Trade Marks & Copyright 2024

2024 in Review

It has been another year marked by significant, global changes to trade mark and copyright law. The continued rise of digitisation and development of new technology, in particular the explosion of generative artificial intelligence (AI), have resulted in noteworthy changes to existing intellectual property laws and the emergence of novel legal issues and questions. Moreover, there were numerous significant decisions from courts in jurisdictions across the world that marked significant shifts in the approaches taken to long-held doctrines, such as the interplay between trade mark law and the right of free speech and how courts delineate between the unlawful infringement of copyright and permissible transformative or fair uses of existing copyrighted works. Looking forward, we expect legislatures and courts worldwide to continue grappling with these emerging issues and provide clearer guidance to the many difficult questions raised in the last year.

Artificial Intelligence

No one in the intellectual property space could avoid engaging with AI this past year. Although AI has existed in various forms for decades, new AI capabilities and technologies have proliferated. In particular, generative AI rose to the forefront of intellectual property practices with the release of platforms such as ChatGPT and many others. The ubiquity of these ever-evolving technologies have posed numerous legal challenges and have presented novel copyright and trade mark issues in jurisdictions all around the world, as courts and legislatures alike have grappled with how to best approach these novel issues.

Although generative AI-based tools may seem like they can create new content at the press of a button, the fact is that these tools are trained on massive amounts of often copyrighted content and other data. Generative AI’s reliance on such content poses a host of questions, many of which remain unanswered. For example, does the use of others’ works in the training of generative AI platforms constitute infringement? Who owns the content that generative AI platforms create for their users, and how much human input is required to claim ownership over such content? Can AI-generated outputs result in liability for the infringement of copyright and trade mark rights and, if so, who is liable?

In some jurisdictions, such as the EU, entirely new positive laws have been passed, and many others have been proposed to address concerns associated with the new developments in AI. The EU’s landmark Artificial Intelligence Act, which purports to be the world’s first comprehensive AI law, seeks to protect the rights held by human authors and intellectual property rightsholders and regulate the use of potentially harmful AI systems, while also acknowledging the growing importance and meaningful contributions that new AI technology represents.

Meanwhile, China has also developed new rules and guidelines, mandating that generative AI services must “adhere to core values of socialism” and prohibiting the use of AI training data that come from sources that the government deems to be illegitimate.

In the USA, numerous courts have reached decisions that affect the legality of trading on copyrighted content and supplying AI-generated outputs, and address whether, and in which specific circumstances, AI-generated outputs infringe on intellectual property rights. There are currently many pending lawsuits that have been filed in the USA challenging the use of data scraped from publicly available sources to train AI, in addition to those alleging infringement of trade mark and copyright based on AI outputs, which should provide additional insight on how courts are likely to deal with these issues moving forward.

The US Copyright Office also has been actively considering these issues, issuing a policy statement in March that it will not recognise authorship or grant registrations in works that are produced primarily by a generative AI tools, even when the output is subject to a human user’s prompt entered into the AI platform, unless the output is subsequently arranged or modified in such a way that meets the minimum standard for creativity required for authorship to vest in the human applicant. Copyright applicants must also now disclose when their works include AI-generated materials. In addition, the Copyright Office requested comments and input from the public in August on issues involving the use of copyrighted works to train AI models, the legality of AI-generated outputs, and the appropriate level of transparency with respect to the use of AI in creating new works. The US Copyright Office received roughly 10,000 comments from stakeholders across the AI landscape.

Trade Mark Damages

As the world continues to grow ever more interconnected, further heightening the impact of extraterritorial trade mark rights, courts and legislatures continued to provide guidance as to the scope and determination of damages in trade mark infringement disputes.

USA

In June of 2023, the US Supreme Court tackled the issues of damages and the extraterritorial application of US trade mark law in the case of Abitron Austria GmbH et al. v Hetronic International Inc. The plaintiff, Hetronic, brought a trade mark infringement suit against foreign distributors of its radio remote control products, alleging that the defendants counterfeited its products for overseas sale. The Tenth Circuit previously had upheld the trial court’s USD96 million award in damages to Hetronic despite evidence that only 3% of the allegedly infringing sales were made in the USA. The Supreme Court overturned this decision, holding that that the Lanham Act’s protections against trade mark infringement do not apply extraterritorially and are limited to circumstances in which the allegedly infringing use in commerce occurs within the USA. If an allegedly infringing use does not occur domestically, the Court determined that the Lanham Act should not apply, even if that foreign use does, in fact, cause confusion within the United States. The Supreme Court’s decision in Hetronic has clarified longstanding uncertainty as to whether damages may be obtained for foreign trade mark infringement, and may dramatically affect how corporations register and enforce their trade mark portfolios worldwide.

China

Continuing a trend from recent years, the Chinese government continues to emphasise the importance of enhancing the damages to which prevailing parties in trade mark infringement disputes are entitled. In China, bad faith infringers may be liable for up to five times the amount of actual damages in a given case. This year, in a landmark decision, the Supreme People’s Court awarded a plaintiff CNY100 million (roughly USD14 million) in damages, despite being able to only demonstrate roughly CNY27 million in actual damages. The remaining amount of the Court’s damages award stems from punitive damages due to the defendant’s bad faith actions, in addition to the reasonable legal expenses accrued by the plaintiff.

Fair Use of Copyrighted Works

As demonstrated by the contributions in this year’s Trade Marks and Copyright guide, the question of whether new uses of existing works infringe copyright or are permissible transformative or fair uses of those works is a hotly contested issue that varies from jurisdiction to jurisdiction. In 2023, courts continued to grapple with this concept and how to determine what types of uses should be deemed to be infringing, most notably in the United States.

USA

This past year, the US Supreme Court ruled substantively on the issue of fair use for the first time in nearly 30 years when it held in the seminal case of Andy Warhol Foundation for the Visual Arts v Goldsmith that the Andy Warhol estate had infringed on the copyright held by photographer Lynn Goldsmith in a photograph of the famous musician Prince, when it licensed an image that Warhol had created based on that photograph to serve as the cover image for an issue of Condé Nast’s magazine following the musician’s death. Central to the Court’s decision in this case was if the analysis of whether a work is transformative should consider the purposes of the specific uses of the original work and the allegedly infringing work, respectively, or the content in the works themselves. The Court ultimately found that the key inquiry should not consider subjective interpretations of the underlying artistic messages or motivations of each work, but rather should focus on whether the secondary use of the original work actually transforms the content of the original, rather than merely exploiting it. Accordingly, the Court disagreed with the Warhol Estate’s position that its use of the image constituted fair use, noting that Warhol’s image “share[d] substantially the same purpose” as the original photograph because both works primarily served as “portraits of Prince used in magazines to illustrate stories about Prince”. Although the fair use analysis in the US will continue to be highly fact-dependent, the Supreme Court’s ruling in this case offers clarity on how lower courts should analyse whether an allegedly fair use serves a different character and purpose than the original, and offers a clear directive that the commercialisation of existing works should be closely considered in such analyses.

EU

In the EU, courts have similarly limited the circumstances in which a party may make fair use of another’s copyrighted work. The “communication to the public doctrine” is one way in which the EU has extended copyright protection beyond the mere act of reproduction or distribution, emphasising the importance of the copyright holder’s right to control how their works are presented publicly, particularly in the evolving landscape of digital communication. This year, the CJEU held in two cases that the broadcasting of background music on passenger transport, specifically commercial flights and trains, constitutes a “communication to the public” that may qualify as copyright infringement if the authors of the relevant works have not granted permission for their works to be made available to the public in that way. The Court’s decisions in these cases demonstrates the EU’s continued efforts to safeguard an author’s rights to control the dissemination of his or her copyrighted works.

Trade Mark Law and Free Speech in the United States

In June of 2023, the US Supreme Court overturned the Ninth Circuit’s ruling against Jack Daniel’s in its dispute over VIP Products Inc.’s “Bad Spaniels” dog toy, which used Jack Daniel’s trade dress and trade marks for its humorous dog toy product. This long-running dispute focused on the balancing of trade mark law with the right of free speech afforded by the First Amendment of the US Constitution. When Jack Daniels asserted infringement claims against VIP Products, VIP Products responded that its product is merely a “parody” of Jack Daniel’s, affording it protection under the First Amendment and shielding it from liability for infringement. Under the longstanding US precedent outlined in Rogers v Grimaldi, which set forth the test for heightened First Amendment protection of expressive works, use of a trade mark is permissible if the use is (i) artistically relevant to the underlying work and (ii) not explicitly misleading as to source or sponsorship. The Supreme Court, however, held that characterising a use of a trade mark as a “parody” is not, by itself, dispositive of whether that use qualifies as artistic expression entitling it to First Amendment scrutiny. Rather, the Court held that if a trade mark is used as a source identifier, that use will not be considered an expression affording it protection under the First Amendment, and will thus be subject to a traditional trade mark infringement analysis (ie, the likelihood of confusion test). Thus, the Court ruled that the Rogers test is not applicable in instances where a trade mark is used as a source identifier, even if its use is satirical or parodical in nature.

The Supreme Court’s ruling in Jack Daniel’s serves as a paradigm-shifting decision on the interaction between trade mark and free speech law, and could have significant impacts on commercial products and expressive works, alike. For example, in the first appellate court decision applying the Jack Daniels ruling, the Second Circuit held in Vans, Inc. v MSCHF Product Studio, Inc., that MSCHF’s “Wavy Baby” sneaker design, an alleged parody of the well-known Vans Old Skool sneaker, did not merit heightened First Amendment scrutiny under Rogers because “MSCHF used Vans’ marks in much the same way that VIP Products used Jack Daniel’s marks – as source identifiers”. Time will tell whether other US circuit courts similarly interpret the Jack Daniels decision.