Part 3 of 3: When Doing Nothing Is the Best Choice

This is the last in a series of posts about how the popular quasi-charitable event organizer, The Color Run, got into such a serious scrape with a freelance photographer because of a too-casual copyright license. As I showed last time, The Color Run was lucky that the photographer hadn’t timely registered the copyrights in the photographs, or else his absurd $100,000 demand wouldn’t have been so absurd.

This post is about The Color Run’s reaction to the said absurd demand. Recall that The Color Run reacted by suing the photographer, Maxwell Jackson, for (1) a declaration that it had a license to use the photographs, and (2) trademark infringement. In my introductory post, I suggested that the claim for declaratory judgment was defensible but the trademark claim was a “dick move.”

In 1928, the Color Run was a lot less colorful.

In 1928, the Color Run was a lot less colorful.

I Do Declare!

While seeking a declaration of non-infringement was defensible in the face of a $100,000 demand, it wasn’t necessarily the correct or wisest course of action. The other course of action was to do nothing and see if Jackson really would sue. Sometimes, in law, doing nothing is the best course of action. Yeah, I know, bias for action and all that, but patience is also a virtue. The trick is know when (and how aggressively) to act. This involves a risk-reward analysis, and to that, you have to understand why you would seek a declaratory judgment in the first place.

There are really two good reasons to seek a declaratory judgment:

  1. To bring a dispute to a head. If your business model depends on the outcome of a dispute and there’s a good chance that you’re legally in the right, and the other side isn’t being reasonable but isn’t suing either, then you have the right to force the issue in court. This forces your adversary to show its cards and start taking some positions, and maybe bring some more reasonable people into the conversation, all of which can help with making a deal.
  2. To help win a dispute. The party that files first gets two non-trivial advantages. First, it can choose the venue. At a minimum, suing in your home district is cheaper (e.g., less travel, which, with lawyers, adds up in a hurry), and, while the local judge isn’t likely to care where you’re from, the local jury might well care. Second, you get to frame the lawsuit. Yes, the other side gets to file a counterclaim, maybe, but there is good evidence from the patent context to suggest that juries are biased in favor whoever the plaintiff is, not necessarily who is the aggrieved party.*

* In the context of intellectual-property, juries are still more sympathetic to the property owner, but being the declaratory plaintiff appears to blunt that advantage.

The downside of filing for declaratory judgment is that you have now bought yourself a lawsuit, and a counterclaim, which you will need care for and feed. Lawsuits aren’t a lot of fun: they cost money, they cause stress, and they distract key employees from making money for the company. Once the issues are joined, you can’t back out easily.

Another risk is, rather than prompt a deal, suing might prompt the exact opposite: a hardening of your adversary’s position. For whatever reason, filing lawsuits can put even large, established corporations into a fight-of-flight reflex. The results aren’t always nice or especially rational.

The final risk, which The Color Run seems not to have considered at all, is publicity. You can’t let fear of bad publicity drive your business decisions—unless your business relies good publicity. It seems to me that The Color Run is the sort of business that needs good publicity because its appeal stems from how good it makes its participants feel (one reason why Jackson’s photograph was so good for The Color Run—the subject is clearly have a good time). Suing a “little guy” is going to engender hard feelings, which can spread pretty quickly among your customers and potential customers.

If Downside > Upside…

In The Color Run’s case, there really wasn’t much point in filing for declaratory judgment. It might have looked like The Color Run was bringing a dispute to a head, since Jackson was clearly unreasonable, but this advantage depends on two things that weren’t really true for The Color Run. First, was the photograph really that necessary for The Color Run? Sure, it was a nice photograph, well-suited to The Color Run’s needs, but could The Color Run live without it? Why not just phase it out? Second, as discussed last time, The Color Run wasn’t very likely to win because it had pretty clearly exceeded the scope of its license.

In 1912, even the color used in The Color Run was black and white.

In 1912, even the color used in The Color Run was black and white.

What about home-court advantage and framing the lawsuit? Again, not really a good reason. The Color Run is based in Utah, so suing in Utah might seem like a big advantage, but the home court was likely ephemeral. Jackson might be the one with the “substantive claim,” but he’s technically the defendant, and when determining personal jurisdiction, you look at things from the defendant’s point of view. If Jackson has any connection with Utah related to the dispute, The Color Run wasn’t saying (see the incredibly vague paragraph 4 of the complaint).*

* Perhaps this explains the surprisingly aggressive and weak trademark claims. The Color Run has a better chance exerting personal jurisdiction over Jackson with respect to those claims. If that’s the real purpose of the trademark claim, the case seems like a good candidate for a Rule 42 severance. Further, courts are permitted to decline to hear actions for declaratory judgment, and if the court felt that the declaratory action was being kept in its jurisdiction by a hair’s breadth of a substantive claim, it might simply ditch the declaratory action and see how serious the plaintiff was about its substantive claims.

Framing the lawsuit is always worthwhile, but is it more worthwhile than just doing nothing? The Color Run knew that Jackson had a viable but small claim. Even if Jackson was serious about suing, what lawyer was going to represent him? Even if some lawyer was generous or crazy enough, what’s the downside? A $10,000 or $20,000 judgment?* If Jackson went pro se, he’s likely to blow his own case.

* Yes, lawsuits are expensive, but remember, we’re comparing one kind of lawsuit with another, so many of those costs cancel out.

So The Color Run’s choice came down to:

  • Doing nothing: A small chance of a small judgment and legal costs, some bad press if Jackson generates sympathy.
  • Filing for a declaratory judgment: A 100% of legal costs, a good chance of a small judgment, very good chance of bad press (and possible harm to business).

I don’t know about you, but doing nothing looks like the better choice.

Mark Your Territory

But if the declaration claim is puzzling, the trademark claim is bizarre (unless is there just to make jurisdiction stick). It’s based on two acts of alleged infringement: (1) displaying his own photographs that show THE COLOR RUN and (2) that Jackson included “The Color Run” as part of his work experience on his Facebook page. You don’t need to be a trademark lawyer to realize these constitute one lame claim.

For a claim to be worth bringing, you need to have some chance of winning AND winning will remedy the harm you’re suffering and/or will solve some problem you’re having. Winning money is always nice. Thus, if a hotel has the same name as your hotel and you’re afraid your customers will get confused, an injunction forcing the hotel to take down its sign will solve that problem. That’s a worthwhile suit.

Here, The Color Run has a very weak claim (i.e., not very likely to win) AND, even if it wins, the available remedies are meaningless.

To win a claim for trademark infringement, you have to prove (1) that you own a valid trademark; (2) that someone is using it in a manner that is likely to confuse the relevant market about the source, affiliation or sponsorship of the someone’s goods or services with yours; OR creates a false impression that you and the someone are somehow affiliated or related; and (3) that you have suffered or are likely to suffer damage.

The Mysteries of Trademark Registration

Proving validity of a trademark can be a real pain. The good news is that if you register your trademark, you get a presumption of validity for the goods and services that you identify in your application.* The bad news for The Color Run is that it still doesn’t have a registration for THE COLOR RUN for athletic events.** Currently, The Color Run’s application is being held up by an opposition and related lawsuit, which is increasingly bitter, on grounds that “color runs” are a generic term for a kind of Holi-related event.***

* Note: registration of a trademark is not required. Trademarks arise from use, not by some act of government (unlike patents, but more like copyrights).

** It does have a registration for THE COLOR RUN for apparel, but that’s not relevant here.

*** Prediction: The Color Run will eventually win out, unless someone can prove priority. THE COLOR RUN is neither generic nor descriptive, based on the pleading I’ve read.

I’m Likely Confused About Why The Color Run Would Sue

Still, THE COLOR RUN has the resources to prove ownership of a valid mark. The problem is the second element: likelihood of confusion.

Consider first the fact that the photographs display THE COLOR RUN because the subjects of the photograph are wearing THE COLOR RUN t-shirts. If you’re going to take pictures of a Color Run, it’s inevitable that you’ll take picture of THE COLOR RUN mark. Jurors understand this and understand that, without more, no one is likely to think that Jackson has some affiliation or sponsorship-relation with The Color Run. They’ll think he just took pictures at a Color Run event.

More important, there IS an affiliation between The Color Run and Jackson. It’s not false! Further, letting Jackson use the THE COLOR RUN mark to a limited extent is fairly obviously an implied term in the same license that The Color Run relies on. Remember, The Color Run is using his photographs and promised to link back to his own display of the photographs. If Jackson wasn’t permitted to display THE COLOR RUN in the photographs, then he’s not really permitted to display the photographs, and if he’s not permitted to display them, then what exactly is Jackson getting from The Color Run in exchange for the copyright license?

Where’s the Harm in That?

Now let’s consider Jackson’s personal Facebook page.* Jackson had done work for The Color Run, but he didn’t work for The Color Run, not even as an independent contractor. He’s just a freelancer whose work happens to be used by The Color Run. The “Work and Education” tab seems analogous to a resume: these are places where you’ve actually worked or gone to school.

* Since taken down.

Thus, Jackson’s putting “The Color Run” under his “Work and Education” tab was what lawyers call a “misrepresentation” but what the rest of us call a “fib.”* It was untrue, but harmlessly so.

* Jackson claims that The Color Run reached out to him to ask him to work other color runs, which does sound like an independent-contractor relationship and not, to my mind, a fib. The offer never panned out, according to Jackson, and he forgot to remove the reference.

So Jackson (at worst) fibbed about his work experience. So freaking what? If I put on my resume that I worked for NASA, would NASA have a trademark claim against me? My employer might have a fraud claim against me, but NASA? Did the University of New Hampshire have a claim against George O’Leary, when he claimed on his resume to have lettered there three times but, in fact, never played in a game? No, but the University of Notre Dame had a grievance.

And, unlike a resume, the “Work and Education” section of one’s personal Facebook page is passive. It’s not even found on one’s “home page,” but one page deeper on one’s “about” or “info” page.* Its purpose is to alert people to possible connections and only incidentally about self-promotion. For that, most people have a professional Facebook page, Jackson included. And, if Jackson fibbed on his professional page, The Color Run doesn’t mention it.

* Note the URL of The Color Run’s screen shot: it ends with “/info” not “/home.”

To succeed in the type of trademark claim The Color Run has brought, you have to make some minimal showing of potential harm. It’s not much, but it’s not nothing either. I never thought I’d see a case that fell below this minimal threshold, but I think I’m looking at one now. The parties aren’t competitors, there no chance of harm to The Color Run, and given the context, there is no realistic chance of benefit to Jackson.*

* Even if “Work and Experience” can be seen as self-promotion, you can’t even tell what Jackson did for The Color Run. For all we know, he was an unpaid intern, or something as impressive as being a waiter at “Limoncello West Chester.”

To the Victor Goes…Some Nice Parting Gifts

But let’s say The Color Run wins on this one. Then what? Damages? How much do you think Jackson even makes? Did anyone decide not to participate in a Color Run because of this?

Oh, what about an injunction? Yeah, that’ll teach him. He’ll be forced to go into his Facebook account and remove the entry. What? He already did that, months ago? If we had only demanded its removal, he would’ve removed it, without the trouble and expense of filing a lawsuit? Well, we sure showed him, though.

Not So Intimidating

The most likely explanation for the trademark claim: intimidation. The Color Run, seeing that Jackson lacked IP counsel, thought Jackson would completely back down from his valid copyright claim. After all, he was ignorant enough to think his copyright claim was worth $100,000, and he didn’t have a lawyer.* Maybe he’d be ignorant enough to believe all of the gobbledygook in the complaint about damages and lost profits, etc. etc.

* According to The Color Run, Jackson later increased the demand to $300,000, which only underscores my point about how Jackson overplayed his hand.

From Jackson’s white-hot pro se filings, it didn’t seem like he was intimidated, just enraged.

A funny thing happened in the lawsuit, though. Jackson took advantage of an unusual** feature of the Utah federal court. The bar of that court requires that its members agree to serve as pro bono counsel when so requested by the court. When Jackson tried to have himself treated as a “pauper” (which is appropriate only for criminal matters), the court kindly treated the motion as a request for pro bono counsel, which the court granted. This is speculation, but I think the court saw that Jackson’s defense and counterclaim were not hopeless, but would come to nothing unless a lawyer got involved.

* Including a counterclaim against The Color Run’s lawyers.

** I have never heard of a similar program anywhere else.

A Fairy-Tale Ending

This is also speculation, but I think counsel was appointed for Jackson, and that the counsel was versed in intellectual property (Utah being full of good IP lawyers), and that this lawyer patiently explained to Jackson that his copyright claim wasn’t what he thought it was, but it wasn’t nothing either, and that this lawyer less-patiently explained to The Color Run’s lawyers that he wasn’t fooled by their complaint one bit and that henceforth Jackson’s defense and counterclaims* would be competently and vigorously asserted, and probably in Florida. And with everyone accurately apprised of the legal situation, a reasonable compromise was reached, exactly like the one that would’ve been reached months ago, if only Jackson realized the true extent and nature of his copyright claim.

* Jackson still needed to register the copyright in his photographs. For all I know, he has now done so, but the registrations haven’t been issued yet.

So, in the end, thanks to this unusual rule, The Color Run’s lawsuit achieved the desired effect. Jackson got his money (but not too much), and The Color Run got to use his photographs. Take away the money expended on the lawsuit, the stress of the dispute, and the bad publicity, it’s as though all is right in the world.

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.