Fashion Apparel Law Blog : Fashion Apparel Law Lawyer & Attorney : Sheppard Mullin Law Firm : Fashion Legal Issues

By Alona G. Metz

In the recent landmark case of Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936 (9th Cir. 2011),[1] the Court of Appeals for the Ninth Circuit held that a web-hosting company that owned and operated servers was liable for contributory copyright and trademark infringement when it failed to take steps to curtail alleged infringement committed by Chinese websites that used its servers. Louis Vuitton sued Akanoc Solutions, Inc. (“Akanoc”), Managed Solutions Group, Inc. (“MSG”), and Steven Chen (the owner of both companies) for contributory copyright and trademark infringement under the Copyright and Lanham Acts, respectively. MSG leased servers, bandwidth, and IP addresses to other companies, such as Akanoc, who then operated the servers and otherwise ran the business. Louis Vuitton alleged that some of Akanoc’s China-based customers directly infringed on Louis Vuitton’s trademarks and copyrights. Louis Vuitton sent the defendants eighteen Notices of Infringement documenting the infringements occurring on websites hosted by defendants, yet the defendants were unable to identify any action taken in response to the notices sent by Louis Vuitton and the websites continued to operate. Louis Vuitton alleged that defendants had actual knowledge of the website's activities, that defendants knowingly avoided learning of the full extent of infringing activities, and that defendants knowingly enabled the infringing conduct by hosting the websites and permitting them to display the counterfeit products.

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In Feder v. Williams-Sonoma Stores, Inc, the United States District Court for the District of New Jersey joined the New Jersey Superior Court in weighing in on the issue of whether a retailer violates consumer privacy state law by requesting a customer's zip code at the point of purchase.  Feder was brought by the same plaintiff’s lawyers and with claims similar to those in the state court case Imbert v. Harmon Stores, Inc.(Bed, Bath & Beyond). Imbert was decided last month, but without any written decision, and permitted that case to proceed past the pleading stage. The District Court in Feder, however, issued the first written opinion under the New Jersey statutes, finding that allegations that a zip code was verbally requested could not support a claim under New Jersey law.
 

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A New Jersey state trial court has initially weighed in on the issue of whether a retailer violates state law by requesting a customer’s zip code at the point of purchase.  In a case fashioned after the California Supreme Court's decision in Pineda v. Williams-Sonoma, 51 Cal.4th 524 (Feb. 10, 2011), New Jersey Superior Court Judge Stephan Hansbury has denied a motion to dismiss brought by Harmon Stores, Inc. (Bed, Bath & Beyond), finding that the plaintiff Robert Imbert adequately pled a claim for violation of New Jersey's Truth in Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:11-17 (“TCCWNA”).   The Court's ruling allows plaintiff to proceed beyond this initial stage, but no liability has been found.
 

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As we previously reported here, Christian Louboutin ("Louboutin") filed a lawsuit against Yves Saint Laurent ("YSL") in early April, alleging that YSL and its affiliated companies violated Louboutin's red sole trademark by selling women's shoes with red uppers and outsoles alleged to be virtually identical to Louboutin's red sole trademarks.
 

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Elvis Costello's 1977 hit song "The Angels Want to Wear My Red Shoes" might be an appropriate theme song for the high profile fashion trademark case that was brought in the United States District Court for the Southern District of New York earlier last month by the designer Christian Louboutin, Christian Louboutin S.A. and Christian Louboutin LLC ("Christian Louboutin") against Yves Saint Laurent America, Inc., Yves Saint Laurent America Holding, Inc., Yves Saint Laurent S.A.S. and Yves Saint Laurent ("YSL). Plaintiff Louboutin and his related corporate entities allege that YSL and its affiliated companies violated Louboutin's red sole trademark by selling women's shoes with red uppers and outsoles virtually identical to Louboutin's red sole trademark. Plaintiffs further allege that: "YSL shoe models Tribute, Tribtoo, Palais, and Woodstock all appear now to carry the copy of Plaintiffs' Red Sole Mark." The YSL shoes at issue were part of a YSL collection featuring colored soles and uppers in red, green and blue color ways. Plaintiffs seek injunctive relief to prevent YSL from any further sales of red-soled shoes, profits allegedly earned through sales of the accused infringing shoes, actual damages, statutory damages, interest, and costs and reasonable attorneys' fees.
 

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On June 25, 2010, the Trademark Trial and Appeal Board ("TTAB") of the United States Patent and Trademark Office rendered its decision in the case of Valentino U.S.A., Inc. v. Florence Fashions (Jersey) Limited, Opposition Nos. 91094961 and 91095203, Cancellation Nos. 92029390 and 92029476, 2010 WL 2783891 (TTAB June 25, 2010), marking the culmination of a sixteen-year dispute -- the opposition proceedings were filed in June 1994 and the cancellation proceedings were commenced in June 1999. Defendant Florence Fashion (Jersey) Limited ("Florence") had filed applications and registrations for the marks "Gianni Valentino" and "Giovanni Valentino" that it used on a variety of clothing and accessory items, including coats, dresses, handbags, and belts. Plaintiff Valentino U.S.A. ("Valentino") brought the proceedings on ground that, as applied to Florence's goods, the marks so resembled Valentino's previously used marks "Valentino" and "Valentino Garavani" for similar goods as to be likely to cause confusion under the Lanham Act, 15 U.S.C. § 1052(d) (i.e., consumers would see a Florence Fashion "Giovanni Valentino" purse and think that it was produced by famed designer Valentino Garavani). 
 

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L’Oreal scored a major victory in trademark protection against smell-alike perfumes this past month in England's Court of Appeal. In L’Oréal v. Bellure, the court held that Bellure's use of lists in its advertising that compared its perfumes' scents to those of well-known L'Oréal perfumes constituted trademark infringement. This widely-reported decision indicates a sea change in European trademark law, which is now recognizing the marketing and monetary effort a company expends when creating and maintaining trademarks. It also is a broad decision, perhaps having wide-ranging effects in other industries. This decision implements judgment in the European Court of Justice – the highest court in the European Union. Thus, the decision in this case applies to all of Europe.  
 

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In Fendi Adele S.R.L. v. Burlington Coat Factory, No. 06 Civ. 85 (LBS), 2010 WL 431509 (S.D.N.Y. Feb. 8, 2010), the United States District Court for the Southern District of New York, in light of the prior 1987 injunction prohibiting defendant Burlington Coat Factory ("Burlington") from selling counterfeit Fendi products in its stores, recently held that the continued sale of counterfeit handbags featuring the trademarks of plaintiff Fendi Adele S.R.L. ("Fendi") violated the prior order, was in contempt of the district court's prior order, and awarded treble damages against Burlington. This decision provides yet another reminder of how courts have dealt harshly with retail vendors who have willfully purchased and sold counterfeit goods, especially where there was a prior injunction against violation of the Fendi trademarks.
 

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Two recent cases highlight the issues faced when seeking an award for willful damages in trademark infringement cases involving counterfeit goods. Burberry brought an action against Designers Imports ("Designers") in 2007 (the "Designers Action") for selling counterfeit Burberry goods, featuring the Burberry name, the Burberry Check design and the Burberry “Equestrian Knight” on horseback (collectively, the “Burberry Marks”). Burberry also brought suit in 2008 against Euro Moda, Inc., Moda Oggi, Inc., and John Fanning (collectively, “Euro Moda”) for selling counterfeit scarves, hats, clothes, and handbags bearing the Burberry Marks (the "Euro Moda Action"). The Courts awarded Burberry $1.5 million in damages in the Designers Action and $4 million in the Euro Moda Action, each of which was considerably less than the statutory maximum, which was what Burberry sought in each case.
 

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Since the proliferation of the internet and online advertising, trademark owners have sought to prevent  the unauthorized use of their marks as keywords for online advertising on search engines. In the Second Circuit before 2009, trademark owners had difficulty protecting their marks where the competitor's link simply shows up as "Sponsored Link" on the landing page, and no other use of the mark has been made, because of the decision in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), which held that no Lanham Act "use", and, thus, no actionable Lanham Act claim, exists for the use of a trademark in a keyword or metatag, where (a) the defendant does not place the trademark on any product, good or service, (b) it is not used in any way that would indicate source of origin, and (c) where defendant's use of plaintiff's trademark is strictly internal and not communicated to the public, as the use does not indicate the source or origin of the product. 
 

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By Craig Cardon and Elizabeth Berman

The California Court of Appeal has recently published two new decisions involving data privacy class actions. Both involve claims under the Song-Beverly Credit Card Act. The most recent, Jessica Pineda v. Williams-Sonoma Stores, Inc., 2009 DJDAR 15191, affirmed the judgment against the plaintiff on the grounds that it is not a violation of Song-Beverly to request a zip code during a credit card transaction, even if the zip code is matched with a name to acquire that individual's address, and that the same conduct is not a serious invasion of privacy where the home address information is publicly available and plaintiff has taken no special steps to protect it. Approximately one month earlier, the same panel held in Susan Powers v. Pottery Barn Inc., (2009) 177 Cal.App.4^th 1039, that the federal CAN-SPAM Act does not preempt a Song-Beverly claim based on a request for an email address, and sent the case back to the trial court for further proceedings.
 

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To read this article on bankruptcies in the fashion industry published by American Lawyer, please click here, or visit the AmLaw Daily website.

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From Coco Chanel to Zac Posen, many fashion designers' personal names (and personalities) have become synonymous with the fashion houses they represent. Anything associated with a famous designer's name often becomes more coveted due to the reputation, history, and recognition that the designer carefully built around it over time. As a result, designers' personal name trademarks often become their most valuable assets. The Joseph Abboud case illustrates some of the issues associated with selling, assigning, or licensing all of a designer's names and trademarks to someone else, and designers should take note of its implications. 
 

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The Ninth Circuit addressed the practical issues and challenges concerning the rights associated with domain names and trademark rights on the World Wide Web. In Perfumebay.com Inc. v. eBay Inc., No. 05-56794, the Ninth Circuit affirmed the District Court's broad injunction preventing Perfumebay from using the conjoined form of the word because such use created a likelihood of confusion with eBay.  Perfumebay.com Inc. v. eBay Inc., No. 05-56794, 14521 (9th Cir. Nov. 5, 2007).

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On June 28, 2007, a 5-4 Supreme Court ruling in Leegin Creative Leather Products, Inc. v. PSKS overturned almost 100 years of federal precedent by declaring that vertical price fixing is no longer automatically presumed illegal under U.S. antitrust law.  This decision allows manufacturers to set fixed prices for their products and forbid retailers from offering discounts.  This ruling permits manufacturers to adopt “resale price maintenance agreements” that forbid discounting, which is likely to have a negative impact on off-price and independent retailers.

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Today, the California Supreme Court unanimously decided Murphy v. Kenneth Cole Productions, Inc. S140308, and held that the "one additional hour of pay" in Labor Code section 226.7 constitutes a wage and not a penalty. This decision is significant because a wage is subject to a three year statute of limitations (Code of Civ. Proc. Section 338), while a penalty is only subject to a one year statute of limitations (Code Civ Proc. Section 340). Moreover, the ramifications of this decision may have broader wage hour implications. Sheppard Mullin's Labor and Employment attorneys are evaluating the impact of this new decision on employers and will provide a more detailed analysis in the next issue of the California Labor and Employment ALERT.

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In a recent case, the Ninth Circuit rejected the aesthetic functionality defense to trademark infringement as applied to those who sell products with popular logos of other companies on them, like Volkswagen's and Audi's logos and other marks, the Nike Swoosh, the Playboy bunny ears, and the Mercedes tri-point star.  Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc. et al., 457 F.3d 1062 (9th Cir. 2006). In that case, Au-Tomotive Gold sold key chains and license plate covers bearing Volkswagen's and Audi's logos and word marks. A trademark infringement lawsuit arose, and the district court concluded that Au-Tomotive Gold did not infringe Audi's and Volkswagen's trademarks because of aesthetic functionality.

 

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In a decision of great interest to California employers, the California Supreme Court yesterday agreed to settle the dispute among California's Courts of Appeal regarding whether the "payment" of one hour's pay at the employee's usual rate for a missed meal and/or break period mandated by California Labor Code §226.7 is a "wage" subject to a three- or four- year statute of limitations or a "penalty" subject to a shorter one-year statute of limitations. Continue Reading...

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