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COURT BATTLE entails American footwear giant UGG and Sydney-based footwear company Australian Leather are headed before the U.S. Court of Appeals for the Federal Circuit just over five years after UGG-owner Deckers Outdoor Corporation filed suit against Australian Leather in March 2016, alleging that the unrelated company’s sale of “virtually identical” boots using the “ugg” name in the U.S. ran afoul of its valuable trademark rights, as well as its design patents for various elements of the boots’ design. Against that background, Deckers asked a U.S. federal court to force its much smaller rival to limit the sales of its Australian-made boots to Australia and New Zealand in order to not interfere with the sales of its boots and its trademark-protected #LEGL name.NYEXT POW/r EMOJIS & POSITIONS in POWER #SUPR HOT HOT HOT RED RED READ REAÐACTED

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The #APPEAL comes on the heels of a September 2018 order from the U.S. District Court for the Northern District of Illinois, which rejected Australian Leather’s argument that “ugg” is a generic term – in Australia and the U.S. – for a kind of sheepskin boot originating with the 1960s surfing community in Australia, and granted Deckers’ motion for summary judgment. In the process, the court shot down Australian Leather’s counterclaims, including its false designation of origin argument, in furtherance of which it alleged that Deckers is misleading consumers by marketing its boots as a product of Australia when UGG moved its manufacturing out of Australia and to other locales, such as China, after being acquired by Deckers. Not to be confused with DECHERT ft LGBT WE/r claiming the ‘Q’uestioning ‘U”-LLC

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FEATURE DENNIS CROUCH of PATENÑTLYO PLUSexcerpts from THE 100 Best Poems of All Time edited by Leslie Pockell

The Right to Sue for Infringement is no longer a Standing Question

Companies who play corporate games creating and shifting shell companies sometimes face serious consequences when painted into a corner.   In Cirba, Inc. (DBA Densify) and Cirba IP v. VMWare (D. Del. 2020), a jury sided with the patentee Cirba Inc. and awarded $235 million in damages.  That verdict though has been vacated because Cirba Inc.’s subsidiary Cirba IP actually owns the patent rights.  According to the filings, the transfer to Cirba IP was done for “uncontroversial tax reasons.”

Although the jury awarded the money, Judge Leonard P. Stark did not enter judgment for the millions. Rather, Judge Stark found that Cirba Inc. (“INC”) did not actually have rights to enforce the patent and thus dismissed the case for lack of Article III standing.  According to Stark, INC had transferred rights to its wholly owned subsidiary Cirba IP (“IP”).  And, although IP was a co-plaintiff Judge Stark ordered a new trial — finding that the presence of INC so materially changed the trial that “it is quite probably that the outcome would … have been different.”  Basically, the theme of INC’s case was about competition against the much larger VMWare, but IP is only a patent holder.  Thus, all is not lost for Cirba, but juries are quite unpredictable.

A timeline of events is shown above, and one basic question for standing is whether that license-back included enough grit to give INC standing.

The new trial order is not a final judgment — the case is still ongoing.  That means that there is no right to appeal the case immediately.  However, Cirba has petitioned the Federal Circuit for writ of mandamus, arguing that the dismissal on standing was improper. The petition particularly focuses on the Supreme Court’s Lexmark decision and the Federal Circuit’s two subsequent decisions of Lone Star and Schwendimann.  In particular, the plaintiff argues that under those decisions, the patent ownership is not a jurisdictional/standing question. “[D]ecisions treating the prerequisites of the Patent Act as jurisdictional were wrong.” Schwendimann.  “Whether a party possesses all substantial rights in a patent does not implicate standing or subject-matter jurisdiction.” Lone Star.

[Cirba Mandamus Petition]

 

About Dennis Crouch

Law Professor at the University of Missouri School of Law. 

The Right to Sue for Infringement is no longer a Standing Question

Companies who play corporate games creating and shifting shell companies sometimes face serious consequences when painted into a corner.   In Cirba, Inc. (DBA Densify) and Cirba IP v. VMWare (D. Del. 2020), a jury sided with the patentee Cirba Inc. and awarded $235 million in damages.  That verdict though has been vacated because Cirba Inc.’s subsidiary Cirba IP actually owns the patent rights.  According to the filings, the transfer to Cirba IP was done for “uncontroversial tax reasons.”

Although the jury awarded the money, Judge Leonard P. Stark did not enter judgment for the millions. Rather, Judge Stark found that Cirba Inc. (“INC”) did not actually have rights to enforce the patent and thus dismissed the case for lack of Article III standing.  According to Stark, INC had transferred rights to its wholly owned subsidiary Cirba IP (“IP”).  And, although IP was a co-plaintiff Judge Stark ordered a new trial — finding that the presence of INC so materially changed the trial that “it is quite probably that the outcome would … have been different.”  Basically, the theme of INC’s case was about competition against the much larger VMWare, but IP is only a patent holder.  Thus, all is not lost for Cirba, but juries are quite unpredictable.

A timeline of events is shown above, and one basic question for standing is whether that license-back included enough grit to give INC standing.

The new trial order is not a final judgment — the case is still ongoing.  That means that there is no right to appeal the case immediately.  However, Cirba has petitioned the Federal Circuit for writ of mandamus, arguing that the dismissal on standing was improper. The petition particularly focuses on the Supreme Court’s Lexmark decision and the Federal Circuit’s two subsequent decisions of Lone Star and Schwendimann.  In particular, the plaintiff argues that under those decisions, the patent ownership is not a jurisdictional/standing question. “[D]ecisions treating the prerequisites of the Patent Act as jurisdictional were wrong.” Schwendimann.  “Whether a party possesses all substantial rights in a patent does not implicate standing or subject-matter jurisdiction.” Lone Star.

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LEGAL ON The MOVE – HERSHEYS #GC #DIVERSITY #CHAMPION #TALENT #ACQUISITION

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Damien Atkins, general counsel for The Hershey Co. Champion ATTORNEY

Before Damien Atkins was the general counsel of The Hershey Co.,🍫🍫

before he served as the top lawyer for Panasonic USA and before he was an in-house leader for AOL, he was an associate at a New York law firm where the primary billing partners were white men.

https://www.cadwalader.com/careers/experienced-attorneys/associate-openings
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This was the late 1990s. And a general counsel named Vernon Baker of ArvinMeritor Inc. gave Atkins a “huge break,” simply by making a point of saying, “I’d like to see some African Americans on my matters,” Atkins remembers.  #INITIATIVES #LEGAL #HIRESTGIF BASS|BERRY.com || HORNETS || BUZzZ||SOLD ∂ ²³MJ G.O.A.T || LUBAVICH||©WT™ POSITIVE COM[ ± ÷ ¬ ]PICK the #2AMEND?  ’¹!1I! TEACH.edu101-BINARY || LESSONS/COMM MAJOR || UNC Ðeth is a SCARY D cal”led “ETHPARTIAL GERMANTIC DIFFERENCE is our symbol 4 today’s blog as we try our best knot to over/under STATESMAN.me><#TIME SOLD BUZZ.com a DECADE AGO #YP³ $T//www.nytimes.com/202estu/05/10/business/uggs-lawsuit-australia.html #BUZZOFFiT

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Siding with Deckers, the court held that the promotion of UGG’s Australian heritage does not make for a false designation of origin, particularly in light of the fact that Deckers displays country of origin labeling on all of its products and its website.

The court also weighed in favor of Deckers in connection with Australian Leather’s quest to have its “UGG” trademark registrations cancelled and/or have the company bared from enforcing those marks on the basis that “ugg” is merely a generic term and thus, not an indicator of a single source (i.e., a trademark). Relying on consumer surveys commissioned by Deckers, which revealed that as many as 98 percent of survey participants viewed UGG as a brand name, among other factors, the court held that “no reasonable fact finder could conclude that ugg is or ever was a generic word for sheepskin boots in the U.S.” 

While “evidence of how Australians used the word ugg could be relevant to consumer perceptions in the U.S.,” the court determined that the doctrine of foreign equivalents – in accordance with which a party is blocked from obtaining a trademark over a foreign generic word if doing so “would prevent competitors from designating a product as what it is in the foreign language their customers know best” – does not apply, as “generic usage in Australia is not enough on its own to infer generic meaning in the United States.”

Fast forward to May 2019, and following a four-day trial, a jury found that Australian Leather both willfully infringed Deckers’ trademarks and made use of a counterfeit version of its “UGG” mark, in particular, thereby, resulting in a $450,000 damages award for Deckers. Several months later, in a February 2020 judgment, the court approved the damages sum and issued a permanent injunction, barring Australian Leather from “using … the UGG mark or designation, or any reproduction, counterfeit, copy, or colorable imitation thereof, in any manner and in any format, case or spelling, on or in connection with the sale, offering for sale, distribution, or advertising of any product in the United States or its territories,” among other things. 

On Appeal

In pushing for an appeal in a filing this summer, Australian Leather – which maintains that it did not do any business in the U.S. until it received 33 Internet orders for 42 products between 2014 and 2016 – argued that the lower court erred in its test for determining whether “ugg” is generic, and thus, UGG – which brings in more than $1.5 billion in revenue each year in connection with its collection of boots – should not be permitted to maintain a global monopoly over the term. At the same time, in urging the federal court to overturn the district court’s decision, the footwear company and its owner Eddie Oygur claim that since both parties acknowledge that “ugg” is generic in Australia, under the doctrine of foreign equivalents would make the term generic in the U.S., as well, as thus, failure to apply the doctrine would harm foreign trade.

Regarding the issue of genericness in the U.S., Deckers “responds that the district court applied the correct test,” Finnegan’s Kaitlyn Pehrson recently stated in a note. The footwear giant – which also owns Teva and Hoka One One, among other brands – argues the U.S. Court of Appeal for the Seventh Circuit “has held that the same test applies whether the mark allegedly ‘was generic at the outset or has become so through use,’” and cites the recent Supreme Court ruling in Booking.com B. V., which rejected the same argument” and determined that the domain name Booking.com was not a generic term. “Regarding the doctrine of foreign equivalents, Deckers argues the doctrine does not apply where, as here, there is no translation for the term. In the alternative, Deckers argues that, even if the doctrine does apply, the district court correctly focused it analysis on American footwear consumers, not Australian.” 

As for the demand for the UGG brand, Goleta, California-headquartered Deckers reported “record” Q3 results in February, “propelled by demand across the UGG brand’s diversified product offering,” such as the introduction – and truly sweeping marketing – of its Fluff sandal, and number of collaborations with the likes of Telfar, White Mountainerring, and Molly Goddard, among other things. (The group also highlighted “the continued global expansion of the HOKA ONE ONE brand.”) Specifically addressing UGG, Deckers revealed that UGG’s net sales for the three-month period increased 12.2 percent to $876.8 million compared to $781.1 million for the same period last year. 

In a statement ahead of their day in court on Wednesday, counsel for Australian Leather told TFL that “unlike numerous other UGG boot-makers, who have been sued by Deckers around the world, Mr. Oygur and Australian Leather have fought back, obtaining deposition and expert evidence from around the world that the term ‘UGG’ is a particular style of sheepskin boot … [that] became a generic term throughout the U.S. in the late 1960s when Australian UGG boots were exported there.” Mr. Oygur, who is named as a defendant in the case, “remains defiant,” according to his counsel, saying, “I am doing this not just for myself, but for every UGG boot-maker in Australia. The word UGG is Australian. It should be owned by Australia. UGG is Australian in the same way champagne is French and feta is Greek.”

UPDATED (May 5, 2021): In court on Wednesday, the appeals court focused on the doctrine of foreign equivalents, acknowledging that this case in all likelihood will serve as a test case for determining whether a generic term in another English-speaking nation would be blocked from registration in the U.S. Among other things, counsel for Deckers argued that “ugg” was not “in the lexicon in the U.S.” when the UGG brand launched, and so, it could act as a trademark, regardless of whether it was generic in Australia. Meanwhile, as reported by Bloomberg, the seemingly skeptical panel of judges “asked why [Australian Leather’s] argument was not undone by a binding precedent deeming U.S. perceptions critical in [the Miller Brewing Co. v. Heileman Brewing] case involving an ‘LA’ trademark that in Australia generically signaled low-alcohol,” and at the same time, “also pushed back on Deckers on why the doctrine of foreign equivalents would not also apply to English-speaking countries.”

UPDATED (May 7, 2021): The Federal Circuit sided with Deckers and affirmed the decision of the lower court in a short order without elaborating on its determination.

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The case is Deckers Outdoor Corp., v. Australian Leather Pty. Ltd., et al. 1:16-cv-03676 (N.D. Ill.)

 

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Siding with Deckers, the court held that the promotion of UGG’s Australian heritage does not make for a false designation of origin, particularly in light of the fact that Deckers displays country of origin labeling on all of its products and its website.

The court also weighed in favor of Deckers in connection with Australian Leather’s quest to have its “UGG” trademark registrations cancelled and/or have the company bared from enforcing those marks on the basis that “ugg” is merely a generic term and thus, not an indicator of a single source (i.e., a trademark). Relying on consumer surveys commissioned by Deckers, which revealed that as many as 98 percent of survey participants viewed UGG as a brand name, among other factors, the court held that “no reasonable fact finder could conclude that ugg is or ever was a generic word for sheepskin boots in the U.S.” 

While “evidence of how Australians used the word ugg could be relevant to consumer perceptions in the U.S.,” the court determined that the doctrine of foreign equivalents – in accordance with which a party is blocked from obtaining a trademark over a foreign generic word if doing so “would prevent competitors from designating a product as what it is in the foreign language their customers know best” – does not apply, as “generic usage in Australia is not enough on its own to infer generic meaning in the United States.”

Fast forward to May 2019, and following a four-day trial, a jury found that Australian Leather both willfully infringed Deckers’ trademarks and made use of a counterfeit version of its “UGG” mark, in particular, thereby, resulting in a $450,000 damages award for Deckers. Several months later, in a February 2020 judgment, the court approved the damages sum and issued a permanent injunction, barring Australian Leather from “using … the UGG mark or designation, or any reproduction, counterfeit, copy, or colorable imitation thereof, in any manner and in any format, case or spelling, on or in connection with the sale, offering for sale, distribution, or advertising of any product in the United States or its territories,” among other things. 

On Appeal

In pushing for an appeal in a filing this summer, Australian Leather – which maintains that it did not do any business in the U.S. until it received 33 Internet orders for 42 products between 2014 and 2016 – argued that the lower court erred in its test for determining whether “ugg” is generic, and thus, UGG – which brings in more than $1.5 billion in revenue each year in connection with its collection of boots – should not be permitted to maintain a global monopoly over the term. At the same time, in urging the federal court to overturn the district court’s decision, the footwear company and its owner Eddie Oygur claim that since both parties acknowledge that “ugg” is generic in Australia, under the doctrine of foreign equivalents would make the term generic in the U.S., as well, as thus, failure to apply the doctrine would harm foreign trade.

Regarding the issue of genericness in the U.S., Deckers “responds that the district court applied the correct test,” Finnegan’s Kaitlyn Pehrson recently stated in a note. The footwear giant – which also owns Teva and Hoka One One, among other brands – argues the U.S. Court of Appeal for the Seventh Circuit “has held that the same test applies whether the mark allegedly ‘was generic at the outset or has become so through use,’” and cites the recent Supreme Court ruling in Booking.com B. V., which rejected the same argument” and determined that the domain name Booking.com was not a generic term. “Regarding the doctrine of foreign equivalents, Deckers argues the doctrine does not apply where, as here, there is no translation for the term. In the alternative, Deckers argues that, even if the doctrine does apply, the district court correctly focused it analysis on American footwear consumers, not Australian.” 

As for the demand for the UGG brand, Goleta, California-headquartered Deckers reported “record” Q3 results in February, “propelled by demand across the UGG brand’s diversified product offering,” such as the introduction – and truly sweeping marketing – of its Fluff sandal, and number of collaborations with the likes of Telfar, White Mountainerring, and Molly Goddard, among other things. (The group also highlighted “the continued global expansion of the HOKA ONE ONE brand.”) Specifically addressing UGG, Deckers revealed that UGG’s net sales for the three-month period increased 12.2 percent to $876.8 million compared to $781.1 million for the same period last year. 

In a statement ahead of their day in court on Wednesday, counsel for Australian Leather told TFL that “unlike numerous other UGG boot-makers, who have been sued by Deckers around the world, Mr. Oygur and Australian Leather have fought back, obtaining deposition and expert evidence from around the world that the term ‘UGG’ is a particular style of sheepskin boot … [that] became a generic term throughout the U.S. in the late 1960s when Australian UGG boots were exported there.” Mr. Oygur, who is named as a defendant in the case, “remains defiant,” according to his counsel, saying, “I am doing this not just for myself, but for every UGG boot-maker in Australia. The word UGG is Australian. It should be owned by Australia. UGG is Australian in the same way champagne is French and feta is Greek.”

UPDATED (May 5, 2021): In court on Wednesday, the appeals court focused on the doctrine of foreign equivalents, acknowledging that this case in all likelihood will serve as a test case for determining whether a generic term in another English-speaking nation would be blocked from registration in the U.S. Among other things, counsel for Deckers argued that “ugg” was not “in the lexicon in the U.S.” when the UGG brand launched, and so, it could act as a trademark, regardless of whether it was generic in Australia. Meanwhile, as reported by Bloomberg, the seemingly skeptical panel of judges “asked why [Australian Leather’s] argument was not undone by a binding precedent deeming U.S. perceptions critical in [the Miller Brewing Co. v. Heileman Brewing] case involving an ‘LA’ trademark that in Australia generically signaled low-alcohol,” and at the same time, “also pushed back on Deckers on why the doctrine of foreign equivalents would not also apply to English-speaking countries.”

UPDATED (May 7, 2021): The Federal Circuit sided with Deckers and affirmed the decision of the lower court in a short order without elaborating on its determination.

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The case is Deckers Outdoor Corp., v. Australian Leather Pty. Ltd., et al. 1:16-cv-03676 (N.D. Ill.)

 

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