Streaming providers and the lost trade marks: Napster, Megaupload

Napster: cats are
 the coolest brand

This Kat had read with interest a month ago that one of the first infamous streaming websites for illegal downloading -- Napster -- was going to be revived.  However, much like beloved felines, brands can have several lives. After Napster was brought down in 2001, IP rights over its name, a platform which divided artists, fans and mainstreamed music download, have been owned by parties ranging from Best Buy Co. Inc to Rhapsody Inc. today. This technology revolution forced both the entertainment business and the courts to catch up on what could be considered fair use and contributory infringement and vicarious liability of internet intermediaries (see for example the Grokster case here).

More recently Megaupload, the uber-famous peer-to-peer platform, was shut down in 2012 and the United States Department of Justice commenced criminal actions against its owners. The indictment alleged that DMCA provisions (so-called 'Safe Harbour' as an exemption to liability) were used for the appearance of legitimacy – the actual material was not removed, only some links to it were, take-down agreements were approved based on business growth rather than infringement, and the parties themselves openly discussed their infringing activities. On January 19, 2013, Megaupload was re-launched as Mega under the domain name mega.co.nz. The re-launch date was chosen to coincide with the first anniversary of Megaupload's take-down by the FBI. 

Those events prompted this Kat to wonder what happens to the trade mark when it is no longer used, or in the event that its purpose (or the use of its services) has been declared illegal.  Rights can be assigned or transferred to a licensee who must use it as a trade mark if it does not want to risk being the object of an invalidity action for non-use for an uninterrupted period of five years according to Article 15 of the Community Trade Mark Regulation (CTMR), for example in a EU action. Under the Lanham Act in the U.S., non-use of a trade mark for three consecutive years creates a rebuttable presumption of abandonment of the trade mark (whether registered or at common law). Moreover, Article 7(f) of the CTMR also provides that a trade mark cannot be registered if is against public policy which comprehends offensive trade marks, but does not affect the fact that, in practice, trade marks such as Napster or Megaupload --with the status possibly of a well-known mark but used for illegal activities-- may be annulled. Some countries recognize excusable circumstances deemed to be outside the trade mark owner’s control such as (1) legal restrictions on the continued sale of goods or services or (2) the bankruptcy or insolvency of the mark owner.

Searching for the legal downloading platform

In the Napster case Ryan Lester, the owner of an open-source sharing website, received a C&D letter requesting him to stop using the URL Napster.fm. After failed negotiations, Rhapsody sued for infringement and cybersquatting. Lester in turn applied for Federal trade mark registration and lodged an opposition at the TTAB, counterclaiming in spite of Rhapsody's undeniable prior rights in the field of trade mark services, that it would cause confusion with Napster. Further, U.S. federal courts  are reluctant to block defendants from using marks that are not being actively used by the marks' owners (this is also known as  "residual goodwill"). In most cases involving the abandonment of a still-famous mark--although ill-famed-- the U.S. courts have examined whether a trade mark owner's de minimis use of a mark was sufficient to maintain the owner's exclusive rights Silverman v. CBS Inc., 666 F. Supp. 575 (S.D.N.Y. 1987).

Whether judges will be sympathetic  to the new owners who legitimately acquired a brand with a former bad reputation or to a defendant's "riding on the coat tails of a famous trade mark", only 2014 will tell and this soon-to-be-ex-Kat will monitor this promising development at the intersection of Intellectual property rights.

Headphones for cats
Internet did not kill the Cat video stars