n a trademark and copyright infringement case brought by Amusement Art, LLC (“Amusement Art”), a company owned by artist Thierry Guetta, most commonly known as Mr. Brainwash, against Life is Beautiful, LLC (“LIB”), a California federal judge ruled that Amusement Art fraudulently utilized the trademark registration system to attempt to secure a monopoly over its artwork and designs. The consequences were severe: the judge dismissed all of Amusement Art’s trademark claims.
Background:
In 2013, LIB hosted the Life is Beautiful festival in Las Vegas. LIB’s owner claimed that the event was inspired by his desire to assist his sister in her battle with depression. The festival’s logo was a splattered paint heart design, shown below. LIB’s owner claimed that the design was intended to allude to his heart attack at the age of 23, and he acknowledged that the design was based on a group of images that he collected from a Google search. The images that LIB collected included a picture of Mr. Brainwash’s artwork, shown below, that incorporated the phrase “LIFE IS BEAUTIFUL.”
Life is Beautiful, LLC Amusement Art, LLC
After developing the festival’s theme and logo, LIB entered into discussions with Mr. Brainwash regarding a potential collaboration for the festival, but instead, the conversation turned into a negotiation proposing that LIB license Mr. Brainwash’s intellectual property. The negotiations failed, and LIB proceeded to use the logo developed for the festival. Amusement Art turned around and sued LIB for trademark and copyright infringement. In seeking summary judgment, LIB countered that Amusement Art should lose under the defense of “unclean hands,” because it fraudulently obtained trademark registrations.
The Court’s Rulings on Summary Judgment:
In analyzing whether infringement claims can be barred by the doctrine of unclean hands, the court established that fraudulently acquiring a trademark is an example of a situation where such a defense is proper. In this case, Amusement Art fraudulently filed Statements of Use for eight trademark applications for the phrase “Life is Beautiful,” claiming that it had used this phrase as a brand identifier in connection with 257 categories of goods and services within eight classes (which is nearly one-fifth of all possible classes in the U.S. trademark system). As a result, Amusement Art received eight trademark registrations based on these Statements, when in fact, Amusement Art did not actually sell many of the products claimed. Amusement Art did not deny that it registered trademarks for goods they did not sell; it instead claimed that this did not rise to the level of fraud because it did not knowingly or intentionally defraud the U.S. Patent and Trademark Office. The court did not buy it, finding that no rational jury could find that these erroneous statements were innocent mistakes. After all, the evidence established that Amusement Art orchestrated and then submitted staged photographs of various goods with “Life is Beautiful” tags, even though it knew it never sold the goods.
Amusement Art argued that the fraud should not have been considered because it had no effect in the case, but the court had no trouble finding that the eight registrations that Amusement Art obtained were directly related to the subject matter of the pending claims. A ninth registration, for exhibitions and festivals, which Amusement Art obtained right before it filed the suit, gave the court pause because it appeared that Amusement Art was actually properly utilizing the mark in connection with such registration. However, the court did not find the proper use of that one mark was strong enough to allow Amusement Art to proceed with its trademark infringement claims, ultimately concluding that fraud should bar all of Amusement Art’s trademark infringement claims. The court was clearly quite troubled by Amusement Art’s overreach, finding that its strategic and fraudulent actions ultimately undermined the integrity of the trademark registration system, which made the unclean hands defense particularly appropriate here.
The troubles for Amusement Art did not stop there. LIB moved for judgment on its claims to cancel Amusement Art’s trademark registrations. Amusement Art argued that because it surrendered the eight “Life is Beautiful” trademark registration filings, a judgment on LIB’s counterclaim for the cancellation of the marks was not necessary and the issue was moot. However, the court was not persuaded that Amusement Art would not simply run back to the Trademark Office and refile. To assure that potential competitors could enter the marketplace and to assure LIB that it could continue to build its business without the fear of litigation, the court granted LIB’s counterclaim for cancellation.
Amusement Art’s claims on its heart design did not fare much better. The court found Amusement Art’s unregistered “heart logo” to not rise to the level of protectability for lack of secondary meaning; the court cited in part an Amusement Art corporate representative’s testimony that she did not think it was a trademark at all, but a copyrighted design. On the copyright claim, however, Amusement Art also lost because LIB’s heart design – the depiction of a concept that both parties agreed was “ubiquitous” – was not virtually identical to Amusement Art’s design, as required for ubiquitous designs. Amusement Art tried to claim that the use of the phrase “Life is Beautiful” should be part of the copyright infringement calculous, but the court rejected the argument as unprecedented.
The Aftermath:
To add salt to Amusement Art’s wounds, LIB is now seeking $1.96 million in fees and costs (including for electronic discovery and a damages expert, in addition to over $1.7 million in legal fees), claiming the suit was a “nuisance” based on fraudulently registered trademarks. While the amount of expense will likely be tested, the tone of the court’s summary judgment ruling does not bode well for Amusement Art’s escaping liability to pay some fees.
Conclusion:
The court highlights the dangers of attempting to monopolize the market by filing trademark registrations. As noted by the court, the trademark registration system was instituted to protect the goodwill of a brand and serve as a source identifier, not to prevent competitors from entering the market. Furthermore, the court exemplified that any entities engaging in such fraudulent actions will be properly punished.
Filed in: Legal Blog
January 18, 2017