Santa Ana, CA – Chronic Tacos Enterprises (“CTE”) is a franchisor of Mexican food restaurants under its Chronic® and Chronic Tacos® trademarks. Defendants are alleged to be former temporary licensees at the Huntington Beach location, which license was terminated when CTE’s founders ceased being shareholders in the Huntington Beach location. CTE alleges that Defendants have failed to execute a franchise agreement to operate the location, thus necessitating the lawsuit. The case is Chronic Tacos Enterprises, Inc. v. Chronic Tacos Huntington Beach, Inc. et al., SACV10-01414 DOC (C.D. Cal. 2010).
Los Angeles, CA – Pepsi’s subsidiary owns the Manzanita Sol® trademark that is used on apple flavored soft drinks. Manzanita Sol® is Pepsi’s second most popular brand in Mexico. Pepsi has sold in the U.S. millions of dollars worth of Manzanita Sol® sodas through its authorized bottlers.
Pepsi accuses SPE Trading of importing soft drinks manufactured in Mexico bearing the Pepsi® and Manzanita Sol® trademarks that Pepsi does not authorize for sale in the U.S. Pepsi alleges that the Mexican product sold by SPE is materially different in many respect from authorized products sold in the U.S., e.g. the Mexican product does not comply with the labeling regulations of the Food and Drug Administration. Pepsi alleges that in response to a cease and desist letter, SPE had previously agreed to stop importing and selling the gray market product. But based upon alleged recent purchases of the gray market Manzanita Sol® product, Pepsi filed the instant trademark infringement and dilution action. The case is Pepsico, Inc. et al. v. SPE Trading, Inc., CV10-6833 DDP (C.D. Cal. 2010).
PRACTICE NOTE: U.S. trademark owners can prevent the importation and/or sale of gray goods that are “materially different” from those sold in the U.S. In determining what is considered “materially different,” 19 C.F.R. § 133.2(e) provides the following non-exclusive considerations: "(1) The specific composition of both the authorized and gray market product(s) (including chemical composition); (2) Formulation, product construction, structure, or composite product components, of both the authorized and gray market product; (3) Performance and/or operational characteristics of both the authorized and gray market product; (4) Differences resulting from legal or regulatory requirements, certification, etc.; [and] (5) Other distinguishing and explicitly defined factors that would likely result in consumer deception or confusion as proscribed under applicable law." Also, PepsiCo, Inc. v. Pacific Produce, Ltd., 2000 U.S. Dist. LEXIS 12085 (D. Nev. 2000) cites cases where failure to comply with FDA labeling regulations constituted a material difference.
Santa Ana, CA – Electronic Arts’ 2009 release of its Sims 3 virtual reality game sequel was to be accompanied by a promotional PlumbBob USB flash drive, which design and prototype has resulted in a real world copyright lawsuit. Plaintiff Design Technologies (“DT”) alleges that Lithomania, a broker that specializes in promotional items called swag, was retained by EA to develop promotional materials for the Sims 3 release. Lithomania then engaged DT to turn the two dimensional PlumbBob – a green jewel that identifies the computer character being controlled – into a three-dimensional USB flash drive.
DT alleges that it spent hundreds of hours developing several designs and provided a prototype to EA. “What began as a project that would involve only a few thousand PlumbBob USB’s that would be given away for free to promote the new game morphed into a program under which EA would sell hundreds of thousands of the PlumbBob USB’s in the collector’s edition of the new Sims 3 game.” DT alleges that after its prototype had been approved, EA and Lithomania asked it to sign an assignment agreement, which it did not sign. Lithomania is accused of then passing DT’s prototype – with EA’s knowledge – to a third party to mass produce. DT seeks a declaration from the Court that it is a joint author of the copyrighted work and seeks an accounting from EA for its profits, alleged to be in the neighborhood of $6,000,000. The case is Direct Technologies, LLC v. Electronic Arts, Inc., SACV10-1336 MLG (C.D. Cal. 2010).
Oskar Systems sued Club Speed, Pole Position, P2R Karting, and individuals for allegedly infringing its copyright in source code for a computer program used in the operation of go-kart tracks. Details blogged here. In late 2001-early 2002, the software was initially developed and owned by Contemporary Systems, Inc. (“CSI”). In 2005, Defendants licensed the software from CSI for one year but then developed their own replacement software and did not renew the license. Oskar Systems is formed in December of 2006 and in October of 2007, CSI transfers “all of its business assets related to ‘Oskar’ business operations” to Oskar Systems. In February of 2009, seven years after the date of creation, Oskar Systems first registers a claim of copyright with the copyright office, but the source code submitted to the Copyright Office was the 2008 version – not the 2002 version.
The Court first found that Oskar Systems did not have standing to bring suit because the alleged infringement occurred before the CSI assets were assigned to Oskar and the assignment did not expressly include causes of action for infringement. “A grant of copyright, even if it purports to convey ‘all right, title and interest,’ is generally construed not to assign existing causes of action unless such causes of action are expressly included in the grant.” Lanard Toys Ltd. v. Novelty Inc., 511 F. Supp. 2d 1020, 1033 (C.D. Cal. 2007). A copy of the order is available here.
Additionally, the Court found that Oskar Systems lacked standing because it failed to deposit with the Copyright Office two copies of the original 2002 software, but instead submitted the software as it existed in the latter part of 2008. The day before filing its opposition, Oskar System attempted – fruitlessly – to correct the improper deposit by filing a supplemental registration and disclosing that the 2008 version is a derivative work of the 2002 software.
Also, the Court found that Plaintiff did not fall within the exception permitting deposit of a derivative material to suffice to register the original work upon which the derivative is based because the alleged infringement occurred before the deposited version of the work was even created.
Further, the Court found that Plaintiff’s supplemental copyright registration fails to register the 2002 version of the software because it failed to sufficiently identify the original work from which the subsequent work was derived. Plaintiff’s statement that “[t]his particular work is actually a derivative work of prior versions of the same computer program and therefore, the actual date of completion for this particular version is 2008, with a publication date of October, 2008” was an insufficient identification. Oskar Systems, LLC v. Club Speed, Inc. et al., CV09-03854 AHM (C.D. Cal. 2009).
PRACTICE NOTE: This loss might have been avoided if the work was timely registered with the U.S. Copyright Office. In order to recover statutory damages and attorneys’ fees from infringers, the work must have been registered with the U.S. Copyright Office before the commencement of the infringement or within three months from the date of publication. 17 U.S.C. § 412.