Several U.S. courts are addressing lawsuits brought by artists alleging that AI-generated art infringes on copyrights held by the artists for their artwork. In one of those cases, a California federal judge recently indicated that he would dismiss the bulk of the plaintiffs’ complaint, while giving them a chance to re-plead their claims. A written decision from the court is forthcoming, and that decision could be an important one for plaintiffs and defendants alike in current and future AI-related copyright cases.

In Andersen, et al. v. Stability AI Ltd., et al., Case No. 3:23-cv-00201-WHO (N.D. Cal.), three artists—Sarah Andersen, Kelly McKernan, and Karla Ortiz—brought suit against Stability AI Ltd., Stability AI, Inc., Midjourney, Inc., and DeviantArt, Inc. Plaintiffs alleged that Stability AI “copied and scraped” billions of images to train an AI tool called “Stable Diffusion.” These images allegedly included those originally created by the plaintiff artists. Meanwhile, the other two defendants created programs allowing users to access Stability AI’s tool, which generates images in response to text prompts entered by users. Plaintiffs asserted that the defendants’ conduct resulted in, among other things, copyright infringement of the plaintiffs’ artwork. Plaintiffs also argued that the defendants engaged in vicarious copyright infringement by permitting their users to enter text prompts that resulted in infringing images.

Continue Reading California Court Casts Doubt on Copyright Claims Relating to AI Images

A recent lawsuit filed in Washington state court alleging trademark infringement by AmerikanWeed, Palmer v. Komm, illustrates the importance of protecting intellectual property in the cannabis industry.[1]

Because the plaintiffs obtained a Washington state trademark registration, their recourse is limited to that state. To have recourse against infringement outside Washington, a federal registration may provide additional remedies — if it can be obtained.

With that in mind, a recent precedential decision by the Trademark Trial and Appeal Board highlights some of the pitfalls to avoid if pursuing federal registration.

The Potential Benefits of a Trademark

Trademark owners can take action against competitors using names and logos that consumers may find confusingly similar. Securing a federal registration can and may impede competitors from trading on the hard-earned goodwill and brand loyalty of a trademark owner across the nation.

However, in In re: National Concessions Group Inc., the TTAB held that state legalization, on its own, does not overcome the Controlled Substances Act’s barrier to registering a federal trademark for cannabis-related drug paraphernalia.[2]

CSA Is a Hurdle to Registration

The National Concessions Group applied to register two of its trademarks, “BAKKED” and the design mark shown below,[3] with the U.S. Patent and Trademark Office for use with “essential oil dispenser[s], sold empty, for domestic use.”[4]

The applications were refused on the grounds that the goods were illegal drug paraphernalia under the CSA.[5]

Trademark registrations cannot be granted on illegal goods. The USPTO has issued guidance that trademarks for cannabis-related goods meeting the exemptions in the 2018 Farm Bill may be registered in limited circumstances.[6][7]

Separately, the CSA includes exemptions, including Section 863(f)(1), known as the authorization exemption, which allows any person authorized by local, state or federal law to manufacture, possess or distribute drug paraphernalia; and Section 863(f)(2), known as the tobacco exemption, which exempts any item that is traditionally intended for use with tobacco products, including any pipe, paper or accessory.

NCG did not argue that its goods were exempt from the CSA under the 2018 Farm Bill. Instead, NCG argued that the athorization exemption and tobacco exemption applied.[8]

The TTAB disagreed and held that state legalization of cannabis did not provide a basis for federal trademark registration.[9]

To read the full article, click here.

[1] Complaint at 9-10, Palmer, et al. v. Komm et al., No. 23-2-11243-1 SEA (Wa. Sup. Ct. filed Jun 21, 2023).
[2] In re Nat’l Concessions Grp., Inc ., 2023 WL 3244416, *1 (T.T.A.B. May 3, 2023).
[3] Serial Numbers 87168058 and 87183434, respectively.
[4] Nat’l Concessions Grp., 2023 WL 3244416, at *1.
[5] See 21 U.S.C. §863.
[6] USPTO Examination Guide 1-19, 1-2 (May 2, 2019) (“the 2018 Farm Bill potentially removes the CSA as a ground for refusal of registration, but only if the goods are derived from ‘hemp’) (emphasis in original). However, to benefit from the Farm Bill the priority date of the application must be amended to December 20, 2018 or later. Id.
[7] 7 U.S.C. 5940(a)(2) (exempting products derived from hemp or with a THC “concentration of not more than 0.3 percent on a dry weight basis”).
[8] Nat’l Concessions Grp., 2023 WL 3244416, at *1.
[9] Id., at *8.

The new social media platform Threads was launched on July 5, 2023. Reports indicate that within the first day of launch, more than 30 million users have signed up. The app is designed for text-based conversations instead of photo updates. As users rush to join the platform, brands should also prioritize claiming accounts in order to guarantee the availability of their choice names—and to prevent potential bad faith registrants.

Although social media activity is largely concentrated on a few major platforms, new networks have continued to pop up and compete for users. With each launch, brand owners may face new challenges managing a social media strategy, including with obtaining their preferred user names and policing potential infringement. Acquiring social media handles that are owned by other people can be difficult (and sometimes expensive). Ownership of a registered trademark may not be enough to claim an account. Platforms will typically also consider how a name is being used, including whether the name might be used in accordance with fair use principles. Accounts that use a trademark in connection with content unrelated to the brand in question, or that act as “fan” pages sharing news and commentary, may not be subject to takedowns. In those cases, brand sometimes opt to negotiate with the owner and buy the handle.

For now, new Threads accounts are tied to existing Instagram accounts. And so, while Threads is considered a “separate space,” any brand with an existing social media handle on its platform should be able to use the same handle on Threads. It is not clear right now if there are any plans to separate the two platforms down the road. Its announcement states that it plans to make Threads compatible with open social networking protocols that would make the platform interoperable with other open networks. Threads names may therefore eventually have a wider reach.

Threads is still nascent. But early days mean opportunity, for better and for worse. Brands should consider taking advantage in order to maximize social media strategies moving forward.

We previously wrote about the widely-publicized Southern District of New York case involving lawyers who submitted papers citing non-existent cases generated by the artificial intelligence program ChatGPT, Mata v. Avianca, Inc. The judge overseeing the matter held a lengthy, and tense, hearing on June 8, 2023, before a packed courtroom, and then issued a decision on June 22, 2023 sanctioning the lawyers involved. The case has grabbed attention by highlighting some of the real risks of using AI in the legal profession, but the case’s primary lessons have nothing to do with AI.

The June 8 Hearing

On June 8, 2023, the judge in the Mata case held a hearing on the issue of whether to sanction two of plaintiff’s lawyers, and the law firm at which they worked, for their conduct. The courtroom was filled to capacity, with many would-be observers directed to an overflow courtroom to watch a video feed of the hearing. 

As set forth in our prior update, the plaintiff’s first lawyer submitted an affirmation on March 1, 2023, in opposition to the defendant’s motion to dismiss, which was written by the second lawyer, but contained citations to non-existent cases. Thereafter, the defendant pointed out that it could not find these cases in a filing on March 15, and the Court issued an order on April 11 directing the plaintiff’s lawyer to submit an affidavit attaching the identified cases. The first lawyer did so on April 25 (attaching some of the “cases”, and admitting he could not find others), but did not reveal that all of the identified cases were obtained via ChatGPT.  Only after the Court issued a further order on May 4 directing the lawyer to show cause as to why he should not be sanctioned for citing non-existent cases did the first lawyer finally reveal the involvement of the second lawyer and the role of ChatGPT in the preparation of the submissions.

Continue Reading Update on the ChatGPT Case: Counsel Who Submitted Fake Cases Are Sanctioned

On May 8, 2023, the USPTO announced its preliminary proposal to adjust its schedule of trademark fees, which was last modified January 2, 2021.[i]  The USPTO states that the existing fee schedule does not allow for enough revenue because of (1) the change in both applicant filing behaviors and trademark demand, and (2) market inflation increasing aggregate costs.[ii]  The USPTO anticipates that the fee changes would be implemented in November 2024 following a public comment period.[iii]

This proposal affects six categories of trademark prosecution fees:[iv]

  • Applications
  • Fees related to intent-to-use filings
    • These include statements of use, extensions to file a statement of use (of which five are permitted), as well as amendments to allege use.
  • Letters of protest
  • Maintenance filings
    • These include declarations of use, declarations of incontestability, and renewals.
  • Petitions to the Director
  • Petitions to revive abandoned applications

The most significant proposed changes are the additional application fees, the increased intent-to-use fees, and the substantially increased letter of protest fees. With applications, the USPTO proposes not only to discontinue the current two-tiered application structure in favor of a single fee at a higher amount, but to add two sets of extra fees for each class.[v] The first additional fee would be for the ability to add a “free form” goods and services listing.[vi] The second fee would apply to identifications of goods and services over 1,000 characters.[vii]

For intent-to-use filings, the USPTO proposes a two-tier structure for extensions of time to file a statement of use.[viii] The first tier, which covers the first to third extensions, will remain unchanged.[ix] However, the USPTO proposed a $125 or 100% increase in cost for the fourth and fifth (final) extension.[x] Amendments to allege use will incur a proposed 100% increase in cost of $100.[xi]

Additionally, the proposed fee change for letters of protest is significant, at 400%, with a $200 increase.[xii]

This proposed fee structure change could have a significant impact. Budget-conscious filers may need to reconsider trademark filing approaches or increase their budget for trademark matters.

Potential filers should also be more careful in their trademark application filings. This may include a more prudent selection of goods and services and a reduction in extension filings.

After consideration of public comments, both written submissions and those from a hearing held on June 5, 2023, the USPTO will publish its proposed fees in the Federal Register with a Notice of Proposed Rulemaking in the first Quarter of 2024, after which a public comment period will follow.[xiii]

[i] Trademark Fee Adjustment, 85 Fed. Reg. 73,197 (Nov. 17, 2020) (to be codified at 37 C.F.R. pts. 2, 7) https://www.govinfo.gov/content/pkg/FR-2020-11-17/pdf/2020-25222.pdf.

[ii] USPTO, Trademark Fee Proposal Exec. Summary, USPTO, Jun. 2023,  at 6, https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.uspto.gov%2Fsites%2Fdefault%2Ffiles%2Fdocuments%2FTrademark-Fee-Proposal-Executive-Summary-PH2023.pptx&wdOrigin=BROWSELINK.

[iii] Id. at 27.

[iv] Id. at 8.

[v] Id. at 9–10.

[vi] Id. at 12.

[vii] Id. at 13.

[viii] Id. at 17.

[ix] Id.

[x] Id.

[xi] Id. at 16.

[xii] Id. at 23.

[xiii] USPTO at 27. See also, Trademark Pub. Advisory Comm. Public Hearing on the Proposed Trademark Fee Schedule, 88 Fed. Reg. 25,623 (Apr. 27, 2023). https://www.federalregister.gov/documents/2023/04/27/2023-08906/trademark-public-advisory-committee-public-hearing-on-the-proposed-trademark-fee-schedule

The U.S. Supreme Court continues to show interest in trademark issues with its recent grant of certiorari in another case pitting the Lanham Act against the First Amendment.

Applicant Steve Elster applied to register the trademark TRUMP TOO SMALL for t-shirts back in 2018. The US Patent and Trademark Office (“USPTO”) refused registration on the basis of Section 2(c) of the Lanham Act, which prohibits the registration of marks that consist of or comprise a name, portrait, or signature identifying a particular living individual except when the individual has provided his or her written consent.

On ex-parte appeal to the USPTO’s Trademark Trial and Appeal Board, the applicant argued that Section 2(c) of the Lanham Act is unconstitutional because it violates his First Amendment right to free speech, i.e., applicant’s right to criticize a political figure. The Board, however, disagreed. Affirming the refusal to register, the Board found (1) that the applied-for mark was clearly a reference to then-President Donald Trump, and (2) that Section 2(c) is viewpoint neutral and, therefore, does not run afoul of the First Amendment.

Applicant appealed to the Federal Circuit, which overturned the Board’s decision, finding that the USPTO’s refusal to register applicant’s mark constituted an unconstitutional restriction on free speech. The USPTO subsequently appealed the Federal Circuit’s decision to the US Supreme Court, which granted certiorari to review the case earlier this week.

This case follows other challenges lodged in recent years to provisions of the Lanham Act that prohibited registration of trademarks considered to be immoral, scandalous, or disparaging, all of which have been struck down by the Supreme Court on First Amendment grounds.