Omega S.A. vs. Costco Wholesale Corp: First Sale Doctrine vis-à-vis Imported Goods

On January 20, 2015, a three judge panel from the United States Court of Appeals for the Ninth Circuit passed a decision which is a victory for Costco and other similar retailers alike. The Court affirmed the decision of the Central District of California which had granted summary judgment to the defendant, U.S retailer Costco. The defendant had been sued by the Swiss Luxury Watches manufacturer, Omega for copyright infringement.

Omega manufactures luxury watches in Switzerland, which it distributes around the world. One of Omega's high-end watches, the Seamaster, often bears an engraving of the Omega Globe Design (“Omega Globe”). Omega obtained a copyright for the Omega Globe in March 2003 and began selling watches with the engraving in September 2003. In 2004, Costco purchased 117 Seamaster watches bearing the Omega Globe on the so-called “gray market”. Omega sold the watches to authorized foreign distributors. Unidentified third parties then bought the watches and sold them to ENE Limited, a New York company. It was from ENE Limited that Costco then purchased the watches. Furthermore, Costco sold the watches to its members in California.

Omega sued Costco for copyright infringement claiming that it had authorized the initial sale but did not approve of the importation of the watches into the U.S.   Costco defended on the grounds of the first sale doctrine, which currently provides a defense for reselling goods manufactured in the United States that are resold by retailers or distributors. Costco claimed that the doctrine applies to foreign-manufactured goods as well. The Central District of California granted summary judgment to Costco, noting that Omega had engraved the Globe Design on its watches at least in part to control importation of the watches, and thus had misused its copyright. According to Costco, the first sale doctrine allows a copyright holder to control the initial distribution of his product, but prevents the copyright holder from controlling a copy’s distribution once it has entered the stream of commerce. Costco argued that copyright holders would be able to eliminate both secondary markets for copyrighted products and the market for used goods. According to Costco, copyright holders would also be able to restrict rental-, lease-, and other lending-based markets.

While the Costco suit was under way, the Supreme Court held in 2013, in Kirtsaeng v John Wiley & Sons that the first sale doctrine also applies to copies of protected works lawfully manufactured abroad. Since the Kirtsaeng judgment retroactively applied in Costco, the Ninth Circuit found that Omega had no copyright infringement cause of action against Costco.

“Omega’s right to control importation and distribution of its copyrighted Omega Globe expired after that authorized first sale, and Costco’s subsequent sale of the watches did not constitute copyright infringement”.

- Nayanika Singhal

Will Flavour marks get Trademark?

Many food treasures and eating haunts are trying to get a trademark for their Flavour marks. If they are accepted, they join the list of non conventional trademarks like sound, smell, touch etc. The problem lies in the fact that the requisites for registration of traditional and non-conventional marks cannot be the same as both are incapable of graphical representation. Secondly, the flavours are subjective in nature, they change over time, besides being difficult to access.

Since functional aspects cannot be registered, flavour marks for food products can be registered only if it acquires secondary meaning. Even the identity of origin function of traditional trademarks is not served as the customer comes to know about the taste only after he buys it.

In a recent case, United States District Court rejected the contention of New York Pizzeria, Inc. that it receipes are being used at a rival restaurant which constitutes trademark infringement under the Lanham Act. The Court rejected it and held that that though Lanham Act encompasses “almost anything at all that is capable of carrying meaning” but that meaning entitles a mark to trademark protection only if it distinguishes and indicates the source of a product. Flavour marks may not be able to satisfactorily carry out this function. Thus, only when a flavour has acquired distinctiveness, or “secondary meaning” – that is, when customers have learned to associate the flavour with its source, that it has any chance of serving as a valid trademark.

-Shambhavi Mishra

Netflix sued

OpenTV has sued streaming giants Netflix in both the US and in Europe on the grounds of patent infringement of video-on-demand software. The District Court of the Hague held that OpenTV’s claim does not meet the requisites of novelty and inventiveness.

This brings relief to people across Europe as OpenTV had sought a court order banning Netflix in the Netherlands outright and also intended to acquire share of the video giant’s profits for the alleged infringement.

OpenTV was ordered to pay legal costs for Netflix of around €234,500.

-Shambhavi Mishra

3D printed ‘Spider Dress’

The 3D printed ‘Spider Dress’ is the latest example of the robotic fashion. This dress is the creativity of engineer and designer Anouk Wipprecht and is connected to an Intel Edison.

‘Spider Dress’ is a master piece of wearable technology that combines 3D printing with animatronic mechanics. A series of skeletal-like limbs "respond to external stimuli" as per configuration proximity and respiration sensors, meant to "defend the personal space of the wearer." It transforms itself as per the mood, level of aggression, heart beat and stress level.

It is still in the testing phase, and will make its debut next week Consumer Electronics Show in Las Vegas.

-Shambhavi Mishra

Facebook's new policies

The modifications made by Facebook in the statement of Rights and Responsibilities, forms the foundation to understand the ownership of the content of that you upload on Facebook. Facebook, being a social networking site, has become the sharing centre for people across the globe.

The social networking giant does not take the ownership of the content and information posted. The person who is posting  and uploading is the rightful owner and the visibility depends on the privacy and application settings .

Facebook is granted, as per the privacy and application settings, non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any content that is covered by Intellectual Property rights that you post in connection with Facebook. The condition is terminated once the content is deleted unless the content has been shared with others and they have not deleted it.

A person may contact the individual who has infringed copyright or trademark before complaining and filing out the form. A person having a Facebook account or a person having no Facebook account can also file copyright infringement. Report can be filed against third party made apps as Facebook does control the content made available through those apps.

-Shambhavi Mishra

Kalashnikov applies for World Trademark

The arms designer credited with creating the AK-47, Soviet Lt-Gen Mikhail Kalashnikov, died last year. The Kalashnikov, or AK-47, is one of the world's most recognisable weapons. Kalashnikov Concern has paid more than USD 380,000 for rebranding  the rifles which includes a new logo “CK” written in black and red and melded into a single block. The logo stands for Kalashnikov Concern.

The arms manufacturer has applied to register a world trademark of AK-47 including for goods of 28 class under the International Classification of Goods and Services. As the Nice Agreement of 1957 the goods of 28 class include games and toys, gymnastic and sporting articles not included in other classes and decorations for Christmas trees.

The Intellectual Property rights Court has rejected another claim of Kalashnikov Concern against M T Kalashnikov firm, owned by the relatives of late designer regarding "image of a rifle with AK-47 marking."

This gun due to its easy manufacture and cheapness is very popular with terrorists and national armies in Asia and Africa.

-Shambhavi Mishra

“pŏm” lands into trouble

The largest maker of 100% pomegranate juice, Pom Wonderful filed an infringement suit against Hubbard before the 9th Circuit to restrain it from selling a pomegranate-flavoured drink labeled “pŏm”. Pom Wonderful contended that “pŏm” is likely to cause confusion among the customers due to similarity with its own trade mark “POM”.

The Court of Appeal is of the view that five factors weigh in favor of Pom Wonderful (strength of mark, relatedness of goods, degree of consumer care, similarity of marks, and marketing channel convergence) and three factors are neutral (actual confusion, defendant’s intent, and product expansion). None of the factors weighs in favor of Pur. There are many semantic, aural and visual similarities particularly in respect of the marks in the respective labels.

Thus, the district court was erroneous and has abused its discretion. The decision is reversed and an injunction is granted by the higher court to further public interest.

-Shambhavi Mishra