Like a hero rescuing a damsel in distress, the federal Ninth Circuit Court of Appeals granted a happy ending to the brand licensing industry in the controversial Betty Boop trademark case.
After its original opinion in Fleischer Studios, Inc. v. A.V.E.L.A., Inc. appeared to not only reverse settled case law, but also undercut the foundations of the brand licensing industry, the Ninth Circuit withdrew the opinion and replaced it with one that omits the controversial ruling.
The court’s original ruling held that under the doctrine of “aesthetic functionality,” there is no trademark infringement if a third party uses a trademark for its consumer appeal, rather than to identify the goods as “official.”
This holding unleashed a firestorm of criticism from the brand licensing industry, and prompted a petition for rehearing by the full Ninth Circuit Appeals Court, supported by briefs from such industry heavyweights as INTA, the MPAA, Major League Baseball, the NFL, and the NBA.
The Ninth Circuit did not give the petitioners what they had asked for, but something better— dispensing with rehearing by the full appeals court, the original three judge panel withdrew its opinion, and replaced it with a new opinion omitting all mention of aesthetic functionality. In its new ruling, the court stuck to the narrow issues at hand. It upheld the trial court by ruling that Fleischer Studios had not proved that it held a valid trademark in the Betty Boop image mark, but reversed the trial court by ruling that Fleischer Studios might have a valid trademark in the Betty Boop word mark, and sent the case back to the trial court for further hearings on the issue.
Takeaway: the Ninth Circuit Court of Appeals followed both common sense and its own recent case law by withdrawing its arbitrary expansion of the doctrine of aesthetic functionality, saving the brand licensing industry from free riders who could sell branded merchandise as long as they make clear the mark was used for its consumer appeal, and not to identify the goods as made or endorsed by the mark owner.