Crystal Enter’t & Filmworks, Inc. v. Jurado, ___ F.3d ___, Case No. 10:11837 (11th Cir. June 21, 2011)

This decision is both fun and educational.  It’s fun because it involves the 1980’s song-and-dance “girl group” Expose, and because the court couldn’t resist punning on the titles of the group’s hit songs.  It’s educational because, even though it presents an unusual set of circumstances, it gets to the heart of the nature of trademark–and a gives a warning about the value of doing things right on the front end.

Like a lot song-and-dance musical groups, Expose wasn’t self-formed.  The women didn’t meet each other at school or some place and decide to form a band.  They were put together by impresarios, like producers of a movie.  They find the “talent,” the songwriters, the costume designers, the choreographers, and so forth.  For purposes of this discussion, we’ll call the folks who put Expose together the “Impresarios.”

So, the Impresarios (the plaintiffs in this action) put Expose together in the 1980’s.  The first iteration didn’t work.  They try again with three different women, and this time, Expose is a pretty big hit.  The Impresarios are clearly instrumental in the success.  The Impresarios knew enough to try to register the mark EXPOSE with the United States Patent and Trademark Office (“USPTO”).  At least, they asked their lawyer to apply for a registration.  But somehow they didn’t get one.

The Impresarios’ failure to register EXPOSE is the key fact and the central mystery of this case.  Had they really tried, they almost certainly would have obtained one (barring some kind of priority problem).  According to the testimony of one of the Impresarios, but they were “denied because, as the [Impresarios’] attorney informed [them], Expose ‘was too common a word to protect’.”  But, even if true, that’s not a basis for rejecting an application.  If it were, a whole class of marks–arbitrary marks, like APPLE for computers–would be invalid.  There’s also no record of such an application in the USPTO’s online database.*

There is a record of a later attempt to register the mark, which referenced in the opinion.  This time, an application was filed, but it went abandoned and died.  It’s not at all clear what happened there.

After a few years, the band went dormant, although the record company continued to release compilations for several years after that.  In 2003, and again in 2006, some of the band members wanted to revive the band and resume live performances.  They duly executed a trademark license with the Impresarios.  The Impresarios don’t do anything much to help, other than collect royalty checks.

In 2007, the band members started to wonder seriously why they were paying the Impresarios money.  They also spoke to a trademark lawyer, who recommended that the band members form their own company and register EXPOSE themselves.  I suspect the lawyer also told the members something that might have been music to the women’s ears:  they, not the Impresarios, might well be the true owners of the mark EXPOSE.

When the members told the Impresarios that they weren’t going to pay any more royalties, the Impresarios sued, ultimately for breach of contract**, trademark infringement and some other trademark-related claims.  At trial, the court held that the Impresarios couldn’t prove ownership of the mark and awarded any rights in EXPOSE to the band members.  The Court of Appeals affirmed.

**  The Impresarios actually won the breach of contract claim.  The members didn’t appeal, so it wasn’t addressed in this opinion.  It might seem strange that the members owed royalties to the Impresarios for a mark the members were ultimately found to own.    Unfortunately, the judge read her findings into the record, rather than setting them forth in an opinion, so it’s a little hard to find out how she reached this conclusion.  It could be that the Impresarios did provide some other services (not mentioned in the opinion), or that they owned the copyright in the songs the group was performing (which is hinted at in the Final Judgment).

Because the Impresarios were asserting rights in EXPOSE, they bore the burden of proving ownership of the mark.  To prove ownership, they needed to prove that they “first appropriated” the mark.  Had they obtained a registration for EXPOSE, this would have been easy because registration is sufficient evidence of proof of ownership (and the burden would have shifted to the members to prove otherwise).  Alas, there was no registration, and the Impresarios had to prove it the hard way.

How do you prove that you own a trademark?  With the other forms of intellectual property, it’s relatively straightforward.  The owner of a copyright is ordinarily the person who wrote, painted, composed, etc. the work in question (except in work-for-hire situations).  The owner of a patent is the inventor.  With trademark, the question is more nuanced.  The owner is sometimes said to be the person with whom the consuming public associates the mark–but that doesn’t tell the whole story because the public also need not be specifically aware of the actual source of the goods or services.

Think back to what a trademark does.  It assures the consuming public that someone is standing behind the quality of the product.  That someone doesn’t have to make the product, or perform the service, or even own the company that does those things.  It just has to be someone who takes responsibility for the product–and that implies, someone who controls the quality of the product.

So, to prove that they own the trademark, the Impresarios had to prove that they controlled the quality of the “product,” i.e., the band’s music and performances, and related merchandise.  Even without the registration, this wasn’t an impossible task or even a very difficult task.  They had, after all, formed the band, thought up the name, and put the pieces together.  They didn’t need to have done much work in controlling the quality of the product, only that they made the key decisions about the quality–and it seems reasonable to surmise that they did.

But too much time had passed.  The band had been formed about 20 years ago.  The Impresarios couldn’t find any documents or witnesses to back up their story.  They did have their own testimony, which could have been enough even so.  But apparently they weren’t very credible or persuasive witnesses.

When the Impresarios failed to prove that they were the “first appropriators” of EXPOSE, the court had to resort to the rarely-used doctrine of “joint endeavors.”*  The members and the Impresarios both contributed to the mark.  Which of them gets it?  This raises another unusual feature of trademarks.  With copyright and patent, there may be many owners.  There often are multiple owners and inventors, and the copyright or patent itself may be split up among several owners.  But with trademark, there may be only one “source” of the quality of the product (for a particular class of products within a certain market).***  Thus, the court didn’t have the option of splitting the mark between two owners.

***  Joint ownership of a mark isn’t impossible, just very, very difficult.  Eventually, the different owners will diverge on issues of quality, which could lead to a kind of identity crisis in the mark.  If these differences translates into sufficiently different levels of quality in the associated products, the mark could be destroyed because it will no longer stand for a single source.

At this stage, the members had the advantage.  They were clearly the “face” of the group.  They performed the songs, did the heavy-lifting, and since 2006, had really be doing all the work themselves.  The court awarded EXPOSE to the members.

There are two immediate lessons here about trademark.  The first is the value of registration.  It saves all kinds of headaches later on because it proves ownership (and the validity of the mark and so on).  Had the Impresarios registered EXPOSE, the result would probably gone the other way, because the members would have had to prove that the Impresarios abandoned the mark.  They would have had to prove not merely that they exercised more control over the quality of the group’s products than the Impresarios (which is, in the end, all they were able to prove), but that the Impresarios had stopped controlling that quality–a much tougher task.

Second, marks aren’t just revenue-generating pieces of intangible property, like copyrights and patents.  Copyrights and patents exist in a kind of legal vacuum–they persist for their allotted lifespans regardless of what, if anything, their owners do with them (provided patent maintenance fees are paid!).  But trademarks represent a relationship with the consuming public, and like any relationship, there is give and take.  It is the consumers who give value to the mark, and if you want that value, you must assure the consumers of the quality of the products associated with the mark–i.e., control the quality.

From the opinion, one has the sense that, after 2003 or 2006, the Impresarios had almost nothing to do with the band’s product other than to “license” the mark and collect royalty checks, as those the mark were a copyright.****  Based on the facts in this opinion, the members would have had a strong chance at proving abandonment, even if there had been a registration.  As it was, the Impresarios’ nonchalance doomed their ability prove ownership under the “joint endeavor” analysis.

****  It’s possible that the Impresarios also collected copyright royalties in the songs, so they may have been confused.

Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.