Another Perspective on Blockbuster Video and the Lanham Act

Here’s a reminder that landlords are not subject to the Lanham Act

The following article originally appeared in the November 1998 issue of Signs of the Times magazine.

By Robert M. Aran, Esq. and Jeffrey L. Aran, Esq.

For the landmark Blockbuster Videocase, Bob and Jeff Aran each submitted amici curiae (friend of the court) briefs on behalf of the Sign Users Council of California. They titled their piece: “The Lanham Trademark Act – Shield or Nightmare? Making Sense of the Blockbuster Decision.” Another article about Blockbuster appears on the FASI website at  http://www.fasi.org/rhetorical/2016/4/15/how-does-the-copyright-protection-of-the-1982-lanham-act-affect-signs?rq=Blockbuster

Literary and other intellectual property protection in the United States is as expansive as it is expensive. Expansive in that its boundaries border upon basic limitlessness. Expensive, not necessarily in the monetary sense, but significant nonetheless in the loss of an important asset if federal protection for intellectual property is neither adequate, perceived nor obtained.

Words, ideas, publications, copyrights and patents are protected from infringement. But also included under that umbrella are trademarks, logos, trade dress and other forms of intellectual property rights, including the on-premise business signs that display trademarks or logos.

In our domestic economy, brand names, tradenames, logos, trade shapes, forms and colors combine to identify a product, service or business to the public. Under U.S. law, each may be entitled to infringement protection. This forms the backdrop when a local community asserts its zoning or police-power rights to regulate signs that have trademarks or logos. The question becomes: Can a governmental entity regulate these federally protected signs? The answer is “yes” and “no.”

For several years, sign-industry attorneys have maintained that the federal Lanham Act protects against local infringement or federally registered trademarks and logos. Similarly, they have declared that registered colors of the trademarks and logos also were protected by the Lanham Act.

Recently, the U.S. Court of Appeals (Ninth Circuit) rendered a somewhat confusing decision in Blockbuster Video, et. al. v. City of Tempe. The city, among other things, refused to issue a sign permit because it found federally registered colors unacceptable.

The city insisted upon colors materially different from the well-established trademark of the business. If the business had complied, its mark would have suffered a color alteration, and the value of its mark would have been diluted in the marketplace.

The court ruled that the sign user could not be forced to alter its business mark, logo and colors once they were registered under the Lanham Act. The court viewed the applicable provisions of the Lanham Act as a shield against local attempts at trademark alteration. The key is to specifically register the color in conjunction with the trademark.

Despite these protections, the court, at the same time, sounded a seriously negative horn by affirming the government’s right to ban trademark usage altogether in the community. This ability to prohibit materially affects the underlying policy of the Lanham Act and constitutes a potential nightmare for the business community as a whole.

The court told the business community its trademarks could be banned, whether or not its marks were registered. However, the court failed to address the multitude of legal, economic and other reasons why cities should be very reluctant to wield such a powerful sword.

The problem, of course, is not the availability of numerous constitutional or statutory defenses to a city’s demands, but rather the cost, delay and often futility of working with local government.

The courts are not always the best suited or preferred place to rest our case. Business must be ever vigilant and leery, particularly where sign programs are in force for a mall or shopping center.

Landlords, for example, may not be concerned with your trademark or color. They may require conformance with their plan. Here, the Lanham Act may not be of assistance because it only deals with interference by governmental action.

Landlords don’t always have the time to be concerned with the significant economic impact you may suffer by complying with the plan, which undoubtedly was approved by local government. In this light, developers should think twice before agreeing to restrictive sign covenants that a city imposes as a condition for project approval.

The specter of the Blockbuster decision is not one of great joy or victory. Overall, it is more beneficial than damaging to sign users everywhere. It’s threatening because it sanctions prohibition of the very essence of sign usage in communities, yet it also provides a clear judicial caveat that local officials cannot force alteration of federally registered marks, logos or colors.
This was a Ninth Circuit decision. Other circuit courts are not bound to follow this decision as a precedent. Therefore, we strongly urge all sign users to federally register their logos, trademarks, trade dress and colors immediately. The cost should be slight and the reward potentially significant.

In California, we hope to introduce legislation in the near future that will provide local sign users with at least the same protection now available to federally registered marks and colors. With state registrations, all small businesses can share in the registration windfall. We urge other states to do the same.

Arans publish SignPosts
Since joining together, the Arans have also begun publishing a free quarterly newsletter, SignPosts. Here are two items from Jeff in a recent issue:

Battling with design review. In many communities, the design-review process can be a death knell for sign approvals. Governmental entities frequently attempt to utilize this police power under the guise of aesthetics.
Although cities and counties may impose truly aesthetics-based restrictions, these impositions nevertheless must be rational, directly advance the governmental interest, and reach no further than is necessary to achieve the desired goal. Further, any restrictions must allow for alternative, reasonable means of communication and may not cause loss of “viewability,” “noticeability” or effectiveness.

For example, an ordinance may limit letter heights to 12 inches in all districts, but without any evidence as to how this provides aesthetic benefits. If visual-acuity statistics suggest that 24 inches is a reasonable maximum – given the speed of traffic, setbacks, etc. – then such a provision could be declared unconstitutional on the grounds that it’s arbitrary and capricious, and that the limitations may result in unreasonable restriction of the business’ ability to effectively communicate with the motoring public.

Reasonable fees. Under California Government Code S66014, all development fees, including permit, variance and inspection fees, may “not exceed the estimated reasonable cost of providing the service for which the fee is charged.” Sign-permit fees cannot be based on the value of the sign.

If you believe a city fee is exorbitant, you can require the city to conduct an audit to establish that the fee is reasonable. A Sign Advisory Committee is currently working with Los Angeles in this regard.

In Sacramento, the entire fee schedule was revamped – when research revealed that a sign permit cost three times as much as a pool permit. A sign permit only required two inspections, while pool permits need six inspections.

Editor’s note: For an excellent case history on this topic, see “Illegally Disguising Taxes as Sign-Permit Fees,” ST July 1995, page 136. In the article, Attorney Richard Rothfelder details a case in which the City of Houston was required to reduce its permit for billboards from $278 to $40. The Texas Supreme Court also ruled that Houston had to pay the plaintiffs $2.3 million for overcharges and attorney fees.

 

Posted in Blog: Rhetorical, Copyright Protection (Lanham Act), Most Popular, Sign Codes, Signs' Advertising Value.