State AGs Fail in Objections to Proposed Settlement in Class Action Challenging Godiva’s Labeling Practices

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The last thing the parties to a class action settlement want to see is an objection from state Attorneys General (AGs).  AG objections to class action settlements are relatively rare and courts tend to give AG objections more weight than objections from private parties.  Not all AG objections are successful, however, and in the recent consumer fraud case of Hesse v. Godiva Chocolatier, Inc., No. 1:19-cv-972-LAP (S.D.N.Y.), a six-state objection filed by the AGs of Florida, Idaho, Maryland, New Jersey, Ohio, and Utah failed to persuade Judge Loretta Preska to reject the proposed settlement.

Hesse concerned Godiva’s use of the word “Belgium” in labeling and promoting its products.  According to the complaint, this practice led consumers to believe, incorrectly, that Godiva’s chocolates are made exclusively in Belgium and to pay higher prices for these products than they otherwise would have.  The parties’ proposed settlement of those claims is fairly standard stuff.  Anyone who purchased Godiva chocolate products between 2015 and last year could file claims to recover $1.25 per purchase.  Class members with proof of purchase could recover up to $25 (for 20 purchases); those without proof were capped at $15 (for 12 purchases).  Plaintiffs claimed actual damages to be $0.46 per purchase, so they characterized this relief as more than full recovery.

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NFTs: The Harbinger of Property Rights in the Metaverse?

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Non-fungible tokens (“NFTs”) continue to dominate the crypto-zeitgeist. It is beyond dispute that they are currently a major economic and cultural force. In 2021, sales surged to approximately $25 billion. They have been featured in high profile television commercials during the Olympics and the Super Bowl. And Nike recently purchased the NFT developer RTFKT Studios, signaling its intention to be a dominant provider of digital fashion in the metaverse.

Despite all this, it remains unclear what legal rights are conveyed with the purchase of an NFT. The academic consensus is that, absent a “smart contract” that expressly includes intellectual property (“IP”) rights, purchasing an NFT does not convey any copyrights or trademark rights. Yet, the creation of an NFT (called “minting”) is almost certainly limited by recognized IP and other legal principles. These issues have begun to percolate up through the courts.

This article explores lingering, undefined NFT questions through the lens of several pending lawsuits. While many articles just describe the facts of each case, this article focuses on the most interesting legal arguments that each makes. It also identifies how decisions by these courts may form the basis of property rights within the metaverse. And ultimately, it questions whether the emergence of such lawsuits undermines blockchain as a decentralized institution.

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NFT Infringement: No Free Taking or New Fair Transformations?

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Earlier this month sports apparel giant Nike sued StockX LLC, a Michigan-based sneaker and streetwear resale marketplace, for offering to its customers non-fungible tokens (NFTs) depicting Nike’s sneakers.  The claims asserted in the February 3 complaint filed in federal court in the Southern District of New York include trademark infringement, trademark dilution and unfair competition, all stemming from inclusion of Nike’s trademarks (e.g. Nike, Air Jordan, Jumpman, the “Swoosh” Design) in the shoe images depicted in the NFTs provided by StockX.

This is not the first case of its kind.  In January, Hermes sued a digital artist for unauthorized reproductions of its well-known Birkin bag in a line of NFTs released by the artist called “Metabirkins.”  And before that, in November 2021, Miramax – the studio that produced the 1994 cult movie classic Pulp Fiction filed suit to enjoin Quentin Tarantino from releasing NFTs based off of his original handwritten script of the movie, including scenes from an early script that were cut from the final version.

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Counterfeiting: Why Crime Doesn’t Pay

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Based on a recent restitution submission prepared by Faegre Drinker, a federal judge in Harrisburg, Pa. awarded Eli Lilly and Company $1.9 million in restitution from an individual convicted of trafficking in drugs bearing counterfeit trademarks of Lilly and other pharmaceutical companies. The defendant in this matter was sentenced to 70 months in prison and ordered to pay $3.6 million in restitution, the remainder split between the other companies based on the defendant’s conduct involving their trademarks.  In this instance, crime clearly didn’t pay for the defendant and success was achieved by partnering with our client to fight counterfeiting and illegal importing.  So how does this work?

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Cross-Class Confusion: Your Rights are Stronger than You Might Think!

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You’ve done the work of securing a federal trademark registration and now face the matter of enforcement against a potential infringer. Are the classes and goods specified in that registration now a double-edged sword?

Say your business, Company A, sells a premium line of clothing for chefs, widely recognized in the restaurant industry for both its durability and stylish design. You’ve worked hard to build the brand and made sure to protect its reputation by registering Company A’s trademarks with the USPTO—in particular, Class 25 for clothing. Much to your dismay, however, a customer has brought to your attention Company B’s new line of kitchen utensils that uses a conspicuously similar name and logo. While initially sold at retail outlets, this new line of cutlery has grown in popularity with some of the nation’s top restaurants. When you reach out to Company B for an explanation, they direct you to your own now-glaring lack of any registration for goods in Class 21 for household utensils. Your brand, despite taking the cooking world by storm, is not quite famous enough to pursue a dilution claim. Are you out of luck in pursuing a claim for infringement?

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IP Litigation Considerations in Light of Court Closures and Stay at Home Orders

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The mechanics of litigation in the federal courts have changed dramatically over the course of the past two months.  Intellectual property enforcement is certainly not immune to these changes.  Now that stay at home orders have been in effect in many states, enforcing copyright, trademark and other intellectual property rights through litigation involves a different set of considerations.  Here are a few of the more significant considerations you can’t afford to ignore:

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High Court TM Profit Award Standard May Be Coming

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On June 28, the U.S. Supreme Court granted certiorari in Romag Fasteners Inc. v. Fossil Inc. et al., agreeing to weigh in on the question of whether plaintiffs in trademark infringement cases must demonstrate that defendants acted willfully in order for plaintiffs to receive a portion of defendants’ profits.

Whether willfulness is a prerequisite to an award of defendants’ profits in trademark infringement cases is a question that has deeply divided the U.S. circuit courts. Half of the circuits have answered the question in the affirmative.[1] The other half have answered the question in the negative.[2] These latter circuits that do not require a threshold showing of willfulness merely view willfulness as one of many factors considered in fashioning an equitable remedy.

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Counterfeits Got You Down? An Ex Parte (Seizure) Might Cheer You Up!

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If trademark infringement and dilution are frequent headaches for brand owners, counterfeiting – which the U.S. Trademark Act defines as use of “a spurious mark identical with, or substantially indistinguishable from, a registered mark” – is a migraine.  As a practical matter, counterfeiting in most cases renders perfunctory the task of analyzing the “likelihood of confusion factors” required in traditional infringement cases.  In counterfeit cases, the marks and goods are identical, and the counterfeit mark was applied with the intent to deceive consumers into believing that fake goods are genuine, so it’s reasonable to assume it will do exactly that.

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