AIPLA
TRADEMARK LITIGATION
COMMITTEE
JANUARY 2011
CASE SUMMARY UPDATE
Including Cases Decided From
October - December 2010
Committee Chair:
Vice Chair:
Jennifer L. Kovalcik
Christina I. Ryan
The Trademark Litigation Committee extends its special thanks to:
•
Stephanie Bald, Case Summary Coordinator
•
Marilu Rodriguez-Bauer, Editor
•
Lance G. Johnson, Robert S. Pierce, Simone M. Katz-O’Neill, Kathryn E. Smith,
Sara Otte Graber, Michael Huey, Katherine Staba, Robert E. Pershes, Lindsay
Yeakel Capps, Lou Perry, Ashley Callahan, William Andrew Liddell, Brandon
Ress, Chris Kindel, Kathleen T. Petrich, Keith Weltsch, Michael Gordon, and Emily
Patricia Graham, who prepared the circuit and district court case summaries
•
The Trademark-Relations with the USPTO Committee, which provided the TTAB
case summaries, prepared by Linda McLeod and Stephanie Bald
FEDERAL CIRCUIT
1.
Inherent Distinctiveness, Trade Dress
In re Chippendales USA, Inc., 96 U.S.P.Q.2d 1257 (Fed. Cir. 2010) [precedential]
The Federal Circuit affirmed the Trademark Trial and Appeal Board’s application of the
Seabrook factors to find that Chippendales’s Cuffs and Collar costume is not inherently
distinctive when used in connection with adult entertainment services. Even though
Chippendales owned a registration with a claim of acquired distinctiveness for the same costume,
the instant application was not moot because an application granted without a Section 2(f) claim
is a stronger registration. The Court then had to determine the appropriate time to measure a
mark’s inherent distinctiveness. While Chippendales argued that the date of first use is the
appropriate time, the Court agreed with the Board that the correct time is at the time of
registration because it would be unfair for an applicant to delay an application and then benefit
from having distinctiveness measured at the time of first use. The Court rejected the Board’s
contention that costumes used in adult entertainment services can never be inherently distinctive,
but it still found Chippendales’s costume lacking in inherent distinctiveness because of the third
Seabrook factor. Its Cuffs and Collar costume was simply a refinement of Playboy’s well-known
design consisting of bunny ears, collar, and cuffs. Finally, the Court rejected Chippendales’s
argument that the Seabrook test was inconsistent with the Supreme Court’s decision in Wal-Mart
Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205 (2000).
2.
Trade Dress, Color, Functionality, Supplemental Register
Erbe Elektromedizin GmbH v. Canady Tech. LLC., 97 U.S.P.Q.2d 1048 (Fed. Cir. 2010)
[precedential]
The Federal Circuit upheld the District Court’s grant of Defendant’s motion for summary
judgment, finding that the Plaintiff did not own a valid, legally protectable mark in the color blue
used on its electrosurgical instrument even though it registered the color on the Supplemental
Register. The Court found that the Plaintiff failed to show that its trade dress was not functional
and had acquired distinctiveness. Because the trade dress was registered on the Supplemental
Register, the presumption of validity did not attach, and so the Plaintiff had the burden of proof.
The Plaintiff argued that the mark was not functional because a color’s purpose is to provide
contrast between a patient’s body and the surgical instrument, and any color (other than red or
beige) can serve that purpose. However, the Court determined that this evidence was insufficient
to rebut the Defendant’s evidence that blue enhances visibility, and thus is commonly used for
surgical instruments. Accordingly, protection of the color blue would put competitors at a
disadvantage by depriving them use of a color that provides enhanced contrast. Use of the
particular blue shade for 30 years along with the use of the slogan “True Blue Probe for Argon
Plasma Coagulation” was not sufficient evidence of acquired distinctiveness, particularly where
a competitor (a co-plaintiff in the case) also used blue for its electrosurgical instruments. The
Dissent indicated that the Court should have deferred to the PTO’s finding that the mark was not
functional as shown by the mark’s registration on the Supplemental Register based on the
Administrative Procedures Act. It also disagreed with the majority’s finding that the mark lacked
secondary meaning, arguing that this finding relied on improperly drawn inferences and that the
2
Plaintiff’s evidence was sufficient to raise a disputed question of fact.
FIRST CIRCUIT COURTS
1.
Attorneys’ Fees
Li v. Bose Corp., 626 F.3d 116 (1st Cir. 2010)
Plaintiff, a model, sued Bose Corporation for alleged improper use of her image on packaging
for an entertainment system. Plaintiff asserted a false endorsement claim under Section 43(a) of
the Lanham Act, among other claims. The district court granted Bose partial summary judgment
on the false endorsement claim, finding that Plaintiff could at best prove only two of the six
factors necessary to prove such a claim. Bose then sought attorneys’ fees on Plaintiff’s
unsuccessful false endorsement claim under Section 35(a) of the Lanham Act. The district court
denied the motion finding that Bose had failed to meet the high standard for imposing attorneys’
fees under the Lanham Act. Bose appealed. The First Circuit reviewed de novo the legal
question of the meaning of “exceptional cases” under the Lanham Act. The court explained that
it had not yet construed the criterion for awarding attorneys’ fees to a prevailing defendant in the
context of the Lanham Act. However, the court did not have to decide the question because the
parties agreed that the standard applied by the district court was correct, namely, requiring
something less than bad faith such as a plaintiff’s use of groundless arguments, failure to cite
controlling law or the generally oppressive nature of the case. Applying this standard, the
appellate court affirmed the district court’s ruling. Although Plaintiff’s claim was defeated on
summary judgment, her claim was not entirely unfounded since she had met at least two of the
factors in the likelihood of confusion analysis. Further, there was nothing particularly oppressive
about Plaintiff’s efforts to obtain discovery on Bose’s financial information in connection with
an intellectual property dispute. Finally, any inaccuracies in Plaintiff’s complaint were perhaps
sloppy, but not improper.
SECOND CIRCUIT COURTS
1.
Laches/ Knowledge/Intent to Exploit
RBC Nice Bearing, Inc. v. Peer Bearing Co., 2010 U.S. App. LEXIS 25641 (2d Cir. Dec. 5,
2010)
A bearing company brought a trademark infringement suit after its competitor had been using the
same mark, "1600 SERIES," with the same goods for almost 50 years. The district court granted
summary judgment in the defendant's favor. The Second Circuit upheld the district court's ruling
that the plaintiff failed to meet its burden of rebutting the defense and that the laches defense was
properly allowed. The plaintiff, RBC Nice Bearing, Inc., claimed that it had been aware that
defendant, Peer Bearing Co., sold equivalent sized bearings but it was not aware that defendant
had been using the same mark for almost 50 years. The court rejected this argument. The Second
Circuit held that a plaintiff need not have actual knowledge of a defendant's infringing actions,
but that a plaintiff is charged with what he should know. "[W]here the question of laches is in
issue, the plaintiff is chargeable with such knowledge as he might have obtained upon inquiry…"
201 U.S. App. Lexis 25641 at *5 (quoting Johnston v. Standard Min. Co., 148 U.S. 360, 370, 13
3
S. Ct. 585, L. Ed. 480 (1893).) "Even with the most limited inquiry," the plaintiff would have
discovered defendant's use of "1600 Series" with bearings in its catalogs long before 2006. The
plaintiff did not justify or defend the long delay. Rather, the plaintiff claimed that the defendant
adopted "1600 Series" intentionally to trade on plaintiff's reputation, which should preclude the
laches defense. Defendant's founder admitted that he was aware of plaintiff's use of "1600
Series" when he decided to use the same designation. Mere knowledge, though, is not enough to
preclude a laches defense. The Second Circuit reiterated that "there must be a finding of the
infringer's intent 'to promote confusion or exploit [plaintiff's] good will or reputation.'" Id. at *8
(quoting Star Indus., Inc. v. Barcardi & Co., 412 F.3d 373, 388 (2nd 2005).) Not only was there
a lack of evidence showing defendant's intent to exploit the plaintiff's mark, but there was
evidence that supported the contrary, i.e., defendant did not intend to "free-ride on [plaintiff's]
reputation." Such evidence included a showing that defendant labeled its bearings with its own
corporate name and logos, that the parties' sophisticated customers did not rely on the serial
numbers for their purchases, and that defendant's founder did not think plaintiff's bearings were
good quality. Therefore, the defendant was properly allowed to raise the laches defense.
2.
False Endorsement / Trademark Infringement / False Advertising Claims Against
Counterfeiter
Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106 (2d Cir. 2010)
Famous Horse, plaintiff, operating a chain of clothing stores in New York under the name
“V.I.M.,” offered brand name jeans and sneakers. V.I.M. purchased goods, including Rocawear
brand jeans, from 5th Ave. Photo, the defendant, but later discovered that the jeans were
counterfeit and so ceased sales of that product. Undeterred, 5th Ave. Photo continued selling the
allegedly counterfeit jeans to other clothing stores and falsely misrepresented to other customers
that its former customer, V.I.M., was a “satisfied customer” of its services and Rocawear jeans.
Famous Horse’s complaint against defendant asserted claims under the Lanham Act under
Section 32(a) (for trademark infringement) and 43(a) (for false representation as to origin). The
district court dismissed plaintiff's Lanham Act claims for failure to state a claim pursuant to
F.R.C.P. 12(b)(6). On appeal, the Second Circuit reversed and vacated the district court’s
dismissal, finding that defendant's statements using the V.I.M. trademark to declare that plaintiff
was a “satisfied customer” of defendant's services and “Rocawear jeans” constituted a valid
claim under §32 for trademark infringement, since it used the V.I.M. trademark to falsely
represent that plaintiff was a satisfied customer, and also a valid §43(a) claim for false
endorsement, since such a statement would be likely to cause confusion, deception, or mistake as
to the relationship between the parties. Further, even though it was not the owner of the
“Rocawear” trademark, the Court found that plaintiff had standing to bring unfair competition
and false advertising claims against defendant because 5th Ave. Photo’s statements caused
competitive injury to the plaintiff. Famous Horse, which sells genuine Rocawear jeans, lost sales
to the lower-priced counterfeit jeans, and, thus, the statements harmed plaintiff’s reputation as a
discount retailer of genuine brand name jeans.
4
3.
Personal Jurisdiction in New York/Internet Sales of Counterfeit Products
Chloe NA v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d Cir. 2010)
At issue here is whether the single act of an out of state defendant employee shipping a
counterfeit handbag into the state constituted sufficient contacts with the state of New York to
give rise to personal jurisdiction. The Second Circuit reversed the New York District Court,
which had granted defendant’s motion to dismiss because the court lacked personal jurisdiction
over the California defendant. Chloe sued Queen Bee (QB), an Alabama LLC, in New York for
infringement of the Chloe trademark. Although QB had shipped numerous items into New York,
none bore the Chloe trademark, except for one handbag that bore the Chloe mark, and that had
been delivered in response to an order placed by an employee of counsel for Chloe. The district
court ruled that a single internet purchase without a continuing relationship, prior negotiations, or
contemplated future consequences was insufficient to support specific personal jurisdiction
against a non-resident absent some additional contacts. The Second Circuit reversed, stating that
New York’s law is a “single act statute,” and therefore, proof of even one infringing transaction
was sufficient to invoke jurisdiction. With respect to due process, the requirements were satisfied
by the fact that, in addition to the sale of the infringing handbag, QB had offered for sale and
sold to New York residents numerous other items by operating websites that permitted customers
to purchase goods through the sites, by facilitating shipments of goods into New York from out
of state, and by operating ‘trunk shows’ in the state.
4.
Incontestability / Common law Fraud / Unjust Enrichment
Federal Treasury Enterprise Sojuzplodoimport, et al. v. Spirits International N.V. et al., Case
No. 06-CV-3532 (2d Cir. 2010)
Federal Treasury Enterprise Sojuzplodoimport (“FTE”), an entity created and purportedly
granted rights by the Russian government to manage the trademark STOLICHNAYA, appealed
the Southern District of New York’s judgment ruling (1) that the incontestable status of a
trademark precluded challenging the validity of its assignment, and (2) the dismissal of FTE’s
common-law fraud and unjust enrichment claims. The Second Circuit addressed these issues in
two separate opinions (see summaries designated 4a and 4b below). Background: In 1969, a
Soviet-owned entity known as “V/O-SPI” registered STOLICHNAYA, which means “from the
capital,” with the USPTO. In 1990, V/O-SPI became “VVO-SPI,” who assigned its rights in
STOLICHNAYA to PepsiCo Inc. (“PepsiCo”) in 1991 by contract that provided that the mark
would revert back to VVO-SPI in 2001. However, things did not go according to plan. “Broadly
stated, the disputed facts involve a series of allegedly unlawful transactions transferring Russia’s
rights to the marks to privately held Russian companies, who then transferred those rights to nonRussian companies.” Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int’l N.V. et al., 623 F.3d
61, 63 (2d Cir. 2010). When the dust settled after the allegedly unlawful transactions, FTE
asserted a number of claims including fraud, unjust enrichment and federal trademark and
copyright claims against two groups of defendants. The first group included Spirits Int’l N.V.,
SPI Spirits Ltd., SPI Group SA, and others (collectively “SPI Entities”), and the second group
consisted of Allied Domecq Int’l Holdings B.V. and Allied Domecq Spirits & Wine USA, Inc.
(collectively, “Allied Domecq”).
5
4a.
Federal Treasury Enterprise Sojuzplodoimport, et al. v. Spirits International N.V., 623
F.3d 61 (2d Cir. Oct. 8, 2010) (“FTE I”)
The district court held that FTE could not challenge Allied Domecq’s ownership of
STOLICHNAYA because the mark was “incontestable.” Once a trademark becomes
“incontestable” pursuant to 15 U.S.C. § 1065(1)-(4), it provides the registrant evidence of its
ownership and “exclusive right to use the mark.” 15 U.S.C. §1115(b). Additionally, 15 U.S.C. §
1127 provides that the term “‘registrant’ embrace[s] the … assigns” of a registered mark. The
District Court concluded that STOLICHNAYA had become incontestable in 1974, when V/OSPI satisfied the four conditions of §1065, and that Allied Domecq was the record, and thus,
rightful owner as a result of an assignment from PepsiCo. The Second Circuit reversed the
district court's finding, holding that a mark’s “incontestability” does not preclude a challenge to
the validity of its assignment. “‘Since the act of recording the document is not a determination of
the document’s validity,’ the existence of a record assignment ‘does not preclude a party from …
establishing its ownership of the mark in a proper forum, such as a federal court.’” FTE I, 623
F.3d at 68 (quoting In re Ratny, 24 USPQ 2d 1713, 1715 (Com’r Pat. & Trademarks 1992)
(emphasis added)). If merely satisfying the requirements for incontestability could preclude an
ownership challenge, then "incontestability would transform recording – a ministerial act – into a
mechanism for conclusively defeating allegations [ ] challenging the legality of the assignment.”
Id. The Second Circuit concluded that the district court “read too much” into the wording
"registrant embrace[s] … assigns" in § 1127 and thereby improperly held that an assignment
recorded against an incontestable registration could not be challenged. The Second Circuit also
determined that claims attacking the validity of an assignment of a trademark arise under federal
trademark law, and, thus, confirmed that federal district courts have jurisdiction over the issue.
4b.
Federal Treasury Enterprise Sojuzplodoimport, et al. v. Spirits International N.V. et
al., 2010 U.S. App. LEXIS 24386 (2d Cir. Nov. 24, 2010), amending 2010 U.S. App. LEXIS
20941 (2d Cir. Oct. 8, 2010) (“FTE II”)
In a companion opinion, the Second Circuit upheld the district court’s ruling on FTE’s fraud and
unjust enrichment claims. FTE pled that PepsiCo relied on false statements by the defendants,
rather than by FTE itself, when PepsiCo assigned the STOLICHNAYA mark. Specifically, FTE
alleged that, when assigning the ownership of the STOLICHNAYA mark to Allied Domecq,
PepsiCo followed the direction of the defendant SPI Entities and relied on their representation
that they were the legitimate successors to the reversionary right that VVO-SPI retained in the
1991 contract. See FTE I, 623 F.3d at 65 n.4. The district court ruled that FTE's fraud claims
were insufficient. The Second Circuit affirmed, stating that “allegations of third-party reliance …
are insufficient to make out a common-law fraud claim under New York law.” FTE II, 2010 U.S.
App. LEXIS 24386, at *4 (quoting City of New York v. Smokes-Spirits.com, Inc., 541 F.3d 425,
454 (2d Cir. 2008)). “[F]raud claims may not be premised on false statements on which a thirdparty relied.” Id. With respect to unjust enrichment, the Second Circuit dismissed FTE's claim.
To satisfy the elements of unjust enrichment under New York law, FTE alleged that (1) the SPI
Entities benefitted, (2) at FTE’s expense, and (3) equity and good conscience required restitution.
Id. at *5. The district court dismissed the claim because FTE had not been created until 2000, did
not receive rights to the STOLICHNAYA mark until 2002, and still had not received rights to
6
the Russian Federation’s share of the profits to American trademarks. Accordingly, the district
court found that “any benefit the SPI Entities received from a course of conduct FTE complained
of was not at FTE’s expense.” Id. at *4. The Second Circuit agreed with the district court’s
holding, but not its rationale. In its unjust enrichment claim, FTE sought the return of the U.S.
trademark, STOLICHNAYA, and argued that legal remedies were inadequate. The court noted,
though, that FTE was only seeking monetary relief. The Second Circuit found the unjust
enrichment claim improper where a legal remedy existed; the legal remedy here being tortious
interference with a contract. Id. (citing Lucente v. Int’l Bus. Mach. Corp., 310 F.3d 243, 262 (2d
Cir. 2002)). Permitting FTE to proceed on its equitable claim would allow it to evade the statute
of limitations applicable to a tortious interference with contract claim. Id. (citing Norris v.
Grosvenor Mktg., 803 F.2d 1281, 1287) (“An equitable claim cannot proceed where the plaintiff
has had and let pass an adequate alternative remedy at law.”).
THIRD CIRCUIT COURTS
1.
Likelihood of Confusion
Sabinsa Corporation v. Creative Compounds, LLC, 609 F.3d 175 (3rd Cir. 2010), petition for
certiorari filed (November 24, 2010)
Sabinsa Corporation (“Sabinsa”) sold weight loss supplements under its trademark “ForsLean” –
composed of forskohlin extracted from the plant Coleus forskohlii. Subsequently, Creative
Corporation (“Creative”) sold forskohlin under the mark “Forsthin”. Sabinsa sued Creative for
trademark infringement. However, the District Court applied the Lapp factors and held in favor
of Creative. On appeal, the Third Circuit reversed in favor of Sabinsa, stating that clear error
existed in the factual findings of the District Court. The District Court erred by implying that
“fors” is a generic or descriptive term, rendering ForsLean a conceptually weaker mark. In an
analogous case, V-8 was classified an arbitrary mark. “The letter V is no more signifies
‘vegetable’ than it does any other word of which it is the initial letter” Fisons Horticulture, 30
F.3d at 478 n.17 (citing Standard Brands, Inc. v. Smidler, 151 F.2d 34, 36 (2d Cir. 1945). Here,
the Third Circuit found no evidence presented that implied that “fors” is an abbreviation for
forskohlin. Consequently, the Third Circuit found that the similarity-of-the-marks and strength
factors favored Sabinsa. As a fallback, Creative argued that more weight should be given to
factors in its favor: lack of actual confusion. Moreover, the products were expensive and the
customers were sophisticated repeat buyers, exercising heightened care in their purchases. The
Third Circuit disagreed, finding “[t]he most important factors, mark similarity and mark strength,
favor[ed] Sabinsa”. Furthermore, evidence of actual confusion often goes unreported. The Third
Circuit thus reversed the District Court in favor of Sabinsa. Thereafter, Creative filed a petition
for certiorari.
7
2.
Descriptiveness and Acquired Distinctiveness
American Infrastructure v. Zachry Construction Corp., 2010 U.S. Dist. LEXIS 137207 (E.D.
Pa. Dec. 28, 2010)
Plaintiff American Infrastructure (“AI”) sued Defendant Zachry Construction Corp and Zachry
American Infrastructure (collectively “ZAI”) for infringing its trade name “American
Infrastructure.” Because ZAI began using its mark along the East Coast in 2008, AI had to
establish it had a valid mark by 2008. The Court determined that “American Infrastructure” was
not a suggestive mark for services that include construction of water plants, pipeline, roads,
highways, and bridges. Instead, the Court determined that “American Infrastructure” was a
descriptive mark that has failed to establish secondary meaning. Although AI began using the
trade name American Infrastructure in 1998, generated $485 million in revenue in 2008, and
ranked the 25th largest heavy civil contractor in the country, AI could not convince the Court its
mark had acquired secondary meaning. The Court reasoned that “American Infrastructure” was
not AI’s only trademark, weakening AI’s position. The Court noted that third-party use of
“American Infrastructure” also weakened the mark, citing three other companies with that name
in the United States. Finally, AI conceded it had not launched a prevalent advertising campaign,
even though its revenue has grown from $140 million to $485 million in the past 10 years. To
explain the dichotomy, the Court cited McCarthy §15:47, “large sales figures and increased
revenue may be due to dozens of factors, only one of which may be the drawing power of the
trademark. To make popularity relevant as evidence, causation between the trademark and the
popularity must be proven.” The Court did not mention the existence of such proof; but rather,
found only evidence of sparse advertisements in trade journals that AI’s customers would not
likely have read. Accordingly, this Court granted a summary judgment in favor of ZAI.
FOURTH CIRCUIT COURTS
1.
Priority
The Daniel Group v. Service Performance Group, Inc., 2010 WL 4703847 (E.D.N.C. Nov. 10,
2010)
Defendant Service Performance Group sought summary judgment on Plaintiff The Daniel
Group’s trademark infringement claim. Since 2005, Plaintiff had marketed its consulting services
under the federally registered SERVICEPERFORMANCE mark. Defendant, also specializing in
consulting in the customer service field, argued that it had operated its business under the marks
SERVICE PERFORMANCE GROUP and SPG since 1992. The parties did not dispute that their
marks were confusingly similar and were likely to mislead the public, nor did Plaintiff dispute
that Defendant’s predecessor’s business had used the marks SERVICE PERFORMANCE
GROUP and SPG from 1999 to 2005. Specifically, Defendant sought summary judgment on the
issue of priority. Plaintiff argued that it had priority because (1) its federal registration was prima
facie evidence of an exclusive rights to the mark; (2) when Defendant’s predecessor dissolved in
2005, so too did Defendant’s rights to the mark; and (3) Defendant’s past changes of corporate
status resulted in the abandonment of its rights to the mark. As to the first argument, the court
8
held that notwithstanding Plaintiff’s federal registration, defendant demonstrated use of the mark
at least four or five years prior to Plaintiff’s stated first use date of 2002 and thus Defendant’s
use had priority over Plaintiff’s. Looking to Illinois corporate law, Plaintiff’s second argument
that dissolution of Defendant’s predecessor affected Defendant’s trademark rights likewise
failed. Under Illinois corporate law, the dissolution of the predecessor in 2005 afforded five
years in which the dissolved corporation could hold and transfer title to assets including
intellectual property. Months before the expiration of this five year period, rights to the marks
and trade names were validly assigned to Defendant. Finally, the court held that Defendant’s
previous changes in corporate form-- from a proprietorship, to an Illinois corporation, to a
proprietorship, and finally to a North Carolina corporation--did not affect its rights to the use of
the SERVICE PERFORMANCE GROUP mark, which declarations confirmed had been
continuously used since the late 1990s. The court granted Defendant’s motion for summary
judgment on the issue of liability.
FIFTH CIRCUIT COURTS
1.
Application of ACPA to Third-Level Domain Name
Goforit Entertainment LLC v Digimedia.Com LP, 2010 US Dist. LEXIS 120338 (N.D. Tex.
Oct. 25, 2010)
The court addressed the issue of whether alleged infringing domain names that are at the third
level, are covered under the ACPA. The court first noted that under the ACPA,
the term domain name means “any alphanumeric designation which is registered with or
assigned by any domain name registrar, domain name registry, or other domain name registration
authority as part of an electronic address on the Internet." 15 U.S.C. § 1127. Because the only
part of a web address that must be registered is the second-level domain, the court found that the
third-level domain name was outside the scope of ACPA. The court explained that a third-level
domain does not require registration with or assignment by a domain name registration authority.
Accordingly, the court found that a third-level domain name could not create a cause of action
under the ACPA.
SIXTH CIRCUIT COURTS
1.
Damages
FDIC v. Homestead Mortg. Co., 2010 U.S. Dist. LEXIS 136392 (E.D. Mich. Dec. 27, 2010)
On summary judgment, the Court concluded that the defendants/counter-plaintiffs were not
entitled to an award of monetary damages based upon claimed lost goodwill, lost or suppressed
royalties or corrective advertising. Where the Lanham Act requires proof of some injury (though
not in an exact amount) for an award of monetary damages based on damage to goodwill or
corrective advertising, the Court held that the defendants/counter-plaintiffs “unsupported opinion
[that he must engage in corrective advertising to negate confusion between the marks] without
reference to one lost customer or loan or drop in profit” was insufficient to defeat summary
9
judgment. The most promising evidence that might have sustained the burden was the
defendants/counter plaintiffs declaration that he “had inquiries about licensing” his mark but
“has not been able to complete the transactions due to confusion in the market caused by use” of
the confusingly similar mark and the resolution of the lawsuit. However, the Court stated that
this allegation “falls short as it does not identify one actual inquiry nor does it specify the market
involved, making it impossible for the Court to determine if the alleged lost licensee was even in
a market in which Defendants/Counter-Plaintiffs could claim superior rights.”
2.
Consent Judgment
Belfor USA Group, Inc. v. Ins. Reconstruction, LLC, 2010 U.S. Dist. LEXIS 130826 (E.D.
Mich. Dec. 10, 2010)
Plaintiff sought to enforce the terms of its consent judgment entered into with defendant and
approved by the Court, prohibiting defendant from using or attempting to register the mark-atissue. Defendants both used and attempted to register the mark arguing that plaintiff’s alleged
abandonment of the mark had the effect of making the injunctive provisions of the consent
judgment unenforceable. The Court found defendants in contempt and held that defendant was
obligated to comply with the terms of a court order, including a consent judgment, even if such
order is not valid, until the order had been set aside.
SEVENTH CIRCUIT COURTS
1.
Exceptional Cases – Attorneys Fees
Nightingale Home Healthcare Inc. v. Anodyne Therapy, LLC, 626 F.3d 958 (7th Cir. 2010)
Buyer (Nightingale) of infrared lamps brought an action in state court against seller (Anodyne)
for fraud. After Anodyne removed the suit, buyer filed an amended complaint adding a claim
under the Lanham Act. After Anodyne successfully defended action, the United States District
Court for the Southern District of Indiana granted Anodyne’s motion for an award of attorney's
fees under the Lanham Act. Nightingale appealed. Judge Posner examined different tests of
exceptionality applied by several of the Circuits depending on whether it was the plaintiff or the
defendant who prevailed. Judge Posner categorized the various tests as “circuit drift” and
identified the Lanham Act reason for including such a remedy as “the public interest in the
integrity of marks as a measure of quality of products” is so great that it would be
“unconscionable not to provide a complete remedy including attorney fees for acts which courts
have characterized as malicious, fraudulent, deliberate, and willful,” and the award of fees
“would make a trademark owner's remedy complete in enforcing his mark against willful
infringers, and would give defendants a remedy against unfounded suits.” S.Rep. No. 1400, 93d
Cong., 2d Sess. 5-6 (1974), U.S.Code Cong. & Admin.News 1974, pp. 7132, 7136-7137. Judge
Posner went on to recognize the more practical concern as the potential for businesses to use
Lanham Act litigation for strategic purposes—not to obtain a judgment or defeat a claim but to
obtain a competitive advantage independent of the outcome of the case by piling litigation costs
on a competitor. While Nightingale may not appeal this decision, Judge Posner seems to
10
highlight the Lanham Act’s teeth in this regard which behooves the trademark bar to monitor the
progress of the Trademark Technical and Conforming Amendment Act of 2010 (S-2968) and
any litigation attempting to assert a claim or defense rooted in the “Trademark Bullies Act.”
2.
Abandonment
Specht v. Google Inc., 2010 WL 5288154 (N.D. Ill. 2010)
Plaintiff owned a registration for the mark ANDROID DATA for software licensing and
computer-related products. Plaintiff ceased operations and abandoned the mark. Google began
using the mark and became the senior user despite plaintiff producing evidence that it had an
intent to resume use. Such evidence, however, occurred after a three year nonuse period in which
Google began using the mark. Plaintiff failed to show any evidence that it intended to use the
mark within the three year nonuse period and summary judgment was granted to Google.
EIGHTH CIRCUIT COURTS
1.
Attorney’s Fees
B & B Hardware, Inc. v. Hargis Industries, Inc., No. 4:06-CV-01654 SWW (E.D. Ark. Nov.
10, 2010)
Plaintiff B & B Hardware (“B&B”) first sued defendant/counter-plaintiff Hargis Industries
(“Hargis”) in 1998 alleging Hargis’ use of the mark SEALTITE infringed B & B’s federally
registered mark SEALTIGHT. Hargis prevailed in the first trial between the two parties with a
less than unanimous jury verdict. Hargis’ trial victory was affirmed on appeal. B&B then sued
Hargis again in 2006, asserting infringement of the same mark by Hargis. Hargis counterclaimed
asserting claims including false advertising and false designation of origin. The jury in the
second trial sided with Hargis once again by rejecting B&B’s claims and finding in favor of
Hargis on its counterclaims. In determining whether this was an “exceptional” case, the Court
reviewed trial testimony which indicated that B&B copied or “lifted” photos and other content
from Hargis’ web site, used keywords and metatags which included Hargis’ registered mark to
divert traffic to B&B’s web site, contacted Hargis’ customers, and that the owners of B&B were
less than truthful in their testimony on these and related issues. Among other reasons, B&B
claimed it was justified in believing that it had a viable infringement claim based on prior TTAB
rulings and allegedly substantial actual confusion evidence (which may have been created by
B&B’s own wrongful actions). The Court cited a number of cases which were determined
“exceptional” due to attempts to confuse the public through use of the Internet (including
metatags and domain name registrations). The Court also noted prior “exceptional” cases in
which a party intentionally copied another mark or product, then subsequently committed perjury
regarding its actions. The Court ultimately concluded that the jury’s findings against B&B—
particularly with respect to intentional copying of Hargis’ photos and materials, use of the
Internet to create confusion, and manufacturing evidence to support its case—were sufficient to
make this an “exceptional” case in which attorney’s fees should be awarded. The amount of the
11
fees was set to be determined following submission of redacted fee statements by Hargis, to
which B&B could respond.
2.
False Advertising
Process Controls Intl. v. Emerson Process Mgmt, Civ. No. 4:10-CV-645-CDP (E.D. Mo. Nov.
10, 2010)
Plaintiff Process Controls sued Defendant Emerson Process Mgmt. (“Emerson”) for false
advertising under Lanham Act § 43(a), state defamation, and tortious interference with business
expectancy claims and sued both Defendant Emerson and Defendant Factory Mutual Insurance
(“FM”) for antitrust violations under the Sherman Act. Plaintiff remanufactures and distributes
refurbished Emerson branded process control equipment in direct competition with Emerson
(which sells both new and refurbished process control equipment). Defendant FM created a
certification process for certifying the refurbished process control equipment at issue. In order to
obtain FM certification, however, FM required that remanufacturers first enter into an approval
agreement with the original equipment manufacturer (OEM), in this case, Emerson. When
Emerson refused to enter into such an agreement with Plaintiff and, at the same time, marketed
its own competing refurbished products as being FM certified and superior to Plaintiff’s, Plaintiff
filed suit. The District Court granted the Defendants’ Motion to Dismiss Plaintiff’s antitrust
claims but held that Plaintiff had sufficiently stated its Section 43(a) false advertising and related
state claims against Emerson. Plaintiff’s claims stemmed from Emerson marketing materials,
including targeted letters to Plaintiff’s customers, that touted Emerson’s remanufacturing process
as safer and superior to its competitors, as shown by, among other things, the FM certification.
Significantly, Emerson’s materials described specific features of its refurbishing process which
Emerson claimed made its products superior and stated in bold and large text, that “Nobody else
can do this.” Because the claims at issue were specific, measurable claims, the Court held that
the statements did not constitute non-actionable puffery. Moreover, the Court held that because
there were factual issues as to whether Emerson’s claims were literally false or misleading,
dismissal was not appropriate. Notably, the court noted that even though Emerson’s FM
certification claims may have been literally true (because Plaintiff did not have FM certification),
whether FM certification actually made Emerson’s products safer presented a factual question as
to whether such statements were misleading. The court denied Emerson’s Motion to Dismiss the
related state claims on similar grounds.
3.
Jurisdiction to Order the USPTO to Refuse Registration Under 15 U.S.C. § 1119
Wind Turbine Indus. Corp. v. Jacobs Wind Electric, Civ. No. 09-36-MJD/SRN (D. Minn.
Nov. 16, 2010)
Plaintiff Wind Turbine sued Defendant Jacobs for trademark infringement, asserting that it and
its predecessors have used the JACOBS mark since 1979 in connection with the manufacture and
sale of wind energy products. Wind Turbine further asserted that Jacobs wrongfully used and
fraudulently obtained one federal registration (“‘714 Registration”) and had wrongfully applied
for another (“‘473 Application”). The ‘714 Registration was for the mark JACOBS WIND
ENERGY SYSTEMS & Design in connection with the manufacture and sale of wind energy
12
products, while the ‘473 Application was for the mark JACOBS in connection with wind energy
products. On cross-motions for summary judgment, the Court granted Wind Turbine’s request to
cancel the ‘714 Registration. Wind Turbine’s evidence that Jacobs stopped making wind energy
systems over thirty years ago, and instead was in the business of refurbishing products that had
already been sold, was sufficient to support a determination that the Jacobs abandoned the mark
without an intent to resume use. The Court also granted Wind Turbine’s request that it order the
Patent and Trademark Office to refuse the ‘473 Application. The Court noted that while the
Eighth Circuit has not specifically addressed whether the 15 U.S.C. § 1119 grants jurisdiction to
order a refusal of registration, other courts have granted such relief. Citing decisions from the
Second and Fourth Circuits, the Court held that § 1119 “should be read broadly to grant [a
request for an order to refuse registration] when the registration of the mark involved in the
application is intertwined with existing registrations.” Because the ‘473 Application was tied
directly to the existing ‘714 Registration, the Court found that § 1119 authorized it to grant Wind
Turbine’s request.
4.
Seventh Amendment Right to Jury Determination of Statutory Damages
3M Company v. Mohan, Civ.No. 09-1413 ADM/FLN (D. Minn. Nov. 24, 2010)
Plaintiffs 3M Company and 3M Innovative Properties Company brought suit against Defendant
Pradeep Mohan in connection with Mohan’s sale and distribution of stethoscopes bearing 3M’s
LITTMANN, MASTER CARDIOLOGY, CARDIOLOGY III, and related design and product
configuration marks. After a bench trial, the Court found in favor of 3M on its claims for
trademark infringement. The Court determined that Defendant’s activities created a strong
likelihood of confusion, particularly in light of Defendant’s intentional
infringement/counterfeiting, and anecdotal and survey evidence of actual confusion.
The Court awarded permanent injunctive relief, attorneys fees and costs. In ordering a broad
permanent injunction, the Court found that Defendant’s intentional and continuous infringement
in connection with lower quality and counterfeit goods established the requirements of the eBay
test. eBay Inc. v. MercExch., L.L.C., 126 S.Ct. 1837 (2006). The Court also awarded attorneys
fees, finding the case an “exceptional case” under § 1117(a). The Court found that Defendant
purposefully used 3M’s marks (and close approximations of the marks) in an attempt to cause
consumers to believe that the stethoscopes he sold were LITTMANN stethoscopes or were in
some way associated with LITTMANN. Further, Defendant deliberately sold counterfeit
stethoscopes and offered genuine LITTMANN identification tags and replacement diaphragms in
tandem with his stethoscopes to create a false impression that he was associated with
LITTMANN. Defendant also used 3M trademarks to gain rank in search engine results and drive
potential customers to his website and eBay and Amazon.com listings. Thus, the Court found
Defendant’s infringement to be deliberate and willful, making this an “exceptional case” for
purposes of § 1117(a). In a footnote, the Court stated that attorneys fees were likely warranted
under § 1117(b) as well, due to Defendant’s deliberate use of a counterfeit mark.
However, the Court declined to award Plaintiffs statutory damages, holding that the Seventh
Amendment requires a jury trial for an award of statutory damages under the Lanham Act. The
Court cited to the 8th Circuit’s decision in Bar-Meir v. N. Am. Die Casting Ass’n, 55 Fed. Appx.
389, 390-91 (8th Cir. 2003) (per curiam), which held a defendant has a right to a jury
determination of statutory damages under the Seventh Amendment, unless such right is waived.
13
The Defendant did not waive his right to a jury trial and had asserted a right to a jury trial
throughout the case. Plaintiffs argued that the purpose of trademark law in providing equitable
relief, and the language of § 1117(c)(2), provides for statutory damages “as the court considers
just,” supported the position that jury determination is not required for an award of statutory
damages. But the Court stated that it was bound by 8th Circuit’s decision in Bar-Meir, and that
the 8th Circuit’s decision aligned with decisions by other circuits looking to the Copyright Act
for guidance in trademark cases.
NINTH CIRCUIT COURTS
1.
Naked Licensing/Abandonment
FreecycleSunnyvale v. The Freecycle Network, 626 F.3d 509 (9th Cir. 2010)
The Ninth Circuit affirmed the district court’s holding for the declaratory relief plaintiff
FreecycleSunnyvale (“FS”) on summary judgment because counter-claimant/mark holder. The
Freecycle Network (“TFN”) had engaged in naked licensing and, therefore, had abandoned its
trademarks. Despite TFN being a loosely organized non-profit for the purpose of creating local
Internet groups through Yahoo! and Google groups to given unwanted items to another, the
Ninth Circuit found that TFN did not retain express contractual control over FS’s quality control
measures, did not have actual control over FS’s quality control measures, and it was
unreasonable in relying on FS’s control measures. TFN’s efforts to control FREECYCLE, THE
FREECYCLE NETWORK, and logo were found wholly absent. Essentially, TFN had a very
loose directive (to keep it free, legal, and appropriate) and the service terms of the Internet social
networking provider was deemed not to be actual control. Further, TFN had exercised no
inspection and supervision of TS’s use of the TFN marks. And there was no long term
relationship between TFN and TS to which it would be reasonable to rely on the licensee’s own
quality control measures. The Ninth Circuit left open two important issues: standard of proof for
asserting a naked license. The Ninth Circuit agrees that it s a ‘stringent standard of proof’ but did
not determine whether it was a “clear and convincing” standard or “preponderance of the
evidence” but felt that the decision in the present case would arrive at the same conclusion under
either standard [Part II of the opinion]. The other issue that the Ninth Circuit left open is whether
actual control sufficient to avoid abandonment under a naked license could start at some point
after the granting of a license to use a trademark (because the present case never exercised any
actual control).
TENTH CIRCUIT COURTS
1.
Infringement- Online keyword Advertising & Secondary Liability
1-800 CONTACTS, Inc. v. Lens.Com, Inc., 2010 U.S. Dist. LEXIS 132389 (D. Utah Dec. 14,
2010)
Plaintiff is the owner of the 1 800 CONTACTS family of marks. While the court concluded that
the use of a competitor’s mark to direct sales to one’s own business would be a “use in
commerce” under the Lanham Act, there was no evidence that the defendant engaged in that
14
behavior. The court also noted that a competitor could, for example, bid on advertisements for
the keyword “contacts” and have their advertisement appear in a search for “1800contacts,” and
that a customer cannot actually see the keyword that triggered the advertisement. Therefore, the
court “conclude[d] that the mere purchase of a trademark as a keyword cannot alone result in
consumer confusion.” Where the competitor’s mark was not used in the resulting advertisement,
the court found for the defendant. Where the competitor’s mark was purchased as a keyword and
was used in the advertisement, the court allowed an inference of likelihood of confusion, and
would have found for the plaintiff, but for the fact that all such advertisements were placed by
affiliates of the defendant, not the defendant itself. As to vicarious infringement, the court found
that no agency existed between the defendant and the affiliate, so it would not hold defendant
liable on that basis. The court followed Inwood Laboratories Inc. v. Ives Laboratories, Inc. in
this case, finding that there was neither any evidence of the defendant inducing infringement on
the part of its affiliates, nor was there any evidence of the defendant being “willfully blind” – in
fact, there was evidence to the contrary of the defendant trying to stop the infringing behavior,
and thus defendant had no liability at all.
ELEVENTH CIRCUIT COURTS
1.
Likelihood of Confusion
Alaven Consumer Healthcare, Inc. v. DRFLORAS, LLC, 2010 U.S. App. LEXIS 21027,
(11th Cir. Oct. 12, 2010)
Appelant is an Intestinal cleanser and non-prescription herbal supplement product manufacturer,
Alaven Consumer Healthcare, Inc., which sells these products on the Internet directly to
consumers under the primary trademark Colonix and the house trademark DrNatura. Appellee
DrFloras, LLC was also a purveyor of intestinal cleanser and non-prescription herbal
supplements over the Internet directly to consumers.
At the trial level, Alaven alleged trademark infringement under the Lanham Act, 15 U.S.C. §
1114, federal unfair competition and false designation of origin under 15 U.S.C. § 1125(a),
trademark dilution, and various state law claims, on the basis that the “DrFloras” trademark
could likely cause confusion among consumers.
On appeal, the 11th Circuit applied the legal standard established in the recent 11th Circuit case
Tana v. Dantannas’s, “though likelihood of confusion is a question of fact, it may be decided as
a matter of law." 611 F.3d 767, 775 (11th Cir. 2010). Alavan appealed from the district judge’s
analysis. The Court of Appeals stated that it does not vacate and remand only for an error in
analysis, but it does affirm correct trial level opinions, in accordance with the standard in Allen v.
Bd. of Pub. Educ. of Bibb Cnty., 495 F.3d 1306, 1311 (11th Cir. 2007). This court reviewed the
record, and agreed with the district court that there was insufficient evidence of likelihood of
confusion between the two marks to warrant trial. Also, since Alaven failed to raise the argument
that the district court should have evaluated Alaven's count for federal unfair competition under a
different rubric than the count for federal trademark infringement, the issue will, “not be
considered for the first time on appeal.” In accordance with Sterling Fin. Inv. Grp., Inc. v.
Hammer, 393 F.3d 1223, 1226 (11th Cir. 2004) (quoting Mills v. Singletary, 63 F.3d 999, 1008
15
(11th Cir. 1995). Finally, the appellate court found no abuse of discretion in the district court's
denial of Alaven's motion for leave to conduct discovery under Rule 56(f).
2.
False Designation of Origin: Standing of Non-Exclusive Licensees
Pandora Jewelers 1995, Inc. v. Pandora Jewelry, LLC, 2010 U.S. Dist. LEXIS 138384 (S.D.
Fla. Dec. 21, 2010)
The Plaintiff, Pandora Jewelers, Inc., has been in the business of selling and marketing jewelry
from its retail store in Deerfield Beach, Florida since 1976. The Plaintiff has used the service
mark PANDORA to market, sell, consign, appraise, clean, and repair jewelry. The Defendant,
Pandora Jewelry, LLC, manufactures and sells jewelry under the name PANDORA to dealers in
the South Florida region. The Defendant also licenses the operation of retail jewelry stores under
the mark PANDORA, and has recently opened its own retail jewelry stores. Defendants Carrie
Ventures and HB Retail are individual retail jewelry stores that operate under the mark
PANDORA pursuant to a license agreement with Defendant Pandora LLC. Pandora LLC owns
several Federal Trademark Registrations for the PANDORA trademark, and has several federal
trademark applications pending.
One of the critical issues on the Affirmative Defenses of Defendants Carrie Ventures and HB
Retail was whether these Defendants, as nonexclusive licensees, were in a position to assert the
rights (and defenses) of the licensor, Pandora LLC.
According to the standard in the 11th Circuit, a claim for false designation of origin under
Section 43(a) of the Lanham Act may be brought "by any person who believes that he or she is
or is likely to be damaged" by the false designation of origin. 15 U.S.C. § 1125(a)(1); Phoenix
of Broward, Inc. v. McDonald's Corp., 489 F.3d 1156, 1163 (11th Cir. 2007). Since the question
of standing is broad under Section 43(a), the Defendants, as nonexclusive licensees, would have
standing to bring a false designation of origin claim, asserting the rights of Pandora LLC, the
licensor. This Court reasoned, “It naturally follows, that these Defendants must also be able to
assert the defenses of Pandora LLC in defending a false designation of origin claim. The
Defendants, as licensees, are standing in the shoes of Pandora LLC, as licensor. Just as these
Defendants, as licensees, would be permitted to use a Section 43(a) claim as a sword, these
Defendants may use the equitable defenses, applicable to Pandora LLC, as a shield in defending
the Plaintiff's Section 43(a) claim.”
The Court also determined that the Defendant’s Affirmative Defenses adequately alleged all of
the essential elements of the defenses, and do not merely contain conclusory statements. Thus,
the Plaintiff's motion to strike affirmative defenses two through nine was denied.
16
TRADEMARK TRIAL & APPEAL BOARD
1.
Accelerated Case Resolution
Weatherford/Lamb, Inc. v. C&J Energy Servs., Inc., Canc. No. 92050101 (TTAB
Oct. 28, 2010)
Petitioner and Respondent elected to proceed under the TTAB’s Accelerated Case Resolution
(“ACR”) procedure, stipulating to have the TTAB decide the case based on their cross-motions
for summary judgment. The TTAB found that Petitioner had established priority based on the
evidence contained in the declaration testimony of three of Petitioner’s witnesses, and the
attached exhibits showing use of the FRACSURE mark. The TTAB also concluded that there
was a likelihood of confusion between the parties’ nearly identical FRAC-SURE and
FRACSURE marks as used in connection with their overlapping or identical oil and gas-well
services and, thus, cancelled Respondent’s registration. In its decision, the TTAB encouraged
parties to TTAB proceedings to take advantage of its ACR procedure, but reminded parties to
address any pending motions or outstanding matters that do not go to the merits of the claims or
issues to be resolved by ACR in their ACR stipulation or, alternatively, to conference with the
Interlocutory Attorney to clarify the particular claims and issues in dispute and that are being
submitted for resolution by ACR.
299779_1.DOC
17