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No Immunity: State Right of Publicity Law is § 230 “Law Pertaining to Intellectual Property”

by | Oct 7, 2021 |

The US Court of Appeals for the Third Circuit held that § 230 of the Communications Decency Act, 47 U.S.C. § 230(c), does not preclude claims based on state intellectual property laws, reversing in part a district court’s dismissal of a plaintiff’s state law claims for violation of her right of publicity. Hepp v. Facebook, Case Nos. 20-2725; – 2885 (3d Cir. Sept. 23, 2021) (Hardiman, J.) (Cowen, J., concurring in part and dissenting in part).

In 2018, Karen Hepp, a Philadelphia newscaster, discovered a photo of herself making its way around the internet. The picture, taken without Hepp’s knowledge or consent, depicts her smiling in a convenience store and was posted in two locations online. The first post was a Facebook advertisement promoting a dating service, which encouraged users to “meet and chat with single women near you.” The second post was to Imgur and was subsequently linked to a Reddit thread, where it spurred a flurry of indecent user commentary. Hepp sued Facebook, Imgur and Reddit for violations of Pennsylvania’s right of publicity statute. The district court dismissed Hepp’s claims with prejudice, holding that all three companies were entitled to immunity as internet service providers under § 230(c). Hepp appealed.

The Third Circuit found that the district court lacked personal jurisdiction over Imgur and Reddit on a “purposeful availment” minimum contacts basis and affirmed dismissal of the claims against those parties.

With respect to Facebook, the Third Circuit considered whether it was immune under § 230(c). Section 230 of the Communications Decency Act was intended to promote the internet, specifically by preserving “the vibrant and competitive free market …unfettered by Federal or State regulation.” Accordingly, § 230(c) provides Good Samaritan protection for internet service providers, encouraging them to host and moderate third-party content by immunizing them from some publisher liability regarding certain moderation decisions. However, pursuant to § 230(e)(2), such immunization does not “limit or expand any law pertaining to intellectual property.”

The first question addressed by the Third Circuit was whether § 230(e)(2) can apply to state law claims generally. The Court acknowledged that precious few cases interpreting § 230’s intellectual property provision exist, and that the existing cases present a clear split on whether § 230(e)(2) applies only to federal intellectual property claims. The Court, adhering to what it regarded as the most natural reading of § 230(e)(2), (i.e., that a state law can be a “law pertaining to intellectual property law”) determined that application of § 230(e)(2) was not limited to federal claims. The Court was not persuaded by Facebook’s policy arguments regarding a purported increase in uncertainty regarding the contours of § 230(c) immunity if state law intellectual property claims, which vary from state to state, were exempt from such immunity.

The second question the Third Circuit addressed was whether Hepp’s right of publicity claim arose from a “law pertaining to intellectual property.” In finding that it did, the Court relied on a survey of legal dictionaries and determined that the term “intellectual property” [...]

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Federal Circuit to WD Tex.: Denial of Transfer Motion was Clear Error, Abuse of Discretion

by | Oct 7, 2021 |

For the third time in as many months, the US Court of Appeals for the Federal Circuit found clear error in the US District Court for the Western District of Texas’s denial of a defendant’s motion to transfer venue. In re Juniper Networks, Inc., Case No. 21-160 (Fed. Cir. Sept. 24, 2021) (per curiam).

WSOU Investments d/b/a Brazos Licensing filed seven complaints against Juniper Networks in the Western District of Texas for infringement of seven different patents. Juniper, a Delaware corporation headquartered in Sunnyvale, California, moved the district court to transfer the case to the Northern District of California pursuant to 28 U.S.C. § 1404(a). Juniper pointed out that Brazos is a self-described patent assertion entity that does not conduct any business other than asserting patents and argued that “whatever ties Brazos has to this District appear to have been created for the purpose of its patent litigation activities in this District.” Additionally, two of Brazos’s officers, its CEO and its president, reside in California. Juniper argued that the Northern District of California was a clearly more convenient forum, noting that potential key witnesses were located in the Northern District of California. Juniper also asserted that the accused products were designed, developed, marketed and sold primarily from its Sunnyvale headquarters. While acknowledging that six of the actions could have been brought in the Northern District of California, the district court denied Juniper’s motion to transfer based on its analysis of the four private interest and four public interest factors. Juniper petitioned the Federal Circuit for writ of mandamus directing the district court to transfer the six cases.

Applying Fifth Circuit law, the Federal Circuit noted that a motion to transfer under § 1404(a) should be granted if “the movant demonstrates that the transferee venue is clearly more convenient.” The Court noted that district courts enjoy broad discretion in transfer determinations, but that it has routinely issued mandamus when a district court’s denial of a motion to transfer amounts to clear abuse of discretion.

The Federal Circuit explained that the “single most important factor” in transfer analysis is the relative convenience and cost of attendance for witnesses. Juniper identified 11 potential witnesses, all of whom were located in the Northern District of California, while Brazos only identified one Texas-based employee as a potential witness. The district court found that this only weighed slightly in favor of transfer, assigning “little weight” to both party and prior art witnesses and concluding that many of the witnesses were “unlikely to testify.” The Court disagreed, holding that the district court clearly erred in not giving sufficient weight to this factor in light of the “striking imbalance” in the parties’ 11-to-one listing of potential witnesses. The Court noted that it previously rejected both of the arguments used by the district court to discount the weight applied to Juniper’s witnesses. In August 2021, the Court held in In re Hulu, LLC that the district court’s discounting of party and prior art witnesses was “untethered [...]

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Only One More Ratification Needed: European UPC Might Be Ready to Launch

by | Oct 7, 2021 | ,

The German parliament recently passed the Approval Act (the Act) regarding the planned European Unified Patent Court (UPC) and the protocol on a UPC on provisional application (PPA). The Act was passed after Germany’s Federal Constitutional Court rejected applications for a preliminary injunction directed against the Act. The instrument of Germany’s ratification of the PPA (not of the UPC Agreement (UPCA)) has been deposited with the European Council. The UPC Preparatory Committee published a report calling Germany’s ratification “a decisive step on the establishment of the Unified Patent Court after the work has been on hold for several years during the examination of the Agreement by the German Federal Constitutional Court.”

The PPA will only come into effect after at least 13 EU Member States (which must include Germany, Italy and France, i.e., the three Member States in which the most European Patents were in effect in 2012) ratify the PPA and deposit their respective instrument with the European Council. The PPA must also ratify the UPCA (or at least have parliament’s approval to do so) and deposit this second instrument with the European Council. In this complex scheme, the German ratification was previously the main legal hurdle.

Now, after publication of Slovenia’s Approval Act in its National Law Gazette and the expected deposit of its PPA and UPCA instruments, only one more national ratification and instrument deposit is needed to reach the required 13 ratifications. According to a note published by the Presidency of the Council of the European Union on September 24, 2021, Austria is likely to move next, whereupon the project will reach the minimum number of ratifying Member States. The Austrian Government submitted a draft for an approval act to its parliament in July 2021 and expects approval.

Upon the complete ratification of the UPCA and PPA, the UPC will form on a provisional basis and commence its existence as a legal entity. The UPC Preparatory Committee (Committee) can then formally start its work. Although there is no timeline set for the initial provisional application stage, the Committee expects that stage to continue for approximately six to 10 months following ratification. As stated in the note by the Presidency of the Council, this stage includes the adoption of the secondary legislation of the UPC, including procedures, establishment of a budget, recruitment of judges and administrative stuff, election of a president, the final configuration and testing of the file management system and ensuring that all IT infrastructure is properly set up and secured. In addition, a working agreement with the European Patent Office (EPO) on patent application and patent validation remains to be completed. Many observers regard the timeline to complete preparations as challenging, noting that several of the above points will likely require significant discussion. With these issues in mind, the Competitive Council (Council) met on September 29, 2021, to discuss further actions regarding the preparations and to invite ministers to inform the Council of recent or upcoming developments in [...]

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Copyright Claims Board’s Proposed Rulemaking: How to Initiate and Respond to a Claim

by | Oct 7, 2021 |

In January 2021, Congress enacted the Consolidated Appropriations Act. This legislation incorporates the Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2020, which includes revisions to the Copyright Act with the goal of creating a new venue for copyright owners to enforce their rights without having to file an action in federal court. The new venue, called the Copyright Claims Board (CCB), is designed to serve as an alternative forum where parties may voluntarily seek to resolve certain copyright claims regarding any category of copyrighted work.

On September 29, 2021, the US Copyright Office issued proposed rules in the Federal Register to establish the initial stages of a proceeding before the CCB. The proposed rules prescribe how to file a complaint, a process that includes submitting claim and notice forms online and paying a $100 filing fee. The proposed rulemaking notes that the claim form will require less information than what is required under Federal Rules of Civil Procedure, Rule 12, as practice before the CCB will be less complex than practice in federal courts according to the Copyright Office.

After a claim is filed, a copyright claims attorney will review the claim to ensure compliance with applicable regulations. If the claim is approved, the claimant can proceed to serve the claim within 90 days. If the claim is not approved, the claimant has 30 days to file an amended claim. Counterclaims are subject to the same review process. To pass review muster, the claim must “clearly state a claim upon which relief can be granted.” § 224.1.3. Under the proposed rules, a copyright claims attorney must review the claim or counterclaim for unsuitability on the grounds set out in 17 U.S.C. § 1506(f)(3). If the copyright claims attorney concludes that the claim should be dismissed as unsuitable under CASE he or she shall recommend that the CCB dismiss the claim and set forth the basis for that conclusion. The proposed rulemaking notes that the CCB wants to avoid hearing overbroad or clearly implausible claims.

The respondent will have 60 days to opt out after receiving notice of the claim, or it will lose the opportunity to have the dispute decided in a federal court. The proposed rulemaking prescribes that the initial notice form, provided by the CCB, be similar to a summons and would require the claimant to identify the nature (i.e., infringement, noninfringement or misrepresentation) of the claims being asserted. If the respondent does not respond or opt out within 20 days after the claimant files a proof or waiver of service, then the CCB will send a second notice to supplement the initial notice by mail and email. A respondent can opt out online, using a CCB form or by mail.

All comments to the proposed rulemaking must be received no later than October 29, 2021, 11:59 pm EDT.



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One for All, and All for One . . . Except When It Comes to Patent License Comparability

by | Sep 30, 2021 |

Examining whether portfolio patent licenses can be sufficiently comparable to a single-patent license for the purposes of supporting a patent damages verdict, a split panel of the US Court of Appeals for the Federal Circuit concluded that, at least without accounting for distinguishing features, the answer is no. Omega Patents, LLC v. CalAmp Corp., Case No. 20-1793 (Fed. Cir., Sept. 14, 2021) (Prost, J.)

The most recent decision was the result of a second jury trial, after the Federal Circuit previously ordered a new trial. At issue in this appeal were certain direct-infringement findings, admission of technical expert testimony and the underlying damages determination. Multiple errors were raised regarding the latter, the most significant of which was the court’s apportionment analysis.

At trial, the jury awarded a royalty of $5 per unit to Omega for CalAmp’s infringement of a single patent that covered multi-vehicle tracking units. On appeal, CalAmp contended that patent damages law required apportionment, and that the evidence was insufficient to support apportionment. Judge Prost, joined by Judge Dyk, agreed, while Judge Hughes dissented in part.

First, the Federal Circuit rejected Omega’s argument that apportionment was unnecessary because all parts of the infringing units were covered by the claims. According to the Court, even where all elements of the infringing unit are claimed, a patentee still must approximate the value of the patented features as compared to the conventional, pre-existing elements. Thus, the jury could not, as a matter of law, merely value the entire unit.

Next, the Federal Circuit held that Omega could not rely on the entire-market-value rule to support its damages verdict. That rule permits a patentee to value the infringement where the patented feature drove demand for the entire product. But on the record here, it was undisputed that other conventional elements contributed to sales of the underlying product. At most, the record indicated that the patent technology was important or helpful—which was insufficient to show that it actually drove sales.

Lastly, Omega contended that its royalty was supported by licensing evidence, which included (1) Omega’s president’s testimony that its policy was to license its entire portfolio for a certain amount regardless of the number of patents included at the time of licensing, and (2) 18 license agreements consummated by Omega, some of which included the patent at issue. For both items, the Federal Circuit found evidence of apportionment lacking. To the first claim (i.e., that Omega would not have hypothetically licensed on a patent-by-patent basis), the Court concluded that crediting such testimony would serve as an end-run around the apportionment requirement because it did not approximate the value of the specific patent at issue. So too with the 18 license agreements, many of which identified a portfolio that included almost 50 additional patents. And although the damages expert identified the portfolio feature as distinguishing, the expert’s failure to explain how to separate out the value of the individually asserted patent was fatal.

In dissent, Judge Hughes would have permitted the conventional, more [...]

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TTAB Cancellation Proceedings Not Preclusive in District Court, Even Between Same Parties

by | Sep 30, 2021 |

Addressing the preclusive effect of judgments by tribunals with limited jurisdiction, the US Court of Appeals for the Third Circuit held that trademark cancellation proceedings before the Trademark Trial & Appeal Board (TTAB) do not have preclusive effect against trademark infringement lawsuits in federal district courts. Beasley v. Howard, Case No. 20-1119 (3d Cir. Sept. 17, 2021) (Chagares, J.)

In 1969, Beasley started a band named The Ebonys. In the mid-1990s, Howard joined the band, and in 1997, Beasley obtained a New Jersey state service mark for “The Ebonys.” Several years later, Beasley and Howard parted ways. In 2012, Howard registered “The Ebonys” as a federal trademark with the US Patent & Trademark Office (PTO).

In 2013, Beasley filed a petition with the TTAB to cancel Howard’s mark, arguing that Howard had defrauded the PTO. The TTAB rejected Beasley’s 2013 petition. In 2017, Beasley filed a second petition with the TTAB, again arguing that Howard had defrauded the PTO and for the first time arguing that Howard’s mark could be confused with Beasley’s separate “The Ebonys” mark. The TTAB rejected Beasley’s 2017 petition, this time on claim preclusion grounds, finding that Beasley should have asserted his likelihood-of-confusion claim in his 2013 petition. Beasley did not appeal either dismissal.

In 2019, Beasley initiated a lawsuit in federal district court, requesting that the court vacate Howard’s mark, award Beasley monetary damages and permit Beasley to register his own “The Ebonys” mark with the PTO. The district court dismissed Beasley’s complaint, finding that claim preclusion applied because the complaint turned on the same factual and legal arguments litigated in the 2017 petition, even though Beasley did not seek damages in the 2017 petition. Beasley appealed.

The Third Circuit reversed the dismissal, concluding that the TTAB’ s cancellation proceedings did not preclude Beasley from bringing his § 43(a) infringement claim in the district court. The Court noted that the TTAB has limited jurisdiction to determine the right to register a trademark and does not have authority to consider questions of infringement, unfair competition, injunctions or damages. It reasoned that because the TTAB does not have jurisdiction to award any remedy beyond cancellation of the mark, a broader § 43(a) cause of action for deceptive use in commerce, as alleged by Beasley, could not have been brought in a TTAB cancellation proceeding.

The Third Circuit also rejected Howard’s argument that Beasley should have brought trademark cancellation claims in the district court in the first instance, noting that even though a federal district court has authority to order a cancellation, a TTAB petition is the primary means of securing a cancellation, and that forcing Beasley to litigate in the district court in the first instance would “encourage[] litigants to sit on their claims and undermine[] the Lanham Act’s adjudicative mechanisms.”

Practice Note: In the Third Circuit, plaintiffs are encouraged to bring their trademark cancellation claims before the TTAB in the first instance, rather than waiting to bring their trademark cancellation and trademark infringement claims together before [...]

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A Tale of Two Authors: Determining Ownership Rights of Novels Adapted for Theatre

by | Sep 30, 2021 |

The US Court of Appeals for the First Circuit vacated the district court’s opinion and order that Roberto Ramos Perea, the playwright who adapted the novels of prominent Puerto Rican author Enrique Laguerre for theatre, was not a proper copyright owner. Perea v. Editorial Cultural Inc., Case Nos. 19-2119, -2129 (1st Cir. Sept. 13, 2021) (Thompson J.) The issue before the Court was whether Editorial, a publishing company, was liable for copyright infringement after it printed and sold 20,000 copies of the theatrical adaptations of two novels (La Llamarada and La Resaca) written by Laguerre and adapted by Ramos.

In 2001, Laguerre contracted with Producciones Teatro Caribeño, authorizing Ramos to create the adaptation of La Resaca and retain the moral rights (protecting the link between Ramos and his work). The parties again contracted in 2003 for the adaptation of La Llamarada. Laguerre and Editorial entered into a contract in 2002 that gave Editorial the right to print “one edition” of the “dramatic adaptation of La Resaca” for seven consecutive years from the first printing date. Editorial received the right to print up to 25,000 copies of La Llamarada (the novel) in exchange for royalties.

During the district court action, both sides moved for partial summary judgment on the infringement claim. Editorial argued that, pursuant to the Laguerre-Caribeño contracts, Laguerre reserved the printing rights to the adaptations to himself exclusively, and Ramos therefore was not entitled to damages for infringement. Ramos argued that he owned the copyrights in the the adaptations and was entitled to recover for infringement because “(1) Laguerre authorized Ramos to create the Adaptations, therefore those creative works belong to him, or, alternatively, (2) La Resaca and La Llamarada were in the public domain when the Adaptations were written (meaning they were available for public use) and as such Laguerre’s authorization was not required.” The district court eliminated the playwright, Ramos, as the copyright owner and, following a jury trial, entered a judgment against Editorial Cultural awarding damages to Laguerre’s heirs. In dismissing Ramos’ claim, the district court exclusively relied on the language of the Laguerre-Caribeño contracts, under which Laguerre retained publishing rights. The issue on appeal involved which party owned the publishing rights to the adaptations when Editorial sold them in 2013.

The district court did not consider whether the novels were in the public domain when Ramos created his adaptations. Under the 1909 Copyright Act, works created before 1978 retained copyright protection for 28 years (plus an additional 28 years if renewed). The novels were written in 1935 (La Llamarada, not renewed) and 1949 (La Resaca, never registered in the Copyright Office). The First Circuit explained it is clear that both novels had passed into the public domain well before the contracts were signed.

Reviewing the summary judgment orders de novo, the First Circuit found that when Ramos adapted the novels into the play scripts in 2001 and 2003, Laguerre had no copyright interest in either of these novels (or any work derived from them) and [...]

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Fifth Circuit Affirms Jury Verdict on Willing Licensee FRAND Commitment

by and | Sep 30, 2021 |

The US Court of Appeals for the Fifth Circuit affirmed a jury verdict finding that a standard essential patent (SEP) owner did not breach its commitment to license its SEPs on fair, reasonable and non-discriminatory (FRAND) terms. The ruling establishes not only that willing licensee disputes can be subject to jury adjudication, but also that in willing licensee disputes, traditional patent damages factors such as apportionment are not required, since willing licensee disputes are based in contract law rather than patent law. HTC Corp. et al. v. Telefonaktiebolaget LM Ericsson et al., Case No. 19-40566 (5th Cir. Aug. 31, 2021) (Elrod, J.) The panel concluded that the district court properly instructed the jury on the meaning of FRAND and did not err in granting a post-trial declaratory judgment in the SEP owner’s favor.

Ericsson holds patents that are essential to the 2G, 3G, 4G and WLAN wireless communication standards and made a commitment to the European Telecommunications Standards Institute (ETSI) to license those SEPs on FRAND terms. In order to minimize the risk of anticompetitive behavior, standards setting organizations such as ETSI may exclude patented technology from their standards if an SEP holder does not commit to license the patent on FRAND terms.

HTC makes smartphones that implement Ericsson’s SEPs. In 2016, Ericsson and HTC were engaged in negotiations to renew their third licensing agreement. Negotiations broke down, and HTC filed a lawsuit alleging that Ericsson breached its commitment to provide a license on FRAND terms. HTC argued that Ericsson’s royalty rate should be based on the smallest salable patent-practicing unit (SSPPU) of HTC’s smartphones—specifically, the baseband processor component—rather than the net sales price of the entire end-user device. Ericsson counterclaimed for a declaration that it had complied with its FRAND obligation. Ericsson argued that its offer to HTC was fair and reasonable because its licenses to other similarly situated device makers were also based on the value of the end-user product, not just the smallest salable unit. After an earlier Fifth Circuit decision (applying French law) determined that the ETSI intellectual property rights policy contained no express language requiring SEP holders to base royalties on the SSPPU. The Court also noted that the prevailing industry standard has been to base FRAND licenses on the end-user device. Thus, a “reasonable person” would not interpret Ericsson’s FRAND commitment to mean that it must base its SEP royalties on the SSPPU.

The case proceeded to trial, and a Texas jury found that Ericsson did not breach its FRAND commitment. The district court also granted a declaratory judgment in Ericsson’s favor following trial, concluding that Ericsson’s offers were FRAND. HTC appealed to the Fifth Circuit, challenging the district court’s exclusion of several of its proposed jury instructions and the declaratory judgment in Ericsson’s favor. At trial, the district court had instructed the jury that whether a license is FRAND “will depend on the totality of the particular facts and circumstances,” and that “there is no fixed or required methodology for setting or calculating [...]

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Discretion to Authorize Hague Alternative Service on Foreign Defendant—it’s All About Time and Cost

by | Sep 23, 2021 |

The US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus, directing the US District Court for the Western District of Texas to dismiss multiple infringement actions for insufficient service of process and lack of personal jurisdiction where the plaintiff used alternative methods to effect service of process on a foreign defendant instead of the more conventional Hague Convention. Although the Court expressed reservations about the district court’s authorization of alternative service methods solely because of the Hague Convention’s slower and more expensive procedures, it found the decision to be within the district court’s discretion. In re: OnePlus Tech. (Shenzhen) Co., Ltd., Case No. 21-165 (Fed. Cir. Sept. 10, 2021) (non-precedential) (per curiam).

OnePlus is a Chinese consumer electronics manufacturing company. WSOU Investments d/b/a Brazos Licensing and Development is a non-practicing entity headquartered in Texas. Brazos filed five patent infringement actions against OnePlus and alleged that OnePlus had no place of business or employees in the United States. Although the People’s Republic of China is a signatory to the Hague Convention, Brazos decided not to attempt service on OnePlus by invoking the Hague Convention because of the burdens involved. Instead, Brazos requested that the district court grant leave under Fed. R. of Civ. Pro. 4(f)(3) to use alternative methods to effect service. Brazos made no showing that service under the Hague Convention had been tried and failed, would have been unlikely to succeed or was otherwise impracticable. The district court regarded the Hague Convention procedure as slow and expensive and granted the motion. Brazos served the complaint and summons on lawyers who represented OnePlus in the past and on OnePlus’s authorized agent for service in California.

OnePlus made a special appearance to challenge the sufficiency of the service and the district court’s jurisdiction over OnePlus. The district court rejected the challenge on the basis that Rule 4(f)(3) gave it discretion to order service on a foreign defendant by means other than those prescribed by the Hague Convention, and that the service was effective to grant the district court personal jurisdiction over OnePlus. OnePlus sought mandamus.

OnePlus’s mandamus petition requested that the Federal Circuit compel the district court to vacate its order authorizing alternative service and require that Brazos effect service pursuant to Hague Convention procedures. OnePlus argued that:

  • Brazos’s service was ineffective because it did not satisfy Texas state law.
  • As a result of the ineffective service, the district court lacked personal jurisdiction over OnePlus.
  • It was an abuse of discretion for the district court to authorize alternative service absent showing of a need to forego Hague Convention procedures.

OnePlus argued that the district court had jurisdiction over it only if OnePlus was subject to jurisdiction in Texas under the Texas long-arm statute. Because valid service under Texas law required the transmittal of documents abroad and triggered the Hague Convention (which Brazos did not use), OnePlus contended that there was no valid service and the district court therefore lacked personal jurisdiction over [...]

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Not on My Watch: Disclosure of Restored Goods’ Source Obviates Consumer Confusion

by | Sep 23, 2021 |

The US Court of Appeals for the Second Circuit affirmed a ruling that a defendant’s use of a mark in connection with the sale of used goods did not create consumer confusion, finding that the district court adequately analyzed the relevant Polaroid factors and did not erroneously apply the 1947 Champion Spark Plug case. Hamilton Int’l Ltd. v. Vortic, LLC, Case No. 20-3369 (2d Cir. Sept. 14. 2021) (Cronan, J.)

Vortic is a watchmaker that specializes in the restoration and conversion of antique pocket watches into wristwatches. Hamilton International brought a trademark infringement suit against Vortic based on a watch that Vortic sold called the “The Lancaster.” The Lancaster name pays homage to Lancaster, Pennsylvania, which is where the Hamilton Watch Company was originally located. The watch was made with restored “Railroad-Era” movements (the internal mechanism of the watch with the hands and face attached) that were originally produced by Hamilton. The Hamilton mark could be seen both on the antique face of the watch and through the see-through back on the internal workings. Vortic’s mark, as well as “The Lancaster” and a serial number, were located on a ring on the rear of the watch.

The district court focused on the Polaroid factors in its likelihood of consumer confusion analysis and on the issue of disclosure under Champion. The district court found that Vortic’s labeling and disclosure were compliant with Champion, that there was no evidence of actual confusion or bad faith and that the buyers of these antique watches were sophisticated purchasers. The district court found no likelihood of confusion and entered judgment for Vortic on all claims. Hamilton appealed.

The main issue on appeal was whether the district court erred in finding no likelihood of consumer confusion. To show a likelihood of consumer confusion, “[a] plaintiff must show ‘a probability of confusion, not a mere possibility’ affecting ‘numerous ordinary prudent purchasers.’”

The Second Circuit considered the district court’s application of Champion. In that case, the Supreme Court determined that keeping the “Champion” logo on refurbished spark plugs would not mislead consumers as the plugs were originally Champion plugs and had the terms “Repaired” or “Used” stamped on them, which provided full disclosure. The Court explained that the lesson from Champion is that when a refurbished “genuine product” is resold, “the seller’s disclosures and the extent of a product’s modifications are significant factors to consider” in any infringement analysis.

Hamilton argued that the repair of the Hamilton parts that went into The Lancaster was so extensive that Champion should not have been applied. The Second Circuit disagreed, noting that the only modification to the original movement was a replacement lever, and that it was clear to consumers that The Lancaster was an “antique pocket watch modified into a wristwatch rather than an entirely new product.”

Hamilton also unsuccessfully argued that the district court erred by not first using the Polaroid factors before turning to the Champion analysis. The Second Circuit explained that since the plaintiff bears the burden [...]

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