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Recent SCOTUS Decisions on Trademark and Copyright Laws

In the past few months, the US Supreme Court has made several key decisions regarding copyright and trademark laws. Whether you’re considering suing for copyright infringement, licensing trademarks, or trademarking a potentially offensive word or phrase, here are the most recent SCOTUS decisions that could impact your business.

Copyright Registration – When Is It Safe to Sue?

If your business has applied for—but not yet received—copyright, is it safe to sue for infringement? Or do you have to wait for approval first? This was the question at the heart of Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, which SCOTUS decided on March 4, 2019.

What happened?

The news organization Fourth Estate had previously licensed news articles to Wall-Street.com. However, once their licensing agreement was canceled, Wall-Street.com did not remove the news articles from the website, so Fourth Estate filed a copyright claim. The problem? Although they had submitted an application to register the news items with the Copyright Office, Fourth Street filed the infringement claim before the copyright was approved.

Ultimately, their copyright claim was dismissed as SCOTUS confirmed that a copyright isn’t in place until it’s been officially registered with the Copyright Office. The Supreme Court noted a few exceptions but only for specific cases. For instance, live broadcasts can’t exactly be registered in advance, so a copyright owner of a live broadcast could potentially sue for infringement before approval. Also, copyright owners can apply for pre-registration for works in danger of being leaked before their completion and release (such as a movie).

Takeaway for your business: Minimize business risks by filing your copyrights ASAP and waiting until you receive approval from the Copyright Office before filing any suits.

Trademark Licenses – What Happens if the Licensor Goes Bankrupt?

Can a licensee keep using a trademark if the licensor goes bankrupt? SCOTUS addressed this topic in Mission Product Holdings, Inc. v. Tempnology, LLC, decided on May 20, 2019.

What happened?

Tempnology, a manufacturer of exercise clothing and accessories, held the trademark “Coolcore,” which it licensed to Mission Product Holdings in 2012. The licensing agreement was set to expire in mid-2016. However, Tempnology filed for Chapter 11 bankruptcy in 2015. At this time, Tempnology asked the bankruptcy court to reject the licensing agreement. The court permitted the rejection, which meant Tempnology was no longer required to perform under the contract. However, Tempnology also wanted Mission to cease using the trademark. Lower courts initially disagreed on whether the rejection meant the contract was terminated.

SCOTUS reviewed the arguments and determined that a rejection doesn’t terminate a contract. Mission was free to keep using the trademark, as long the company continued to abide by the original contract terms.

Takeaway for your business: While there are benefits to registering a trademark, note that licensing agreements can outlive your business. Bankruptcy may be touted as a way to wipe the slate clean, but it doesn’t necessarily free you from all your contracts.

Trademark Language – How Offensive is Too Offensive?

Can you register a trademark that is “immoral” or “scandalous?” Just days ago on June 24, 2019, SCOTUS weighed in on whether or not the Patent and Trademark Office (PTO) was obligated to register profane trademarks in Iancu v. Brunetti.

What happened?

Erik Brunetti sought to register the trademark “FUCT” for a clothing line, but the PTO rejected the application. The PTO cited the Lanham Act, which prohibits the registration of trademarks that are “scandalous” or “immoral.” Brunetti argued that this prohibition was unconstitutional, in violation of the First Amendment right to free speech.

SCOTUS reviewed the arguments and determined that the Lanham Act does infringe upon First Amendment rights because it “disfavors certain ideas.” Essentially, they found that if a prohibition is based upon a viewpoint, it is discriminatory. SCOTUS offered the examples of these real trademark applications: “You can’t spell healthcare without THC” and “Say no to drugs—reality is the best trip in life.” The PTO rejected the former as “scandalous” but not the latter, suggesting that in practice, “scandalous” referred to a particular viewpoint on drugs, not just to drug references.

Takeaway for your business: As the law stands now, you’re free to register a trademark that could potentially offend. However, note that future prohibitions aren’t off the table. It’s not only possible but fairly likely that new “viewpoint-neutral” legislation could be drafted to legally prohibit specific kinds of speech from trademark registration.

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