Tag Archives: Dilution

A tale of two CITIs…

It seems that everyone who has a computer today has written about the lawsuit between Citicorp and All Citi Pawn, a New York pawn shop.  CNN Money may have been the first to write about it, with this story:

In the suit filed last week in Brooklyn federal court, Citigroup alleges that in using the same Citi abbreviation and red arc as its banking subsidiary, Citibank, All Citi Pawn has infringed on their trademark. Citigroup is seeking all of the business’ profits since it adopted the All Citi name.

“What can I tell you? Its crazy. They’re going wild for a little art that I put up. Theirs is a moon shape, mine is a V-shape, but I’ve already taken it down,” pawn shop manager Bob Kay told CNN.

[…]

“It is important for Citigroup to know that no one is trading off their name – they need to protect their intellectual property.” [said Trademark attorney Michael Feign].  Feigin went on to say, however, that removing the offending logo should resolve the case. According to Kay, it has not.

Marty Schwimmer has the full text of the complaint here.

What’s surprising is that most of the commentators–and even reporters—are complaining that this is somehow a frivolous exercise for Citi.  CNN lead off its article with “You would think that Citigroup had enough on its plate these days, but that hasn’t stopped the financial behemoth from filing a copyright [sic] infringement suit against a Brooklyn, New York, pawnshop over a similar logo….”   And even Mr. Schwimmer titled his blog post “Your tax dollars at work.”

In defense of Citi, this is not a bad case. According to the allegations in the complaint, the owner of All Citi Pawn started using the offending name, and registered its allcitipawn.com domain name well after CITIBANK became famous.  Second, Citibank attached some promotional materials showing the logo that All Citi Pawn used.  It included a logo that looked a lot like Citibank’s.  A quick trip to the Wayback Machine at the Internet Archive (http://www.archive.org) retrieved this logo at the http://www.allcitipawn.com website:

The logo of All Citi Pawn

The logo of All Citi Pawn

Compare that to Citi’s logo:

The registered logo from the big CITI.

The registered logo from the big CITI.

According to the Wayback Machine, the first appearance of anything on allcitipawn.com was in 2007.   So we have a small pawn shop in New York independently choosing to modify the word “City” to “Citi” in its business name, and coincidentally use a sans-serif font in blue, with a red roof instead of a red arch?  That screams bad intent to appropriate the goodwill of the senior user (and its mark, previously adjudged to be famous).  The word is the same; the logo is nearly identical; to the extent that a pawn shop and a bank both make loans on collateral, the services are quite similar.  This is not overzealous trademark prosecution; this is what a responsible trademark owner should do to police its mark and keep it distinctive.

The fact that Citi may be in dire financial straits right now doesn’t mean that it shouldn’t continue to protect its brand and logos, especially when the marks and goods are so similar.  It’s certainly worth a couple of thousand dollars to draft a complaint (it shouldn’t take more than that; my guess is that the associate charged with drafting the complaint already had plenty of examples from which to model) and a couple hundred dollars in filing and service fees.  It’s certainly no million dollar office renovation.

Here’s what happened (as alleged in the complaint):    All Citi Pawn, instead of consulting trademark counsel, adopted the name in 2007 (or thereabouts) not in an attempt for people to believe that Citibank was opening a pawn shop, but rather for customers to see the logo and think “cute,” and maybe to get customers to think that All Citi Pawn was as stable and honorable as Citi (*smirk*). Citi attorneys found the website. They sent a cease-and-desist letter. All Citi Pawn, instead of consulting trademark counsel, thought, it’s just the word “Citi,” and our inverted “v” is different from their semicircle, so screw ’em, they won’t do anything else. And–whoops!–they did something else.  Now all of the business community is in an uproar just because Citi wants to protect whatever goodwill remains in their brand.

And now to the infuriating part of the CNN report:

“…but that hasn’t stopped the financial behemoth from filing a copyright infringement suit against a Brooklyn, New York, pawnshop over a similar logo.

[…]

“Citigroup is seeking all of the business’ profits since it adopted the All Citi name.”

First, there is no allegation of copyright infringement in the complaint.  This is a matter of trademarks, CNN! And if a business reporter for CNN doesn’t know the difference between trademarks and copyrights….

Second, Citigroup isn’t seeking all of All Citi Pawn’s profits.  In the WHEREFORE clause of the Complaint, Citi seeks:

D (1) All of defendant’s profits, gains and advantages derived from the unauthorized appropriation of Citigroup’s good will in its service marks as part of defendant’s name, to identify defendant’s services and products…. (emphasis added).

This pleading is appropriate and correct for willful trademark infringement. Citi is not asking for all of the defendant’s profits, but all profits that flow from the use of Citigroup’s names and logos.  That’s a much, much smaller pool (and almost impossible to prove).

I’m not usually one to valiantly defend the big, bad bank from a bit of bad publicity, but I think in this instance, Citi’s gotten an unfair shake.

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“Stripper Idol” Update — The Docs

Here are the filings with the United States District Court, Western District of Texas, in Fremantle v. Benelux Corp. and Athanases Stamatopoulous, Civil Action A08-CA-908LY. (Blogged here and here).

The Complaint (pdf)

The Exhibits (pdf).

Note that Fremantle’s proof of infringement comes from an ad placed in the Austin Chronicle.  It’s blurry, it’s in black and white, but it does look like the same font that American Idol uses.

Also interesting, as Gene at IPWatchdog noted, that the Complaint contains Counts I (Federal trademark infringement and unfair competition), II (trademark infringement and unfair competition under Texas law) and IV (trademark dilution under Texas law).  Conspicuously absent is Count III, which Gene hypothsized may have been a claim for federal trademark dilution.  The questions arise:  Was the omission of the federal dilution claim intentional, or an oversight? If it was intentional (perhaps a decision made at the last minute) was it because Fremantle was concerned about a finding that AMERICAN IDOL is not famous, or that something like STRIPPER IDOL does not dilute it?  Or did they believe that relief under the Texas law (which appears to require a lower threshold of fame than the Lanham Act) would provide all the remedies they needed (after all, the strip club is not going to offer these services outside of Texas, so if you shut them down in Texas, that wins the case)?

This would be a fun one to follow, although my guess is that the case will be settled quickly and confidentially.

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“Stripper Idol” competition strips trademark law to its bare bones

As reported by the Houston Chronicle, the Dallas Morning News, and the local Austin TV station KVUE, FremantleMedia, owner of the popular FOX television program American Idol, has sued local Austin strip club Palazio Men’s Club (reasonably safe for work) for the Club’s creation of a weekly amateur special called “Stripper Idol.”

An ad taken from the club's Myspace page.

An ad taken from the club's Myspace page.

FremantleMedia, which owns the country’s most-watched TV show, says Palazio’s weekly amateur stripping contest is a trademark violation, one that tarnishes the company brand and could lead the public to believe the TV show is sponsoring the event.

[…]

Palazio managers, who first thought the lawsuit was a joke, say they have no intention of ending the Thursday night strip-off.

They say the contest – where girls have 60 seconds to dance topless, then are ranked by audience applause to win $500 – bears no resemblance to the hit TV show.

[…]

FremantleMedia’s lawsuit takes issue more with the club’s marketing than with the contest itself. The suit notes that Palazio uses the word “idol” in the contest name – a direct link to American Idol, which starts its new season Tuesday. And it has designed a contest logo that uses a “color scheme, design and font” mirroring that of the TV show. In addition to using the logo in advertisements, the club has waitresses wear T-shirts emblazoned with it – T-shirts cut, tied and tailored in revealing ways.

[…]

The suit’s claims are hogwash, said “Kinky” Kelly Jones, a club manager and the show’s emcee. Fremantle can’t lay claims to the word “idol,” he said.

“That word is biblical,” he said, “and has been around for thousands of years.”

And while Stevenson said the club would alter the logo if necessary, he added that he thought the whole suit was a bum deal.

“I didn’t know you could copyright an oval,” he said.

This is seriously a hard case.  “Kinky” is probably right–it will be a stretch for Fremantle to say that any entertainment service featuring a contest in the United States cannot use the word “Idol” in its title.  What Kinky doesn’t realize, though, is that the Lanham Trademark Act protects a junior trademark user from using any mark likely to cause consumer confusion or mistake not only as to the source of goods or services (that is, who provides the service or produces goods) but also “as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.”  In other words, if Kinky markets his stripper competition in such a way that a customer is likely to be confused or deceived that Stripper Idol is been sponsored by, or is affiliated with, American Idol, then American Idol can win its lawsuit. Most courts use a multi-factor test to determine likelihood of confusion, which usually includes balancing the fame and distinctiveness of the senior user’s mark, the similarities of the trademarks, the care of the consumers, the channels in which the  products are marketed, any instances of actual confusion, and the intent of the junior user in adopting the mark.  If you examine the STRIPPER IDOL advertisement above, there are certainly similarities with the well-known (and perhaps famous) AMERICAN IDOL and Design logo that is used on the TV show:

The TV show's logo

The TV show's logo

The consumers of both American Idol and Stripper Idol are not particularly careful (just look at the voting on the show!) or “sophisticated”, and while stripping and musical talent aren’t exactly the same, one could argue that the goods and services are “related” enough (just look at the promo for the new season, with the girl singing in a bikini and Simon allowing her to go on.) When you consider that Kinky probably didn’t just “come up” with the “Stripper Idol” name on his own, but rather likely intended his prospective customers to at least think of the Fox show, it would appear that many of the factors would favor Fremantle.

Kinky’s quote also illustrates a common misconception (and confusion) among Americans. Fremantle doesn’t have a “copyright” on an “oval,” (you likely cannot copyright the shape of an oval, as it lacks minimal creativity) but that is a design element of its trademark, which can be used to determine whether confusion is likely.

I haven’t even addressed the issue of “trademark dilution,” the concept that regardless of competition, a “famous” trademark’s market power and presence can be “diluted” by a similar (usually identical) use by a junior user.  Trademark dilution comes in two flavors — dilution by blurring (blurring the unique distinctiveness of the mark) or dilution by tarnishment (a connection that causes harm to the reputation of the senior user).  Associating an amateur strip contest with American Idol just may fall into that latter category.

On the other hand, I’m sure Fremantle’s attorneys thought long and hard about filing suit in this case.  Because rather than shutting down a potential (embarassing) infringer, it has made the club (and its amateur strip competition) more famous and more popular.  On the one hand, trademark owners have to police their rights, or otherwise the marks will become “diluted” and unprotectable (and perhaps even generic–like aspirin and almost Xerox).  On the other hand, fighting needless battles against small proprietors delivering unrelated goods and services just creates negative goodwill.   My guess is that they saw a rather unsympathetic defendant using a very similar logo to create a knock-off competition and believed this could be a prime case to “set an example” to prophylactically prevent others from using the IDOL trademarks or trade dress in simiar ventures.

I’m not sure that stuffing a few smelly singles into Fremantle’s g-string alone will put a smile on this media giant’s face. But it wil be a fun one to watch.

(All puns, intended.)

UPDATE: Conde Nast Portfolio.com has posted a similar story, except that the author contends that it’s a case of “copyright infringement.”  Indeed, there is sometimes some crossover between articles that are copyrighted and articles that may be entitled to trademark protection– the characters Mickey Mouse or Popeye may be examples.  But, alas, it appears that the Conde Nast journalist is just as clueless as strip club owner Kinky on the differences between copyright and trademark.  I’ll blog on this more soon, but for now, here’s a handy primer from the PHOSITA blog.

UPDATE No. 2:

This story continues to grow legs, now being picked up by the Boston Globe and the New York Daily News.

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