Whether attorney-client privilege protects communications among a client, his lawyer, and a public relations consultant was the question before the California Court of Appeal (“Court”) in Behunin v. Superior Court (2017) 9 Cal.App 5th 833, 837.
After acknowledging that the attorney-client privilege may extend to communications with public relations consultants in some circumstances, the Court concluded that Behunin failed to prove communications among him, his lawyers, and a PR firm were “reasonably necessary for his lawyers’ representation of him in a lawsuit.” Thus, the communications were not protected by the attorney-client privilege, and the opposing party could compel their disclosure.
Below is a breakdown of how the Court reached its conclusion, with some TAKE-AWAYS for clients, lawyers, and PR firms.
Nicholas Behunin had filed a lawsuit against Charles R. Schwab and son Michael Schwab over an unsuccessful real estate investment deal. As part of a strategy to induce settlement, Behunin’s attorneys (Steiner) engaged a PR consultant (Levick) to create a website linking Schwab real estate investments to former Indonesian dictator Suharto. [The website can be seen at www.chuck-you.com, though it appears to have been changed since earlier versions (see e.g., Oct. 2014 version).]
Schwab responded by suing Behunin for libel, slander, and invasion of privacy. When Behunin filed an anti-SLAPP motion to have the Schwab case thrown out, Schwab sought discovery of communications among Behunin, his lawyers, and the PR firm concerning the creation of the website. Behunin objected, claiming the communications were protected from disclosure by the attorney-client privilege.
PRIMER: HOW THIS ISSUE GETS TO THE COURT OF APPEAL
Behunin objected to producing the PR documents and filed a motion for a protective order based on the attorney-client privilege.
Schwab filed motions to compel the production of documents from Behunin and Steiner.
The trial court referred the motions to a discovery referee.
The discovery referee found the PR documents were not protected by the attorney-client privilege or work product doctrine, and thus, recommended denying the protective order and granting Schwab’s motions to compel.
Behunin and Steiner filed objections to the discovery referee’s recommendation with the court.
The trial court overruled the objections and adopted the referee’s recommendations as its own order.
Behunin filed a petition for writ of mandate with the Court of Appeal and requested an immediate stay of the trial court’s orders.
The Court of Appeal (“Court”) issued an order to show cause why it should not order the trial court to vacate (i.e., annul or set aside) its orders, and stayed (i.e., stop or put a hold on) all discovery proceedings pending its determination.
After the case was briefed and argued, the Court denied the petition for writ of mandate and vacated its order staying the discovery proceedings in the trial court.
THE COURT OF APPEAL ANALYSIS
The issues presented on appeal were:
(1) whether communications among Behunin, Steiner (lawyers), and Levick (PR consultant) were confidential attorney-client privileged communications; and
(2) whether the attorney-client privilege was waived.
The Court began by identifying and explaining the standard of review. First, it noted that a trial court’s ruling on a motion to compel discovery ordinarily is reviewed for abuse of discretion. However, where the issue concerns a legal privilege, appellate courts will review the trial court’s decision under the substantial evidence standard of review.
PRIMER: APPELLATE COURT REVIEW STANDARDS
Important to any appellate analysis is what standard of review the appellate court applies. Does the Court of Appeal simply decide the issue independently, as if it was the trial court (i.e., de novo or independent review)? Or does the Court of Appeal give some level of deference to what the trial court found as facts and concluded after applying the facts to the applicable law? This is why the “DISCUSSION” section of appellate opinions almost always begins with “Standard of Review.”
The standard of review has a huge effect on (and hugely affects) the likelihood that an appellate court will alter a trial court’s decision. A trial court’s decision reviewed for abuse of discretion is rarely reversed on appeal. A trial court’s decision reviewed for substantial evidence stands a slightly better chance of being reversed. If you are a litigant trying to get a trial court decision reversed on appeal, you want the appellate court to independently review (or to apply a de novo review standard), whereby the appellate court essentially reviews the matter the same way the trial court did, though it is often limited to what is contained in “the record.”
As to the second question, the Court of Appeal explained that “whether a party has waived a privilege, however, is often a mixed question of law and fact.” Where there is a mixed question of law and fact, and the Court’s inquiry requires a critical consideration, in a factual context, of legal principles and their underlying values, the Court views the issues as predominantly legal, and will independently review the trial court’s ruling.
The Court of Appeal explained the attorney-client privilege (Evid. Code § 954), as follows (italics added):
- a client, whether or not a party, has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer;
- the attorney-client privilege protects confidential communications between a client and his or her attorney made in the course of an attorney-client relationship; and
- the attorney-client privilege applies only to confidential communications made in the course of or for the purposes of facilitating the attorney-client relationship.
As to the third part, the Court of Appeal noted the definition of confidential communication between client and lawyer from Evidence Code § 952:
A “confidential communication between client and lawyer” means information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.
It then noted Evidence Code § 912, which concerns waiver of the privilege: “A disclosure in confidence of a communication that is protected by a privilege provided by Section 954 (lawyer-client privilege) … , when disclosure is reasonably necessary for the accomplishment of the purpose for which the lawyer … was consulted, is not a waiver of the privilege.”
The Court then focused its analysis on the real issue:
Whether the disclosure to Levick (PR consultant) of communications between Behunin and Steiner (Behunin’s lawyers) was reasonably necessary to achieve the ends for which Behunin consulted Steiner.
Ordinarily, once a party establishes the facts necessary to support a claim of privilege (i.e., a communication made in the course of attorney-client relationship), the communication is presumed to have been made in confidence. However, this presumption does not apply when an attorney-client communication is disclosed to a third party. When that occurs, the party claiming the privilege bears the burden of proving the disclosure was reasonably necessary to achieve the ends for which the client consulted the lawyer.
The Court then discussed why Behunin had not proved that the communications were “reasonably necessary” for Steiner’s representation of Behunin. Initially, whether communications among a client, attorney, and a public relations consultant are protected by the attorney-client privilege depends on whether the communications were confidential and whether disclosing them to the consultant was reasonably necessary to accomplish the purpose for which the client consulted the attorney.
The Court identified two ways that disclosure of a privileged communication to a third party may not destroy the privileged nature of a communication:
- where the third party has no interest of his or her own in the matter, but a litigant must disclose a confidential communication to the third party because the third party is an agent or assistant who will help to advance the litigant’s interests;
- where the third party is not an agent of the client or attorney, but is a person with his or her own interests to advance in the matter, and those interests are in some way aligned with those of the client (also known as “common interest”)
The Court elaborated, noting the words “other than those who are present to further the interest of the client” means that a communication to a lawyer is confidential even when made in the presence of another person—such as a spouse, parent, business associate, or joint client—who is there to further the interest of the client in the consultation. “Those who are present to further the interest of the client” also applies to persons who may meet with the client and his attorney on a matter of joint concern.
Noting an absence of California case law applying the law of privilege in the context of public relations consultants, the Court reviewed several cases from other jurisdictions before turning to the evidentiary showing by Behunin.
The Court said Behunin provided little evidence explaining how or why communications among Levick, Steiner, and himself were reasonably necessary to assist Steiner in his ability to advise Behunin or to litigate his case. Similarly, Behunin presented no evidence showing why his or Steiner’s communications with Levick were reasonably necessary to develop a litigation strategy or to induce the Schwabs to settle.
Rather, the evidence showed that Steiner had little involvement with Levick, and that all Steiner did was act as a liaison in hiring the public relations firm. Steiner and Behunin merely stated, in conclusory fashion, that they engaged Levick to “develop and deploy” strategy, that they intended their communications with Levick to be confidential, and that the goal of the agreement with Levick was “to develop and deploy strategy and tactics of [Behunin’s] legal complaint” in the lawsuit.
Missing, said the Court, were “evidentiary facts showing or explaining why Steiner needed Levick’s assistance to accomplish the purpose for which Behunin retained him.”
The Court left open the possibility that “[t]here may be situations in which an attorney’s use of a public relations consultant to develop a litigation strategy or a plan for maneuvering a lawsuit into an optimal position for settlement would make communications between the attorney, the client, and the consultant reasonably necessary.” The Court also noted that “maximizing a client’s negotiating position and increasing the prospects for a favorable settlement are important parts of representing a client in litigation.”
But “[w]ithout some explanation of how the communications assisted the attorney in developing a plan for resolving the litigation, Behunin would not be able to show such communications were reasonably necessary to accomplish Steiner’s purpose in representing Behunin.”
The Court also reviewed cases in which communications with public relations consultants were privileged because the consultants were found to be “functional equivalents” of employees. The functional-equivalent cases, however, “require a detailed factual showing that the consultant was responsible for a key corporate job, had a close working relationship with the company’s principals on matters critical to the company’s position in litigation, and possessed information possessed by no one else at the company.” No such showing was presented by Behunin.
The Court said Behunin also had not presented evidence sufficient to protect the communications on the basis of common or aligned interests. Behunin and Levick apparently argued that they shared an interest in obtaining legal advice as to whether it was permissible to post content on the Internet, and that such advice clearly encompassed questions regarding both Behunin’s and Levick’s potential exposure to legal liability for such statements. However, the argument was not supported by evidence showing that Levick sought legal advice from Steiner or that there was any attorney-client relationship between Steiner and Levick. In fact, Behunin’s own declaration said that Steiner hired Levick on Behunin’s behalf without knowing anything about the content of the website Levick was to create. The law allows “sharing of privileged information when it furthers the attorney-client relationship,” but not simply “when two or more parties might have overlapping interests.” In other words, overlapping interests help, but are not sufficient without additional evidence showing (1) a party’s sharing its confidential information was reasonably necessary to advance the party’s case; or (2) that there was an attorney-client relationship between Steiner and Levick.
Accordingly, the Court of Appeal denied Behunin’s petition and did not disturb the trial court’s rulings ordering disclosure of communications involving the PR consultant.
TAKE-AWAYS FOR PRACTITIONERS AND PARTIES TO LITIGATION
1. When hiring a PR firm, anticipate potential disclosure requests and challenges to attorney-client privilege.
a. Consider limiting the creation of written communications by, to, and from the PR firm, just in case an attorney-client privilege is not found or is found to have been waived. (Note that here, Behunin and Steiner had to produce documents in which Levick participated, but did not have to produce communications solely between Steiner and Behunin.)
b. Consider whether the PR firm should also retain the lawyers, so there is an attorney client relationship between the lawyers and PR firm as well. (Note that here, Behunin and Levick argued that they shared an interest in obtaining legal advice regarding whether it was permissible to post content on the Internet. However, the court said there was no evidence that the PR firm sought legal advice from the lawyer or that there was an attorney-client relationship between the lawyer and the PR firm.)
c. Map out the process for determining whether the privilege applies and the process for determining if there was a waiver. Pay attention to the review standards, noting in particular, that the involvement of a third party (PR consultant) changes the burden of proof in litigating attorney-client privilege issues, and the party claiming the privilege will bear the burden of proving the privilege applies and was not waived.
d. Consider getting appellate counsel involved early. On appeal, review of the trial court’s decision is likely to involve mixed questions of law and fact, to which the Court of Appeal will apply the independent review standard. It is critically important that the record be sufficiently developed, that all potential bases for privilege are covered (see No. 2 below), and that all arguments are supported by evidence in the trial court and are made part of the record on appeal (see No. 3 below).
[For more on standards of review, see California Court of Appeal – Civil Appellate Practices and Procedures for the Self-Represented in the Fourth Appellate District Division One, Chapter 5. Briefing the Case, beginning on page 5-5.]
2. Parties and/or PR firms interested in preserving the attorney-client privilege must be prepared to provide evidence:
a. explaining how or why communications among the PR consultant, lawyer, and client are reasonably necessary to assist the lawyer in his ability to advise the client or litigate his case;
b. showing why the client’s or lawyer’s communications with the PR firm are reasonably necessary to develop a litigation strategy or settlement strategy or other litigation purpose;
c. showing or explaining why the lawyer otherwise needs the PR firm’s assistance to accomplish the purpose for which client retained the lawyer; or
d. showing (in detail) that the consultant was responsible for a key corporate job, had a close working relationship with the company’s principals on matters critical to the company’s position in litigation, and possessed information possessed by no one else at the company (consistent with the analysis in FTC v. GlaxoSmithKline (D.C.Cir. 2002) 352 U.S. App.D.C. 343 [294 F.3d 141, 148], Schaeffer v. Gregory Village Partners, L.P.(N.D.Cal. 2015) 78 F.Supp.3d 1198, 1204, and/or A.H. ex rel. Hadjih v. Evenflo Co., Inc. (D.Colo., May 31, 2012, No. 10-cv-02435-RBJ-KMT) 2012 WL 1957302, pp. *5, *3).
3. Parties and/or PR firms interested in protecting communications from disclosure also should consider the potential applicability of the work product doctrine. See California Code Civ. Proc., § 2018.030. Here, the court noted that Behunin failed to advance any arguments to support the application of the work-product doctrine, noting: “Although Behunin refers to the attorney work product doctrine in his petition and in his reply, he provides no legal argument or authorities to support the application of that doctrine to documents the court ordered produced. There is also no evidence in the record from which we might independently ascertain whether any of the communications to or from Behunin, Steiner, or Levick or any of the documents created by Levick would qualify as “[a] writing that reflects an attorney’s impressions, conclusions, opinions, or legal research or theories” and thus work product.”
 Confidential communication privileges allow a person to resist compulsory disclosure of certain communications. These privileges exist not because of a fear that information provided will be inaccurate, but because there are public policy reasons why the information should not be disclosed. For example, the lawyer-client privilege, marital communications privilege, physician-patient privilege, psychotherapist-patient privilege, clergy-penitent privilege, sexual assault counselor-victim privilege, and domestic violence counselor-victim privilege exist to foster free-flowing communication between persons in what the legislature has determined are socially beneficial relationships.
 The Court explained the substantial evidence standard as follows: “When the facts, or reasonable inferences from the facts, shown in support of or in opposition to the claim of privilege are in conflict, the determination of whether the evidence supports one conclusion or the other is for the trial court, and a reviewing court may not disturb such finding if there is any substantial evidence to support it.” Note that the word substantial can be confusing in this context. It doesn’t mean, “There was a substantial amount of evidence supporting that point.” In common parlance, it’s more like “There was some evidence supporting the point, and that evidence had substance to it.” See more on Standard of Review here (see p. 5-5.)
 The Court of Appeal explained this that works in the context of the Behunin case. Mixed questions of law and fact concern the application of the rule to the facts and the consequent determination whether the rule is satisfied. As the historical facts are undisputed, the question is whether, given those historical facts, a party has waived the attorney-client privilege and attorney work product protection. That inquiry requires a critical consideration, in a factual context, of legal principles and their underlying values. Therefore, the question is predominately legal, and appellate courts independently review the trial court’s decision. (Note: “independent review” is the same as de novo review, and means the Court reviews the issues much in the same way the trial court did, without deference to the trial court’s findings and decision.) See also, IDENTIFYING AND UNDERSTANDING STANDARDS OF REVIEW from the Georgetown Univ. Law Center.
 Examples: when an attorney shares a confidential communication with a physician, appraiser, or other expert in order to obtain that expert’s assistance, so the attorney is better be able to advise his client; or where a translator or an accountant is employed to help clarify communications between an attorney and client.
 This assumes a California state court would find the “functional equivalent of an employee of the client” theory viable.
In Mirmina v. Genpact LLC, plaintiff sought discovery of emails in which the defendant made derogatory statements about plaintiff. Defendant’s attorneys relied upon their client’s review of her own emails (“self-collection”) to locate responsive documents, as shown in this email exchange between counsel:
Defendant’s counsel wrote:
In any event, to be clear, Ms. Saxena provided for our review and processing all emails between her and Mr. Mirmina as well as any other emails and documents relating to her concerns about Mr. Mirmina’s performance, the PIP and/or the termination decision. To the extent these documents were non-privileged and responsive to the initial discovery protocols or your requests for production they were produced.
Plaintiff’s counsel responded:
So, am I to understand that you relied on Ms. Saxena to locate responsive documents? Do you really think if she wrote an email that she thought Mr. Mirmina worked 15 hours a week that she would turn it over to you? We want an objective search done that does not rely upon the “good faith” of the person who made defamatory remarks regarding Mr. Mirmina.
When defendant Genpact disagreed, plaintiff filed a motion to compel, arguing that the discovery rules required something more from counsel than reliance upon the client’s good faith in producing emails. Plaintiff sought an order requiring defendant to conduct an objective search for emails based on search terms agreed upon by both parties.
Defendant’s opposition began by acknowledging that:
(1) a litigation hold was the first step (preservation);
(2) compliance with the hold must be monitored;
(3) attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents; and
(4) attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search.
Defendant argued it satisfied these requirements by submitting (1) a declaration of Genpact’s in-house counsel that he properly issued a litigation hold upon receiving the charge of discrimination by plaintiff; and (2) a verification that he had coordinated a thorough search of all emails and documents relating to, concerning, or reflecting Genpact’s decision to terminate Mirmina and provided them to outside counsel for production.
Defendant then argued that plaintiff’s motion was based entirely on supposition that Genpact had concealed phantom “smoking gun” documents, without any evidence supporting the allegation.
THE COURT’S ANALYSIS
The court began its analysis by setting forth today’s standards:
A party’s discovery obligations do not end with the implementation of a “litigation hold” — to the contrary, that’s only the beginning.
Counsel must oversee compliance with the litigation hold, monitoring the party’s efforts to retain and produce the relevant documents.
Proper communication between a party and her lawyer will ensure (1) that all relevant information (or at least all sources of relevant information) is discovered, (2) that relevant information is retained on a continuing basis; and (3) that relevant non-privileged material is produced to the opposing party.
“Responsibility for adherence to the duty to preserve lies not only with the parties but also, to a significant extent, with their counsel.”
Indeed, for the current “good faith” discovery system to function in the electronic age, attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents.
Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search.
The court found that the steps taken by the company’s in-house counsel and litigation counsel to coordinate and supervise the search for electronically stored information (ESI) were proper and sufficient for ensuring a comprehensive search was conducted. Since plaintiff submitted no evidence supporting the contention that defendant had withheld communications, the defendant was not required to conduct an additional search for ESI.
THE TAKE-AWAY FOR IN-HOUSE COUNSEL AND THEIR LITIGATION COUNSEL
Here are the steps the court found proper and sufficient in Mirmina v. Genpact LLC:
(A) The company’s in-house counsel—
(1) issued a timely and detailed litigation hold to potential custodians of ESI, directing the preservation of any records and documents that might pertain to plaintiff’s claims;
(2) gave instructions to the ESI custodians regarding searches and specific search parameters;
(3) explained the importance of a thorough search to the ESI custodians; and
(4) provided guidance when questions arose during the search.
(B) The company’s in-house counsel then affirmed that he forwarded the results of the searches to outside counsel, who in turn conducted a review for processing and production.
(C) The company’s outside counsel represented that a comprehensive search was conducted for all documents subject to production under the Initial Discovery Protocols, and that all responsive documents were disclosed to the plaintiff.
THE TAKE-AWAY FOR PARTIES SEEKING TO COMPEL A SEARCH OF ELECTRONIC DOCUMENTS
A party seeking to compel a search in the face of representations that all documents have been produced must support the motion with evidence, and not simply surmise.
 Mirmina v. Genpact LLC (D.Conn. July 27, 2017, No. 3:16CV00614(AWT)) 2017 U.S.Dist.LEXIS 117412.
 Bagley v. Yale University, 318 F.R.D. 234, 239 (D. Conn. 2016), and Friedman v. SThree PLC, No. 3:14cv278, 2016 WL 7374546, at *3 (D. Conn. Oct. 24, 2016); see also citing Richard Green (Fine Paintings) v. McClendon, 262 F.R.D. 284, 290 (S.D.N.Y. 2009) (quotation marks and citation omitted), and Fed. R. Civ. P. 26(g) (requiring that counsel make a “reasonable inquiry” before certifying that a discovery response is “is complete and correct as of the time it is made”).
 Vaigasi v. Solow Mgm’t Corn., No. 11 Civ. 5088, 2016 WL 616386, at *16 (S.D.N.Y. Feb. 16, 2016
 Mirmina v. Genpact LLC (D.Conn. July 27, 2017, No. 3:16CV00614(AWT)) 2017 U.S.Dist.LEXIS 117412, at *3-4, citing Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 432 (S.D.N.Y. 2004).
 Mirmina, supra, quoting from Electrified Discounters, Inc. v. MI Techs., Inc., No. 3:13CV1332(RNC), 2015 U.S. Dist. LEXIS 64950, 2015 WL 2383618, at *2 (D. Conn. May 19, 2015).
 Orbit One Commc’ns, Inc. v. Numerex Corp., 271 F.R.D. 429, 437-38 (S.D.N.Y. 2010); see also Fed. R. Civ. P. 26(g) (requiring that counsel make a “reasonable inquiry” prior to certifying that a discovery response is “complete and correct as of the time it is made”).
It sounds like something you might put on your lawn to kill weeds. But in the world of brands and marketing, genericide is a killer of trademarks. It is what happens when a trademark becomes the common (generic) word for a product or service itself and is no longer protectable under trademark law.
Countless articles tell the stories of how trademarks lost their ability to distinguish the source of goods because they became generic. Examples include CELLOPHANE, LANOLIN, ESCALATOR, THERMOS, and ASPIRIN. See INTA’s Practical Tips on Avoiding Genericide.
Genericide is one reason companies police how others use their trademarks. It is also a reason that companies create branding and trademark usage guidelines, like these for Intel, Apple, and Symantec. See also, A Guide to Proper Trademark Use.
Some guidelines, like those of Symantec, go beyond what to do, and explain why:
Proper usage aids consumers who depend upon Symantec’s goods and services and helps prevent Symantec Trademarks from losing their distinctiveness and becoming generic.
They may even explain what not to do:
Trademarks are adjectives and should be followed by the generic term they modify, such as “software” or “product”. Never use a trademark as a noun, a verb, or in the possessive form.
With all of this focus on how marks lose their distinctiveness by becoming generic, you may be thinking:
What is the deal with GOOGLE?
People seldom say, “Try searching for [whatever] using the Google search engine.” People instinctively shorten things and say, “Try googling it.” But shouldn’t that lead to Google becoming generic and incapable of serving as a trademark?
Not necessarily, said the Ninth Circuit Court of Appeal in Elliott v. Google, Inc., No. 15-15809, 2017 U.S. App. LEXIS 8583 (9th Cir. May 16, 2017). There is more to it. You have to ask the right question, and that is the TAKE-AWAY at the end of this article.
Initially, explained the court, the mere fact that the public sometimes uses a trademark as the name for a unique product does not immediately render the mark generic. Rather, a trademark only becomes generic when the “primary significance of the registered mark to the relevant public” is as the name for a particular type of good or service irrespective of its source.
Courts make that determination by applying the “who-are-you/what-are-you” test:
If the relevant public primarily understands a mark as describing “who” a particular good or service is, or where it comes from, then the mark is still valid. But if the relevant public primarily understands a mark as describing “what” the particular good or service is, then the mark has become generic. In sum, we ask whether “the primary significance of the term in the minds of the consuming public is [now] the product [and not] the producer.”
In Elliott v. Google, seeking show that Google had become generic, Elliott focused on how google often is used as a verb. [Well-known dictionaries define google as a verb.] The Ninth Circuit court, however, found Elliott’s claim to be flawed for two reasons: (1) a claim of genericide must always relate to a particular type of good or service; and (2) use as a verb does not automatically constitute generic use.
Genericide Must Relate to a Particular Type of Good or Service
Relation to a particular type of good or service, the court said, is infused throughout several sections of the Lanham Act (federal trademark law). A mark can be canceled if it “becomes the generic name for the goods or services . . . for which it is registered.” “If the registered mark becomes the generic name for less than all of the goods or services for which it is registered, a petition to cancel the registration for only those goods or services may be filed.” The relevant question under the primary significance test is “whether the registered mark has become the generic name of [certain] goods or services.” 15 U.S.C. § 1064(3).
The court then added that such a relation requirement is necessary to maintain the viability of arbitrary marks as a protectable trademark category. In other words:
If there were no requirement that a claim of genericide relate to a particular type of good, then a mark like IVORY, which is “arbitrary as applied to soap,” could be cancelled outright because it is “generic when used to describe a product made from the tusks of elephants.”
Trademark law recognizes that a term may be unprotectable with regard to one type of good, and protectable with regard to another type of good. Thus, the court said the very existence of arbitrary marks as a valid trademark category supports the conclusion that a claim of genericide must relate to a particular type of good or service.
Use as a Verb Does Not Automatically Constitute Generic Use
Moving to the second point, the court said a trademark may be used as a verb, or even as a noun, without becoming generic. In connection with Lanham Act amendments, the court noted the following from a Senate Report:
A trademark can serve a dual function—that of [naming] a product while at the same time indicating its source. Admittedly, if a product is unique, it is more likely that the trademark adopted and used to identify that product will be used as if it were the identifying name of that product. But this is not conclusive of whether the mark is generic.
In this way, the court said Congress has “instructed us that a speaker might use a trademark as a noun and still use the term in a source-identifying trademark sense.” That was the case in Coca-Cola Co. v. Overland, Inc., 692 F.2d 1250 (9th Cir. 1982), where Coca-Cola had sued a restaurant (Overland) for trademark infringement, and Overland countered that COKE was generic, claiming that customers ordered “coke” only in a generic (“soda”) sense. The court rejected that argument, noting that the mere fact customers ordered “a coke,” i.e., used the mark as a noun, failed to show “what . . . customers [were] thinking,” or whether they had a particular source in mind.
To accept Elliott’s argument, the court said, would require “evidence regarding the customers’ inner thought processes.” The court explained further in a footnote:
We acknowledge that if a trademark is used as an adjective, it will typically be easier to prove that the trademark is performing a source-identifying function. If a speaker asks for “a Kleenex tissue,” it is quite clear that the speaker has a particular brand in mind. But we will not assume that a speaker has no brand in mind simply because he or she uses the trademark as a noun and asks for “a Kleenex.” Instead, the party bearing the burden of proof must offer evidence to support a finding of generic use.
Relating it to Google, the court said that just as a customer might use the noun “coke” with no particular cola beverage in mind, or with a Coca-Cola beverage in mind, an internet user might use the verb “google” with no particular search engine in mind, or with the Google search engine in mind.
While Elliott had amassed a mountain of evidence ranging from expert surveys to dictionaries, it all focused on the public using “google” as a verb, and did not show evidence of “google” being a generic name for internet search engines.
Elliott also argued there is no efficient alternative for the word “google” as a name for “the act” of searching the internet regardless of the search engine used. But the court convincingly disposed of that argument:
Elliott must show that there is no way to describe “internet search engines” without calling them “googles.” Because not a single competitor calls its search engine “a google,” and because members of the consuming public recognize and refer to different “internet search engines,” Elliott has not shown that there is no available substitute for the word “google” as a generic term.
Ultimately, Elliott lost by focusing on the wrong question. Elliott focused on whether the relevant public primarily uses the word “google” as a verb, when the real question was:
…whether the primary significance of the word “google” to the relevant public is as a generic name for internet search engines or as a mark identifying the Google search engine in particular.
BONUS TIP FOR IP LITIGATORS
The opinion includes analysis of several consumer surveys offered by Elliott. The court noted that consumer surveys may be used to support a claim of genericide “so long as they are conducted according to accepted principles.”
Two of Elliott’s consumer surveys, however, were excluded because they were not conducted according to accepted principles:
Specifically, these surveys were designed and conducted by Elliott’s counsel, who is not qualified to design or interpret surveys… [and, even] if the surveys were admitted, Elliott’s counsel would need to withdraw in order to offer testimony on the survey results.
For the latter point, the court cited Ariz. R. Sup. Ct. 42, E.R. 3.7 (“A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness . . . .”); see also Model Rules of Professional Conduct 3.7.
In California, see Rule of Professional Conduct 5-210 Member as Witness; but also see proposed California Rule 3.7 Lawyer as Witness (On March 30, 2017, the State Bar submitted the proposed rules to the California Supreme Court).
Nice post by Eric Ostroff on a case involving pleading requirements (Iqbal/Twombly) under the federal Defend Trade Secrets Act.
As more plaintiffs bring claims under the shiny new Defend Trade Secrets Act, we continue to learn about how courts are interpreting this statute. On Tuesday, the District of New Jersey answered an open question: whether the statute, in conjunction with Twombly/Iqbal, requires a heightened pleading standard for misappropriation. In Chubb INA Holdings, Inc. v. Chang, the DNJ declined to apply such a standard. A copy of the opinion can be downloaded below.
In this case, Chubb sued its former employee and its competitor Endurance, alleging that the former employee worked with Endurance to solicit a large number of employees from Chubb’s real estate and hospitality division. The goal was to hire enough Chubb employees to create a “turnkey” operation for Endurance. In the process, Chubb alleges, the former employees took Chubb’s confidential information. Chubb sued for, among other things, violations of the Defend Trade Secrets Act.
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On December 7, 2016, Eric Ball & William Pierog of Fenwick & West published a very useful and well-researched article, “Can Internet Comments and Search Results Prove Trademark Infringement?”
The article explores what types of comments will and will not help prove confusion, backed by citations to particular cases in which the issues have arisen.
[O]nline comments… are not hearsay if they… are not offered for the truth of the matter asserted… [and instead…[are] offered to show assumed association between the parties.
…evidence that does show confusion about product source may only suggest that the internet user “appears to be someone so easily confused that even trademark law cannot protect her.”
…inattentiveness during purchasing decisions is relevant…[but] consumer inattentiveness at other times may not suggest product source confusion.
[Concerning search results as evidence of confusion]…Consumers expect a search to return unrelated products.
…evidence should be from relevant purchasers rather than vendors or third-party businesses.
There’s an old saying: “A business with no sign is a sign of no business.”
In a recent dismissal order, the Northern District of California provided insight into the requirements for assigning an Intent-to-Use (ITU) trademark application when the assignment occurs before proof of actual use of the mark is filed with the USPTO.
Some use of a mark, sufficient to accrue some goodwill, is required before an Intent-to-Use trademark application may be assigned to another.
This is a very important concept, because it can arise in many contexts, including:
- two companies develop a similar new product both seek to use the same mark, and they resolve the conflict with an assignment of a pending ITU application;
- assignments between related companies;
- an individual files an application in his or her personal name instead of or before forming a corporate or other entity (discussed below); and
- M&A transactions involving IP portfolios that include pending applications.
Common law trademark rights arise from actual use of a mark on goods or in connection with services. USPTO registration of a mark (providing nationwide rights) can occur only after a mark is used in interstate commerce.
If a mark is already in use when a trademark application is filed, the first use date is stated in the application, and the mark, specimen, description, and classes are reviewed by the trademark examiner. Upon approval, the mark is published to see if anyone objects. Barring a successful objection, the USTPO issues a registration certificate.
U.S. law also allows a trademark application to be filed based on Intent-to-Use (ITU), effectively allowing a mark to be reserved. However, the USPTO will register a mark only after the ITU applicant shows actual use of the mark by filing an “allegation of use” — either an Amendment to Allege Use (before publication of the mark) or a Statement of Use (after publication). If the mark ultimately is registered, the filing date of the ITU application becomes the constructive first use date. This gives the ITU applicant priority over others who started using the mark after the ITU application filing date (even though the ITU applicant had not actually used the mark in commerce at that time). See why this matters here.
Assignments of ITU Trademark Applications
An ITU trademark application may be assigned to another before a registration issues if the requirements of 15 U.S.C. § 1060(a)(1) are met. The requirements differ, however, depending on whether the assignment occurs before or after the ITU applicant files an allegation of use.
If the assignment occurs after the applicant has filed an allegation of use, the ITU application must be assigned in writing together with the goodwill of the business in which the mark is used, just as if the assignment occurred after the mark already had been registered.
If the assignment occurs before the applicant files an allegation of use, the law will allow an assignment only “to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing.”
Stated another way, an ITU application may not be assigned before an allegation of use is filed, unless the ITU application is transferred with at least part of the applicant’s “ongoing and existing” business to which the mark pertains. This prevents the trafficking or profiting from the sale of ITU applications, i.e., the buying and selling of “inchoate” marks which as of yet, have no real existence.
What does it mean to assign an ITU application “to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing”?
The Northern District of California recently addressed this in an order granting a motion to dismiss in Sebastian Brown Productions LLC v. Muzooka Inc. (N.D. Cal., Mar. 14, 2016, No. 15-CV-01720-LHK) 2016 WL 949004, at *8.
Plaintiff Sebastian Brown Productions (SBP) operates a digital media storefront MuZook at muzook.com. SBP’s sole owner, Miller, in his individual capacity, had applied for the MUZOOK trademark under an ITU application. A few weeks after filing, Miller assigned the ITU trademark application to SBP, “together with that part of [Miller’s] business to which the Marks pertain, which business is ongoing and existing, the goodwill of the business symbolized by the Marks, and all registrations and applications therefor.”
In 2014, SBP sued competitor Muzooka, Inc. While the facts are more complex than stated here, in order to prevail, SBP needed to establish constructive-use priority over Muzooka, Inc., based on the date Miller filed the MUZOOK ITU application.
Since Miller had assigned the MUZOOK ITU application to SBP before filing an allegation of use, the dispute focused on whether SBP was truly a successor to an “ongoing and existing” business to which the MUZOOK mark pertained, for purposes of § 1060(a)(1). Turning to precedent from the Trademark Trial and Appeal Board, the court discussed various cases applying this language, and distilled a few principles:
- the “ongoing and existing” business exception to § 1060(a)(1) did not alter the requirement that the trademark assignment include the good will of the business in which the mark is used; and
- an assignment of an “ongoing and existing” business involves more than the assignment of goodwill alone. Hence, an assignment is void if it transfers only the intent-to-use application and goodwill, without any of the applicant’s ongoing and existing business.
Ultimately, the court determined that some use of a mark, sufficient to accrue some goodwill, is required before an ITU application may be assigned. It is not enough to simply restate the language of § 1060(a)(1) in an assignment — there must be some goodwill or ongoing and existing business to transfer.
“Goodwill” generally has been described as “the advantage or benefit, which is acquired by an establishment, beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers,” which accrues only through use of the mark. As the court noted in citing Pfizer, Inc. v. Hamerschlag, 2001 WL 1182865, at *4 (TTAB Sept. 27, 2001) (non-precedential): “Unwittingly or not, a party who has no business except obtaining a trademark on the basis of intent to use and who prior to starting a business assigns that application to another falls squarely into the trademark trafficking activity that [§ 1060(a)(1)] is intended to preclude.”
Although Miller used sufficient language to transfer an ITU trademark application before the filing of an allegation of use, Miller had nothing to transfer — no goodwill or ongoing and existing business. SBP did not allege that Miller had provided any services under the MUZOOK mark; invested money in the development of the MUZOOK mark; publicly displayed the MUZOOK mark; had any business assets; or engaged in any business activities. There was nothing alleging that Miller had used the MUZOOK mark, prior to the assignment, in a manner that established goodwill or any ongoing and existing business. Thus, since no allegations could establish transfer of goodwill or an ongoing and existing business as required by § 1060(a)(1), SBP could not establish the constructive-use date needed to demonstrate priority over Mazooka, Inc., and the case was dismissed.
While this assignment issue is important in many contexts, counsel and DIY trademark applicants should use caution when assigning an individual’s ITU trademark application to his/her business entity before an Amendment to Allege Use or a Statement of Use has been filed with the USPTO.
10-22-2016 Addition: For further application and analysis of these concepts, see Sorry, Apple, Assignment of ITU Applications Isn’t MAGIC by Wes Anderson at DuetsBlog (http://www.duetsblog.com/2016/10/articles/advertising/sorry-apple-assignment-of-itu-applications-isnt-magic/)