Business Law Journal

Generative artificial intelligence (AI) has revolutionized how businesses create, communicate, and market.  For trademark owners and AI-utilizing businesses, however, AI brings not only opportunity but also significant risk.  

Following the Legislature’s 2024 amendments to Section 16600, a new spotlight has been shown down on the so-called Trade Secret Exception and the rift that has emerged over the past few years between California courts about its continued application.  Ultimately, the California Supreme Court will likely be called upon in the near future to address whether—and to what extent—an employer may include restrictive covenants in an employment agreement as necessary to protect the employer’s trade secrets.  Until it does, litigants may credibly argue that the legislature’s recent amendments to Section 16600 abrogated the exception, diminished the exception, or had no effect on it at all.  

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International enforcement of U.S. trademark rights just became much more difficult.  On Thursday, the Supreme Court issued a unanimous decision with concurrences from Justices Jackson and Sotomayor in Abitron Austria GmbH v. Hetronic International, Inc., No. 21-1043, 2023 WL 4239255 (U.S. June 29, 2023) (“Abitron”).  The Court settled a decades-long circuit split on extraterritorial application of the Lanham Act by applying a new framework that focuses on where the mark is being used in commerce rather than where the effect of that use is felt.

In a unanimous 9-0 decision, the U.S. Supreme Court ruled that when a junior trademark user uses a parody of a famous trademark as an indicia of source for its own goods, the junior user cannot rely on the First Amendment to shield it from liability for trademark infringement for artistic or so-called “expressive works,” nor the parody exception to trademark dilution claims under the Lanham Act.

On April 23, 2020, the United States Supreme Court ruled that a trademark holder need not prove that the infringement of its trademark was willful in order to recover an award of the infringer’s profits.  The Court’s decision in Romag Fasteners, Inc. v. Fossil, Inc. resolves a longstanding circuit split and may make it easier for trademark holders in many jurisdictions, including the Ninth Circuit, to recover damages in trademark infringement cases.