse of his name to market the “jaz” line constituted both breach of contract and trademark infringement. Although Abboud believedthat using his name to advise consumers that he was the sourceof the new goods was a descriptive “fair use,” the District Courtfelt that consumers would be “utterly confused” about whether “Joseph Abboud” products by JA and “jaz” products by Abboudcame from the same source. Abboud was enjoined from “usinghis personal name to sell, market, or otherwise promote, goods, products, and services to the consuming public.”However, on appeal, the U.S. Court of Appeals for the SecondCircuit reversed and remanded the case to the District Courtfor further proceedings. The Second Circuit determined that the

Clothing designer can use hisname in competition with ownero trademark rights

by operation of law, not through the authority of the owner of thecopyright in the objects depicted in the photos. The Court cor-rected the impression given in

Gracen

that such permission wasnecessary. Rather, the author of a derivative work owns a copy-right in the “incremental expression” contributed to that work, ex-tending to the material contributed by the author of that work, notto any preexisting material employed in the work. That copyrightmay be “thin,” as it extends only to the original expression created by the author.

The Court also claried another statement in

Gracen

it said had been “misapplied” – that there was a “heightened standard of originality” in a derivative work that required the work to be “sub-stantially different” from the underlying work in order to be copy-rightable. Derivative works, noted the Court, need not contain anymore originality than necessary to distinguish them from publicdomain or other existing works in some meaningful way. As theCourt found that Schrock’s photos contained that much original-ity, they were copyrightable. A photograph’s originality can lie inthe effect created by the photographer’s choices of perspective,angle, lighting, shading, focus, lens and the like. Only in caseswhere the goal is to reproduce the underlying work exactly, such

as in slide transparencies of paintings, would there be insufcient

individual expression to constitute originality. Photographs canstill constitute original work even if they are intended, as here, for a purely utilitarian commercial use. Even accurate product photoscan therefore be copyrightable.Because the Court could not determine from the record on appeal if the parties’ agreements and other dealings (1) prohibitedSchrock from registering the copyright in his photos or (2) gaveLearning Curve an implied license to keep using the photos, theCourt sent the case back to the district court for additional pro-ceedings. A contract provision barring registration of a copyrightcould override what the photographer might otherwise be allowedto do under the Copyright Act.As noted in the opinion, there is disagreement in the courts over whether photographs of a copyrighted work are actually deriva-tive works or are original works. The Seventh Circuit declined todecide the question in this case but merely assumed that they werederivative works for purposes of the decision.If the photographs had constituted “works for hire,” the owner of the copyright in those photos would have been Learning Curveor HIT (depending on the agreements between those parties), notSchrock. However, that was not an issue in the case. Photographs

are not specically mentioned among the categories of works inSec. 101 of the Copyright Act that can be dened as works madefor hire, although they could be t into the dened category of a

collective work in the right case.

Source:

Schrock v. Learning Curve International, Inc., U.S. Court of Ap- peals for the Seventh Circuit, No. 08-1296, November 5, 2009