Intellectual Propery Update
About our Intellectual Property
Practice Group
Our Intellectual Property Practice Group
counsels clients on matters related to the
protection of copyrights, trademarks, and trade
secrets, including preparation and processing
of trademark and copyright applications,
consultation regarding infringement,
preparation of licensing agreements, and related
matters. Our services include:
• Protecting creative and literary
works, pictorial and graphic works,
designs, trade and service marks and
other creations, both in the United
States and in foreign countries;
• Consulting with regard to the
preparation of derivative and
collective works, protection
of unpublished works, proper
publication notice, and creation of
“works made for hire”;
• Counseling regarding innocent
infringement of copyrights and
trademarks;
• Counseling with respect to rights to
re-sell, structuring of assignments,
licenses and sub-licenses, and
recording of transfers;
• Obtaining and interpreting
trademark searches and assisting
clients in creating trademark rights
through first use and registration;
• Dealing with trademark oppositions,
petitions to cancel registrations,
abandonment, likelihood of
confusion, and quality control;
• Counseling on antitrust problems,
unfair competition and other matters
related to intellectual property law;
and
• Helping clients develop ways to
protect against disclosure of trade
secrets, including confidentiality
agreements with employees and
others.
If you would like further information
about any of the topics mentioned in this
publication, please contact James F. Gossett
at 312.876.7833 or jfgossett@arnstein.com.
© 2008 Arnstein & Lehr llp
Spring 2008
Karaoke Device Manufacturer Not Entitled to Print or Display Song Lyrics in
Real Time with Song Recordings by Virtue of Acquiring Compulsory Mechanical
License for Copyrighted Musical Compositions
T
he U.S. Court of Appeals for the Ninth Circuit has held that a karaoke device
manufacturer was not entitled to print or display song lyrics in real time with song
recordings on the basis of its having acquired a compulsory mechanical license to
copyrighted musical compositions under Section 115 of the federal Copyright Act. The
ruling came in a declaratory judgment suit filed by the manufacturer, who had obtained
a compulsory mechanical license from defendant BMG Music Publishing, through its li-
censing agent, but who was denied the right to include BMG’s copyrighted musical com-
positions in its karaoke devices unless it also paid a “lyric reprint” fee and a “synchroniza-
tion fee” to BMG.
Plaintiff Leadsinger, Inc. sought a declaration that it was entitled to print or display song
lyrics in real time with song recordings in its karaoke device as long as it obtained the com-
pulsory mechanical license, or, in the alternative, that it was entitled to do so under the fair
use doctrine. A federal district court dismissed Leadsinger’s complaint for failure to state a
claim, and, on appeal, the Ninth Circuit affirmed.
Considering Leadsinger’s argument with regard to the compulsory mechanical license, the
Ninth Circuit affirmed because it found that Section 115 of the Copyright Act exclusively
does not apply to sounds “accompanying a motion picture or other audio visual work.”
The Court of Appeals reasoned that devices displaying song lyrics in real time with song
recordings constituted “audio visual works,” which meant that Section 115 did not apply to
the plaintiff’s device so as to prevent the defendant from charging Leadsinger synchroniza-
tion fees and lyric reprint fees in addition to the mechanical license fee provided for in that
section of the Copyright Act.
As for Leadsinger’s “fair use” argument, the Court of Appeals found that the purpose and
character of Leadsinger’s use in this case was commercial, the song lyrics displayed by the
plaintiff’s karaoke machine fell within the core of copyright protection, and Leadsinger
used song lyrics in their entirety. For those reasons, the Court of Appeals affirmed the
district court’s dismissal of Leadsinger’s request for a declaratory judgment based on the
fair use doctrine, rejecting Leadsinger’s argument that it was entitled to a fair use defense
because karaoke machines could be used for “teaching,” namely, instruction on singing,
which the Ninth Circuit said could not be reasonably inferred to have been the actual pur-
pose of Leadsinger’s use of copyrighted lyrics in its karaoke machine. Likewise, the Court
of Appeals rejected Leadsinger’s argument that it was entitled to a fair use defense because
its use of lyrics helped consumers to understand the words to a song, facilitating “parental
control over objectionable song words.”
Source: Leadsinger, Inc. v. BMG Music Publishing, U.S. Court of Appeals for the Ninth Circuit, No. 06-55102, Janu-
ary 2, 2008.
Amended Complaint Treated as De Facto Supplemental Complaint Allows
Copyright Infringement Plaintiff to Continue Suit When Registration Obtained
After Filing of Initial Complaint
The U.S. Court of Federal Claims has held that a federal inmate was not precluded from
Spring 2008 Intellectual Property Update 1
 suing the United States for copyright infringement, even though
he had not obtained a copyright registration when his initial com-
plaint was filed, because he had filed an amended complaint after
registration that was properly treated as a supplemental complaint
the court could consider after its filing. However, the court dis-
missed the suit in the case at bar because the court found that it
lacked jurisdiction over the plaintiff’s copyright infringement claim
pursuant to 28 U.S.C. Section 1498(b), which states that the Copy-
right Act does not confer a right of action on any copyright owner
with respect to a copyrighted work prepared by the plaintiff while
in the employment or service of the United States.
The rulings came in a suit filed by a federal inmate who had been
involuntarily assigned to design and produce a calendar for the
federal General Services Administration under the auspices of a
UNICOR/Federal Prison Industries, Inc. work program. Plaintiff
alleged that the government never compensated him for its use of
the calendar he designed and thus infringed his copyrights in that
item. Furthermore, the plaintiff alleged that the government was
engaged in ongoing infringement.
When the plaintiff filed his original complaint, he had applied
for copyright registration with respect to the calendar, but it had
not yet been granted. However, the case was transferred from one
federal court to another, and, by the time it reached the Court
of Federal Claims, the Copyright Office had granted the plain-
tiff’s copyright registration for the calendar allegedly used by the
government. Consequently, an attorney for the plaintiff filed an
amended complaint that alleged the registration.
An attorney for the U.S. Department of Justice moved to dismiss
the complaint, arguing that a plaintiff’s failure to obtain registra-
tion of copyrights prior to bringing suit was a jurisdictional defect
in the original complaint that could not be cured by the filing of
an amended complaint after the registration took place. The Court
of Federal Claims, however, disagreed with this argument for dis-
missal advanced by the defendant’s attorney, finding that, while
the amended complaint did not cure the jurisdictional defect in
the original complaint arising from the fact that registration had
not been obtained when that complaint was filed, the amended
complaint was properly treated as a de facto supplemental pleading
that could establish jurisdiction in the court to hear the plaintiff’s
case as of the date of its filing, assuming no statute of limitations
problems had arisen.
In this case, the court said it did not have to deal with the applica-
tion of the statute of limitations because the court found that it was
required to consider other potential jurisdictional impediments to
the suit. It then found such an impediment in 28 U.S.C. Section
1498(b).
Addressing that statute, the Department of Justice argued that the
plaintiff was an employee of the United States when he created the
calendar. But the court rejected that argument, finding that the
statute could not be read to include a prisoner-custodian relation-
ship within its concept of “employment” by the United States.
The plaintiff nonetheless found his suit dismissed because the court
2 Spring 2008 Intellectual Property Update
ruled that, while serving in the federal government work program,
the inmate was working for a government agency and a corpora-
tion wholly owned by the government, he supplied the govern-
ment with the output of his efforts, and he used government time,
material and facilities to create the calendar in question. These
considerations led the court to conclude that the plaintiff was in
the “service” of the United States when the calendar was prepared.
Source: Walton v. United States, U.S. Court of Federal Claims, No. 04-1277 C, Janu-
ary 23, 2008.
Contractor Hired to Photograph Other Copyrighted Works
Could Not Acquire Copyrights in Photos Without
Authorization from Owner of Copyrights in Other Works
The U.S. District Court for the Northern District of Illinois has
held that a photographer could not sue for infringement of his
copyrights in photographs of a copyrightable object, namely, toys,
where the photographer had not obtained authorization from the
owner of copyrights in the toys before acquiring copyrights in the
photos. The ruling came in a suit by the photographer against a
toy distributor that had hired the plaintiff to take photos of its toys
for marketing purposes.
A contract between the photographer and the toy distributor gave
the distributor a two-year license to use copyrighted photos taken
by the plaintiff. But the defendant continued to use photographs
after the two-year license period, prompting the suit.
On a motion for summary judgment by the defendant, the district
court ruled that the plaintiff could not bring an infringement ac-
tion based on copyrights in the photos because the plaintiff did not
hold a valid copyright in the photographs. The court found that,
because the photographs were of a copyrightable object, the pho-
tos were derivative works, and the plaintiff required authorization
from the defendant, which owned copyrights in the toys, before
acquiring copyrights in the photos. Since that authorization had
never been granted, the plaintiff did not hold a valid copyright
upon which to base his claim.
Source: Schrock v. Learning Curve International, Inc., U.S. District Court for the
Northern District of Illinois, No. 04 C 6927, January 29, 2008.
Mandatory Victims Restitution Act Does Not Allow Award
in Excess of Actual Losses in Misdemeanor Copyright
Infringement Case
The U.S. Court of Appeals for the Eighth Circuit has held that the
federal Mandatory Victims Restitution Act did not allow a pro-
ducer of undeliverable CDs and DVDs to recover proceeds from
sale of the discs by someone who took them from post office trash.
BMG Columbia House sought such restitution from James Chal-
upnik, who pleaded guilty to misdemeanor copyright infringement
for taking the discs.
A federal district court sentenced Chalupnik to pay BMG the
amount he derived from selling the discs, but that award was vacat-
ed by the Court of Appeals, which found that the Act gave BMG
no right to obtain such restitution in this case. The Eighth Circuit
found that, as BMG had planned on destroying the discs and was
not required to make any royalty payments to copyright holders
because of Chalupnik’s criminal conduct, BMG had not suffered
any actual loss because of Chalupnik’s activities, and the Act al-
lowed restitution only for actual loss suffered by a victim.
Source: United States v. Chalupnik, U.S. Court of Appeals for the Eighth Circuit, No.
07-1355, February 1, 2008.
Business Consultant’s Use of Slogan in Proposal to Potential
Clients Does Not Constitute Trademark Use of Slogan or
Activities Analogous to Trademark Use Where Slogan Was
Only Intended to Be Used by Clients and Public Would
Not Identify Slogan with Consultant’s Services
The U.S. Court of Appeals for the Second Circuit has held that a
business consultant could not sue American Express for infringing
his alleged trademark rights in the slogan MY LIFE. MY CARD.
because the consultant had not made trademark use of the slogan
or engaged in activities analogous to trademark use simply by in-
cluding the slogan in advertising campaign proposals submitted
to various credit card companies. The ruling came in a dispute
arising after the inclusion of a virtually identical slogan in a sales
pitch Steven Goetz made to credit card companies, suggesting that
they personalize credit cards by reproducing photographs selected
by cardholders on the face of their cards.
Goetz sent his idea to the credit card companies, including Ameri-
can Express, with a proposal for use of the catchphrase MY LIFE,
MY CARD. American Express never replied to Goetz, but later
began its own advertising campaign using MY LIFE. MY CARD.,
which prompted Goetz to demand that American Express cease
and desist from using “his” slogan. American Express then com-
menced a declaratory judgment action in the United States District
Court for the Southern District of New York, seeking a declaration
that it had not misappropriated the slogan and that Goetz lacked a
viable claim for trademark infringement.
On appeal of a district court judgment for American Express,
dismissing Goetz’s counterclaims for misappropriation and trade-
mark infringement, the Court of Appeals affirmed the lower court
judgment that American Express had not infringed any trademark
rights owned by Goetz. The Court of Appeals held that Goetz
could not prevail in a trademark infringement suit because Goetz
had never made actual trademark use of the slogan in which he
claimed rights, and his activities were not analogous to trademark
use.
Citing previous decisions by the Patent and Trademark Office refus-
ing to register slogans as marks owned by advertising agencies, even
if they would be subject to registration by the agency’s prospective
clients, the Court of Appeals said that Goetz’s use of the slogan at
issue in this case was likewise undeserving of protection under the
trademark laws. According to the Court of Appeals, Goetz’s usage
of the slogan did not amount to trademark use because the slogan
did not designate the origin of any goods or services he offered,
as he did not sell credit cards and never displayed the slogan to
card consumers. Rather, he offered the slogan as a complement to
the card personalization concept he proposed to sell and, in this
respect, his claim was no better than that of an advertising agency
that offers its clients a marketing concept to enhance their sales.
Goetz had argued that, if he did not actually use the slogan as a
trademark, his activities were analogous to trademark use, and he
cited some decisions by the District Court for the Southern Dis-
trict of New York in support of the assertion that “analogous use” is
sufficient to establish trademark rights in the absence of actual use.
But the Court of Appeals held that Goetz’s use of the slogan in this
case did not qualify as “analogous use,” because, at the very least,
“analogous use” must be of such a nature and extent that the mark
has become popularized in the public mind so that the relevant
segment of the public identifies certain goods or services with the
claimed owner of the mark. In contrast, there was no public expo-
sure of the slogan by Goetz in this case, since his communications
of his idea were only with a few commercial actors within the credit
card industry, and, therefore, the slogan could never have come to
be associated with Goetz in the public mind.
Moreover, the Court of Appeals found that Goetz’s reliance upon
“analogous use” as supporting his trademark infringement claim
was misplaced because, according to the Second Circuit, prior
court decisions had never stretched the “analogous use” doctrine
so far as to preclude any necessity for a trademark infringement
plaintiff to make some eventual actual use of a mark in support of
his claim. The Court of Appeals held that it could not rely on the
“analogous use” doctrine as the sole source of trademark rights, as
suggested by the plaintiff in this case, because prior case law in the
circuit clearly showed that promotional activities “must be within
a commercially reasonable time prior to actual use” for them to be
considered analogous trademark uses.
Source: American Express Co. v. Goetz, U.S. Court of Appeals for the Second Circuit,
No. 06-2184-cv, February 4, 2008.
When Copyright Infringement Suit Is Dismissed Volun-
tarily by Plaintiff, Defendant May Be Entitled to Award of
Attorney’s Fees as “Prevailing Party”
The U.S. Court of Appeals for the Seventh Circuit has held that,
when a copyright infringement suit is dismissed voluntarily by the
plaintiff, the defendant is a “prevailing party” that may be entitled
to an award of attorney’s fees under 17 U.S.C. § 505. That section
authorizes a federal district court to “award a reasonable attorney’s
fee to the prevailing party as part of the costs” in a suit filed under
the federal Copyright Act.
In this case, plaintiffs had contended that the defendants’ video-
poker game infringed the plaintiffs’ source code. After the case
had been pending for more than a year, plaintiffs filed a motion to
dismiss, hoping to acquire better evidence in the future, and they
asked the district judge to dismiss without prejudice. The district
judge dismissed the case, but with prejudice.
The defendants then applied for attorney’s fees under 17 U.S.C. §
Spring 2008 Intellectual Property Update 3
 505. The district court denied that request, ruling that the defen-
dants were not the “prevailing party” in the suit because the district
court had not passed on the merits of the litigation. But, on appeal
of that decision, the Seventh Circuit reversed and remanded the
case for an award of reasonable attorney’s fees to the defendants.
Explaining its decision, the Seventh Circuit found that an award
on the merits was not necessary to confer “prevailing party” status
on a defendant in a copyright infringement suit. The defendants
were the prevailing party, said the Court of Appeals, because they
obtained a favorable judgment, and the fact that this came about
when the plaintiffs “threw in the towel” did not make the defen-
dants any less the victor than if the district court judge had granted
summary judgment or a jury had returned a verdict in the defen-
dants’ favor. According to the Seventh Circuit, the plaintiffs sued;
the defendants won; no more was required.
Though the defendants were the “prevailing party,” the Court of
Appeals also had to consider the question of whether this case
was an appropriate occasion for an award of attorney’s fees, since
17 U.S.C. § 505 merely authorizes, and does not direct, a district
court to award attorney’s fees to the prevailing party in a copy-
right infringement suit. The district court had observed that there
were several reasons why the defendants might not be entitled to
attorney’s fees in this case, including the fact that the judge had
denied the defendants’ motion to dismiss the complaint before it
was voluntarily dismissed, a decision by the defendants to reject
an attempt at mediation in the case, and the defendants’ delay in
responding to the plaintiffs’ discovery requests. But the Court of
Appeals found that refusing to award attorney’s fees in this case
was not an appropriate response to these developments, though the
district court judge would have been within his rights to reduce the
defendants’ award of attorney’s fees by any amount of fees incurred
to frustrate or drag out discovery.
In fact, the Seventh Circuit saw this case as being an especially good
candidate for an award of attorney’s fees to the defendants because
the plaintiffs, in settling another lawsuit between the parties previ-
ously filed by the plaintiffs based on the same alleged copyright
violations, had agreed to submit similar future claims to alternative
dispute resolution. By filing another suit, the plaintiffs had forced
the defendants to bear the very expenses that the parties had agreed
to avoid through alternative dispute resolution, and the Seventh
Circuit ruled that the party responsible for creating such excessive
legal costs should bear them itself in the end. Thus, the Seventh
Circuit directed that the district court enter an award of reasonable
attorney’s fees to the defendants, including legal fees incurred by
the defendants in vindicating their rights on appeal.
Source: Riviera Distributors, Inc. v. Jones, U.S. Court of Appeals for the Seventh Cir-
cuit, Nos. 06-2043 and 06-3692, February 20, 2008.
Section 43(a) of Lanham Act Applies to Company’s Decep-
tive Use of Franchisor’s Brand Name in Order to Position
Itself As Middleman Between Suppliers and Franchisees
The U.S. Court of Appeals for the Fifth Circuit has affirmed a
4 Spring 2008 Intellectual Property Update
lower court’s decision in favor of restaurant franchisor Schlotzsky’s,
Ltd. on claims it brought against Sterling Purchasing and National
Distribution Co., Inc. under Section 43(a) of the federal Lanham
Act, based on allegations that Sterling made misleading representa-
tions to Schlotzsky’s suppliers and franchisees in order to position
itself as a middleman between them, including the representation
that Sterling had been designated by Schlotzsky’s as its exclusive
supply chain manager. Schlotzsky’s argued that Sterling was never
more than a non-exclusive supply chain manager.
On appeal of a district court decision that enjoined Sterling from
making continued misrepresentations and awarded attorney’s fees
to Schlotzsky’s, Sterling contended that the district court rulings
should be overturned because Section 43(a) did not apply to Ster-
ling’s alleged conduct, as it did not involve trademark infringement.
Sterling argued that the Lanham Act related only to trademarks,
not to all commercial activities, and Sterling cited pronounce-
ments by the Supreme Court of the United States indicating that
the Lanham Act “should not be stretched to cover matters that are
typically of no consequence to purchasers.”
Analyzing the claims made by Schlotzsky’s, however, the Court of
Appeals concluded that the reach of Section 43(a) was sufficient
to encompass Sterling’s alleged deceptions, as Section 43(a) should
be broadly construed to extend beyond mere trademark protec-
tion. In this case, the Schlotzsky’s claim was that Sterling dam-
aged its goodwill and profited by deceptively claiming that it was
solely authorized to act on behalf of Schlotzsky’s as a middleman
between Schlotzsky’s franchisees and suppliers, thereby threatening
the goodwill of the Schlotzsky’s brand with the plaintiff’s suppliers
and causing confusion among Schlotzsky’s franchisees concerning
the details of the association Sterling had with Schlotzsky’s. This
deceptive use of the Schlotzsky’s brand name in an effort to further
Sterling’s position in the marketplace violated the Section 43(a)
prohibition against representations of fact that are “likely to cause
confusion, or to cause mistake, or to deceive as to the affiliation,
connection, or association of such person with another….”
Source: Schlotzsky’s, Ltd. v. Sterling Purchasing and National Distribution Co., Inc.,
U.S. Court of Appeals for the Fifth Circuit, No. 06-50720, March 5, 2008.
Award of Attorney’s Fees to Defendants in Trademark In-
fringement Suit Ruled Proper When Plaintiff Has Pursued
Infringement Claims After Actual Notice That Such Claims
Were Barred by Decision of U.S. Supreme Court in Dastar
The U.S. District Court for the Southern District of New York
has awarded attorney’s fees to the defendants in a trademark in-
fringement suit based on the plaintiff’s continuing to pursue an
infringement claim after a district court judge refused the plaintiff
a preliminary injunction and found that the plaintiff’s trademark
claim was not cognizable under the Lanham Act pursuant to the
decision of the Supreme Court of the United States in Dastar Corp.
v. Twentieth Century Fox Film Corp. The plaintiff was required to
pay the defendants’ attorney’s fees incurred after the district court
judge’s ruling on plaintiff’s motion for a preliminary injunction,
which gave the plaintiff actual notice that its trademark infringe-
ment claim was without merit.
In this case, plaintiff Contractual Obligations Productions, LLC
sued defendants Cable Vision Systems Corporation and Rainbow
Media Holdings, Inc., among others, alleging trademark infringe-
ment and other violations of the law arising from a decision by the
defendants to produce a television series allegedly based on mate-
rial the plaintiff had created as an independent contractor. The
district court refused preliminary injunctive relief to the plaintiff,
finding that the plaintiff’s trademark infringement claim was fore-
closed by the ruling of the Supreme Court of the United States
in Dastar. But the plaintiff continued to pursue its trademark in-
fringement claim, along with other claims, in its suit against the
defendants, prompting Cable Vision and Rainbow to move the
district court for an order directing the plaintiff to pay the attor-
ney’s fees incurred by the defendants in defending against plaintiff’s
infringement claim.
In the Dastar case, the Supreme Court of the United States held
that the Lanham Act does not apply to claims arising out of a fail-
ure to attribute or credit the originator of a creative work. The
district court in the suit filed by Contractual Obligations Produc-
tions, LLC found that this was essentially the nature of the trade-
mark infringement claim pursued by the plaintiff. Furthermore,
the district court held that the plaintiff’s continued pursuing of the
infringement claim after the ruling on the motion for a preliminary
injunction evidenced the type of bad faith that would support an
award of attorney’s fees to the defendants.
The district court, however, noted that there was no evidence of
bad faith by the plaintiff in pursuing its trademark infringement
claim prior to the decision by the district court on the motion for
a preliminary injunction. Consequently, the plaintiff was held li-
able for the reasonable attorney’s fees incurred by the defendants in
defending against the plaintiff’s trademark infringement claim after
the ruling on the motion for a preliminary injunction, but not for
the defendants’ attorney’s fees incurred in defending against the
trademark infringement claim prior to that ruling.
Source: Contractual Obligation Productions, LLC v. AMC Networks, Inc., U.S. Dis-
trict Court for the Southern District of New York, 04 Civ. 2867, March 25, 2008.
Prior Version of Product Can Be Considered as
“Counterfeit” of Successor Product Under Lanham Act
The U.S. District Court for the Eastern District of New York has
held that a prior version of a product can be considered a “counter-
feit” of its successor under the Lanham Act. The ruling came in a
suit prosecuted by Johnson & Johnson Consumer Companies, Inc.
against a group of companies that allegedly sold, distributed, and/
or marketed in the United States counterfeit skin bleaching prod-
ucts that resembled a line of products sold by the plaintiff under
the “AMBI” trademark.
When the suit was filed, the plaintiff’s AMBI products were manu-
factured in the United States for export to other countries. Prior
versions of the plaintiff’s AMBI products, however, had been man-
ufactured in Jamaica until the Jamaican factory closed in 1997.
Some of the defendants in this case argued that they could not be
guilty of counterfeiting under the federal Lanham Act because the
products they were selling were genuine AMBI products, albeit pri-
or versions of current AMBI products that had been manufactured
in Jamaica and acquired by the defendants. The district court,
though, analogized this case to previously decided cases involving
“gray market goods” and held that a prior version of the products
could be considered a “counterfeit” of its successor if the successor
was not intended to be sold in the United States and the prior ver-
sion differed materially from the successor product.
In this case, it was undisputed that the plaintiff and predecessors
in interest never intended to sell the allegedly counterfeited AMBI
products in the United States, although a predecessor in interest
had sold other AMBI products there. Furthermore, while the de-
fendants’ allegedly counterfeit products, to the untrained eye, were
nearly identical to the products currently exported by the plaintiff,
several differences in the packaging and composition of the alleg-
edly counterfeit products, as compared to the plaintiff’s current
products, were apparent upon closer examination.
In determining whether the allegedly counterfeit versions of the
plaintiff’s AMBI products differed materially from the actual, cur-
rent versions of those products, the district court said that a mate-
rial difference would be one that consumers would likely consider
to be relevant when purchasing a product. Here, the allegedly
counterfeit products contained only trace amounts of the active
skin bleaching ingredient in the plaintiff’s products, as compared
with a two percent level of that ingredient in the plaintiff’s goods.
Furthermore, the packaging of the plaintiff’s products, but not the
defendants’ products, bore expiration dates and batch codes, as well
as various warnings to the consumer. These factors convinced the
district court that the defendants’ allegedly counterfeit products
were materially different from those of the plaintiff, as the district
court viewed these differences as being potentially significant to
customers.
For the above reasons, the district court granted Johnson & John-
son summary judgment against some of the defendants with re-
spect to the plaintiff’s Lanham Act claims, as well as related state
law dilution and unfair competition claims. Because there were
issues of fact not resolved with regard to other defendants, plain-
tiff’s motion for summary judgment against them was denied, and
further proceedings were ordered to resolve those issues.
Source: Johnson & Johnson Consumer Companies, Inc. v. Aini, U.S. District Court for
the Eastern District of New York, No. 02-CV-6624, March 25, 2008.
Hearsay Testimony Cannot Be Admitted, Under Hearsay
Exception Permitting Receipt of Out of Court Statements
to Show Declarant’s “Confused” State of Mind, in Order
to Show Actual Confusion and Likelihood of Confusion in
Trademark Infringement Case
The U.S. Court of Appeals for the Eleventh Circuit has rejected a
lower court’s receipt of hearsay testimony in a trademark infringe-
Spring 2008 Intellectual Property Update 5
 ment suit for the purpose of showing actual confusion and likeli-
hood of confusion, finding that admission of such testimony was
not permissible for that purpose under the hearsay exception allow-
ing receipt of out of court statements for the purpose of showing
the declarant’s “confused” state of mind. The ruling came in a
dispute between private pilot organizations over the right to use
the service mark “Angel Flight” to promote their services and solicit
donations in the southeastern United States.
Angel Flight Georgia claimed common law trademark rights in the
Angel Flight mark and sued other organizations for infringement,
as well as various related violations of state and federal law. A fed-
eral district court found in favor of Angel Flight Georgia on all
claims, ruling, among other things, that Angel Flight Georgia es-
tablished a likelihood of confusion by showing actual confusion in
the relevant marketplace through testimony from two of plaintiff’s
employees regarding the content of conversations they allegedly
had with would-be donors and medical personnel, in which the
donors reported misdirecting donations and the medical profes-
sionals reported problems with medical transportation because of a
confusion between plaintiff and defendants.
On appeal of the district court decision to the Eleventh Circuit,
the Court of Appeals noted that the district court had received the
evidence from the plaintiff’s employees under Federal Rules of Evi-
dence 803(3), a hearsay exception permitting receipt of out of court
statements for the purpose of showing the declarant’s “confused”
state of mind. But, in its opinion, the district court recounted as
fact the stories of actual confusion relayed by the plaintiff’s employ-
ees, and the Court of Appeals ruled that, by finding the incidents
described to the employees by the out of court declarants had actu-
ally taken place, the district court used the statements as evidence
of the truth of the matters asserted – a classic hearsay purpose.
Disregarding the evidence of actual confusion considered by the
Chicago
120 South Riverside Plaza, Suite 1200
Chicago, Illinois 60606
p 312.876.7100 f 312.876.0288
Hoffman Estates
2800 West Higgins Road, Suite 425
Hoffman Estates, Illinois 60169
p 847.843.2900 f 847.843.3355
Springfield
808 South Second Street
Springfield, Illinois 62704
p 217.789.7959 f 312.876.6215
Boca Raton
2424 North Federal Highway, Suite 462
Boca Raton, Florida 33431
p 561.322.6900 f 561.322.6940
Fort Lauderdale
200 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
p 954.713.7600 f 954.713.7700
6 Spring 2008 Intellectual Property Update
district court, however, the Court of Appeals found that there was
ample evidence to support the district court’s ultimate finding that
confusion in this case was likely, as the defendants had used the
same mark the plaintiff had used in the southeastern United States
for over 20 years and had used it for the same services provided
by the plaintiff, namely, public benefit flying. Furthermore, the
plaintiff and the defendants had targeted the same consumers in
conjunction with those identical services and had used identical
advertising methods, namely, radio, television and fundraisers, and
the district court had found that the defendants had intentionally
exploited the goodwill associated with the plaintiff’s common law
mark.
For all of the above reasons, the Court of Appeals concluded that
the district court did not err by concluding that consumers were
likely to be confused by the concurrent use of the Angel Flight
mark in the same territory by both the plaintiff and the defendants.
The Court of Appeals then went on to affirm the district court’s
ruling for the plaintiff on all counts and its issuance of injunctive
relief, as well as cancellation of a federal trademark registration for
a logo containing the Angel Flight mark, which was found to have
been obtained by a predecessor in interest to one of the defendants
through fraud on the Patent and Trademark Office. That fraud
included providing an incorrect date of first use in connection with
the registration application and failing to disclose knowledge that
the plaintiff and other organizations throughout the United States
had been rightfully using the Angel Flight mark prior to the regis-
tration application date.
Source: Angel Flight of Georgia v. Angel Flight America, U.S. Court of Appeals for the
Eleventh Circuit, No. 07-11460, April 4, 2008.
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