Trademark Law Updates - from Lawupdates.com

2In re Spirits Int’l: A Mark Is Geographically Deceptively Misdescriptive Only if Materially Deceptive to a Substantial Portion of the Intended Audience

2009-06-26T19:38:25+00:00

Trademark Law || In re Spirits International, 06/26/2009 || Clarifying the application of the doctrine of foreign equivalents, the Federal Circuit held that a mark is geographically deceptively misdescriptive if a substantial portion of the relevant consumer market is likely to be deceived by the mark. In In re Spirits International, 563 F.3d 1347 (Fed. Cir. 2009), the Federal Circuit vacated a TTAB decision that had affirmed the Patent Office’s refusal to register a mark on the grounds that it was primarily geographically deceptively misdescriptive. The Federal Circuit remanded the case for a determination of whether a substantial portion of the target audience would be deceived by the mark.

Rep. Conyers Files House Version of Patent Reform Act of 2009

2009-04-24T16:52:00+00:00

Trademark Law | New Proposed Legislation || No. H.R. 1260 || , 03/3/2009 || || Rep. John Conyers, Jr. (D-Mi) has filed a House version of the Patent Reform Act of 2009 to match the Senate version filed by Senators Orrin Hatch (R-Ut) and Patrick Leahy (D-Vt) (S. 515). LawUpdates.com has already presented the major features of this bill in an earlier post. The Senate and House bills are similar to bipartisan legislation introduced in the 110th Congress. Notable proposed changes by this legislation include reform of patent infringement litigation, post-grant review, and changing to a “first-to-file” system. Basically, the bill amends federal patent law to rewrite provisions concerning the conditions for patentability. It also: —Defines “effective filing date of a claimed invention” as the filing date of the patent or the application for patent containing the claim to the invention (thus establishing a first-to-file system). —Revises various other rights and requirements related to patents, including regarding: (1) damages; (2) post-grant procedures; (3) citation of prior art; and (4) inter partes reexaminations; (5) pre-issuance submissions by third parties; (6) venue and jurisdiction; and (7) the regulatory authority of the Patent and Trademark Office. —Replaces the Board of Patent Appeals and Interferences with the Patent Trial and Appeal Board. —Revises provisions concerning the residency of federal circuit judges. In a committee meeting led by Chairman Leahy, the Senate Judiciary Committee on April 2, 2009 voted to pass the Patent Reform Act of 2009 to the whole Senate. The Committee adopted the proposed manager’s amendment that modifies the damages and interlocutory appeals provisions, and voted against several other amendments. The House of Representatives passed patent reform legislation (H.R. 1908) in the last Congress, and the Senate Judiciary Committee reported companion legislation in the Senate (S. 1145).

Ninth Circuit’s Ruling Favors Internet Specialties over its Domain Name Dispute with Milon-Digiorgio Enterprises

2009-03-30T16:41:00+00:00

Trademark Law | New Judicial Opinions || No. No. 07-55087 || U.S. Court of Appeals for the Ninth Circuit, 03/17/2009 || In this dispute over an internet domain name, the U.S. Court of Appeals for the Ninth Circuit has upheld the grant of injunction against any further use of the registered domain name “ISPWest.com.” Plaintiff-appellee Internet Specialties West, Inc. (“Internet Specialties”) alleged in its trademark infringement suit in the U.S. District Court for Central District of California that its use by defendant Milon-Digiorgio Enterprises, Inc. (“MDE”) violated the Lanham Act. The district court granted Internet Specialties’ application for injunction. On appeal, the Ninth Circuit turned to whether the district court erred in determining that laches did not bar Internet Specialties’ trademark infringement claim. The Ninth Circuit agreed with the district court’s holding that that MDE did not demonstrate prejudice from Internet Specialties’ delay in bringing suit. The NInth Circuit reasoned that MDE did not spend the time in the interim developing brand recognition of its mark. The Ninth Circuit pointed to the uncontested evidence at trial showing that the vast majority of MDE’s advertising took the form of “pay-per-click” advertisements, through which potential customers are funneled to MDE’s website based on their interest in a particular type of service (i.e., internet services in Southern California). Additionally, the Ninth Circuit found the scope of the injunction appropriate. The Ninth Circuit explained that in order to avoid confusion to consumers, MDE must abandon all use of the name “ISPWest.com.” || By way of background, Internet Specialties and MDE are both internet service providers offering substantially similar services, including internet access, e-mail, and webhosting. Internet Specialties uses the domain name “ISWest. com”, which it registered in May of 1996. MDE uses the domain name “ISPWest.com”, which it registered in July of 1998. In 2005, after giving MDE a cease-and-desist letter, Internet Specialties brought suit alleging that MDE’s use of the name “ISPWest” constituted trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1). The trial was bifurcated. In the first phase, the jury found that MDE had infringed on Internet Specialties’ trademark, but found no damages from the infringement. In the second phase, the district court ruled that MDE did not have a laches defense to the action. Accordingly, the court issued an injunction against the use of the name ISPWest. MDE moved for a new trial that the district court denied. MDE filed this appeal against the district court’s grant of an injunction against any further use of its registered domain name, “ISPWest.com.” MDE asserted three challenges to the injunction: 1) that the jury’s finding of trademark infringement, which gave rise to the injunction, was the result of an improper jury instruction; 2) that the district court erred in finding that the plaintiff’s claim was not barred by laches; and 3) that the injunction is overbroad. First, the Ninth Circuit considered MDE’s contention that jury instruction18.15 was improper and prejudiced the jury in favor of Internet Specialties on its trademark infringement claim. Jury instruction 18.15 followed the Model Civil Instructions by identifying the elements of trademark infringement, and by listing the eight Sleekcraft factors under the element of likelihood of confusion. Opinion, p. 3407, citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979). The Ninth Circuit rejected MDE’s contention that the jury instruction misled the jury as to the source of these factors. For example, the district court’s phrase “three of these factors” which the Ninth Circuit said clearly referred to the eight Sleekcraft factors. And the district court’s phrase “as I have instructed you”, taken in context, was not an attempt to direct the jury to find for the plaintiff. Instead, it merely referred back to the district judge’s previous instructions on the likelihood of confusion. Therefore, the Ninth Circuit rejected MDE’s claim that jury instruction 18.15 was improper. Next, the Ninth Circuit turned to whether the district court erred in determining that laches did not bar Internet Specialties’ trademark infringement claim. The Ninth Circuit agreed with the district court’s holding that that MDE did not demonstrate prejudice from Internet Specialties’ delay in bringing suit. The NInth Circuit reasoned that MDE did not spend the time in the interim developing brand recognition of its mark. The Ninth Circuit pointed to the uncontested evidence at trial showing that the vast majority of MDE’s advertising took the form of “pay-per-click” advertisements, through which potential customers are funneled to MDE’s website based on their interest in a particular type of service (i.e., internet services in Southern California). Such advertising creates little to no brand awareness. It is a simple premise that MDE cannot create “public association” between ISPWest and the company if it does not even use the ISPWest mark in its most prevalent form of advertising, the Ninth Circuit wrote. The Ninth Circuit found no error or abuse of discretion in the district court’s finding that MDE was not prejudiced within the meaning of a trademark infringement claim. Thus, the Ninth Circuit concluded that laches did not bar Internet Specialties lawsuit. Finally, the Ninth Circuit determined the issue whether the district court’s injunction is overbroad. The Ninth Circuit answered this question in the negative, and affirmed the district court’s finding on this issue. In seeking to overturn the district court’s ruling, MDE contended that even if it cannot use its mark to market DSL services, it should not be prohibited from using it to market its other services which did not prompt Internet Specialties’ lawsuit. The Ninth Circuit however found the scope of the injunction appropriate. The essence of trademark infringement is the likelihood of confusion, and an injunction should be fashioned to prevent just that. The Ninth Circuit did not find any abuse in the district court’s determination that, in order to avoid confusion to consumers, MDE must abandon all use of the name “ISPWest.com.” On the basis of the foregoing, the Ninth Circuit affirmed the district court’s judgment. Justice Kleinfeld dissented, arguing that the Court improperly applied the prejudice standard. He explained that the majority opinion defied circuit precedent, citing the cases of Grupo Gigante S.A. de C.V. v. Dallo & Co., 391 F.3d 1088, 1105 (9th Cir. 2004) (citing 5 McCarthy on Trademarks and Unfair Competition § 31:12 at 31-42 & n.4 (4th ed. 2002)); Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 837-38 (9th Cir. 2002); Whittaker Corp. v. Execuair Corp., 736 F.2d 1341, 1347 (9th Cir. 1984).

Fourth Circuit Dismisses “OBX” Trademark Infringement Suit Versus Bicast

2009-03-27T17:41:00+00:00

Trademark Law | New Judicial Opinions || No. No. 06-1769, 06-1887 || U.S. Court of Appeals for the Fourth Circuit, 02/27/2009 || In this trademark infringement suit, the U.S. Court of Appeals for the Fourth Circuit upheld a district court’s ruling that the “OBX” mark had become generic or a geographically descriptive term without secondary meaning. Plaintiff OBX-Stock, Inc. (“OBX-Stock”) coined this term as an abbreviation for the region called “Outer Banks” of North Carolina, and obtained trademark registrations for selling goods and services. Plaintiff alleged trademark infringement and requested an injunction when defendant Bicast, Inc. began selling stickers with the text "OB Xtreme." The U.S. District Court for the Eastern District of North Carolina ruled against plaintiff. Specifically, the district court found that plaintiff lacked a secondary meaning as the term is associated with a geographic location. On appeal, the Fourth Circuit affirmed the questioned decision. The Fourth Circuit explained that OBX-Stock never attempted to associate the geographically descriptive abbreviation for Outer Banks with its products or itself, but rather with the Outer Banks as a location. The Fourth Circuit thus concluded that the district court did not err in holding that OBX is not a valid trademark. || By way of background, James Douglas, the founder of OBX-Stock, invented “OBX” as an abbreviation for the “Outer Banks” of North Carolina. OBX-Stock began using the letters OBX on oval stickers for automobiles to indicate that the automobile was from or had visited the Outer Banks. Plaintiff attached these letters to souvenirs and other sundries to indicate that they were sold at the Outer Banks. The Outer Banks of North Carolina is a geographical region consisting of approximately 200 miles of barrier islands off the coast of North Carolina. The Outer Banks, which encompasses several counties and numerous towns, is a major attraction for vacationers, windsurfers, paragliders, hang gliders, as well as sunbathers and swimmers. After obtaining trademark registrations, OBX-Stock undertook efforts to police its trademarks, sending out cease-and-desist letters. Bicast, Inc., was the target of one of the OBX-Stock’s cease and desist letters because it sold oval stickers bearing “OB Xtreme” in pink cursive script. While Bicast had long sold products bearing “OB” for the Outer Banks, in 2003, it began producing stickers that added the “Xtreme” language to denote the wide variety of extreme sports available at the Outer Banks. When Bicast refused OBX-Stock’s demand to cease and desist, OBX-Stock commenced the present action. On Bicast’s motion, the district court granted summary judgment in favor of Bicast. In finding for Bicast, the district court concluded that OBXStock “ha[d] not established ownership in a valid trademark” because it failed to present any evidence of secondary meaning. Opinion, p. 6. The district court noted that the evidence indicated overwhelmingly that “OBX” is “a geographically descriptive or generic term for the Outer Banks” and that no evidence was presented to show that “any consumer associates OBX with Plaintiff’s products or Plaintiff itself.” Id. From the district court’s judgment dated June 11, 2006, OBX-Stock filed this appeal, challenging the summary judgment entered in favor of Bicast. Bicast filed a cross-appeal, challenging the district court’s refusal to cancel the OBX registrations. In this appeal, the Fourth Circuit affirmed the district court’s determination. Specifically, the Fourth Circuit agreed with the district court’s holding that there is no evidence on record that any consumer associates PBX with plaintiff’s products or plaintiff itself. The Fourth Circuit explained that OBX-Stock never attempted to associate the geographically descriptive abbreviation for Outer Banks with its products or itself, but rather with the Outer Banks. The Fourth Circuit rejected OBX-Stock’s argument that its four certificates of registration on the Principal Register of the PTO provided evidence of secondary meaning. The Fourth Circuit reasoned that entry on the Principal Register does not shift the burden of persuasion on validity, merely the burden of production. Id., p. 11, citing Retail Services, Inc. v. Freebies Publ’g, 364 F.3d 535, 542 (4th Cir. 2004). The Fourth Circuit noted that the letters OBX had the potential of becoming a valid and enforceable trademark to identify an OBX brand product and OBX-Stock as the source of the product. But the Fourth Circuit qualified that from the beginning, Douglas, the inventor of “OBX,” never intended that OBX be associated with a product as its brand or source. Rather, Douglas intended solely that OBX become associated with and descriptive of a geographical location, the Outer Banks. The Fourth Circuit observed that Douglas repeatedly stated this fact in his deposition, and continued to maintain it in arguments made on appeal. The Fourth Circuit gave the example of a T-shirt with OBX on it: according to the Fourth Circuit, such shirt does not indicate that the consumer bought an OBX brand T-shirt or that the T-shirt was a product of OBX-Stock. Rather, the letters OBX indicate that the T-shirt was purchased at the Outer Banks of North Carolina or is promoting the Outer Banks. Such a mark on plaintiff’s product is not the secondary meaning that allows a geographically descriptive word to indicate, by usage and promotion, its product or source of its own product. At bottom, the Fourth Circuit concluded that the district court did not err in concluding that OBX is a geographically descriptive abbreviation that has no secondary meaning and therefore is not a valid trademark. On the matter of Bicast’s cross-appeal, the Fourth Circuit rejected Bicast’s argument that the district court abused its discretion in failing to order the Patent and Trademar Office (“PTO”) to cancel plaintiff’s registrations under 15 U.S.C. § 1119. The Fourth Circuit wrote that the district court correctly ruled that Bicast did not file a counterclaim for cancellation, choosing simply to argue the point as part of its motion for summary judgment on OBX-Stock’s claims. Id., p. 13, citing 37 C.F.R. §§ 2.106(b), 2.114(b). The Fourth Circuit added that Bicast has received an adequate remedy through the district court’s summary judgment in its favor. The district the court’s final advcerse decision on trademark validity will preclude OBX-Stock’s marks from becoming incontestable. Id., citing 15 U.S.C. § 1065(1).

AP’s Lanham Act Claims Against All Headline News Corp. Dismissible – NY District Court

2009-03-2T18:10:00+00:00

Trademark Law | New Judicial Opinions || No. No. 08 Civ. 323 || U.S. District Court for the Southern District of New York, 02/17/2009 || The U.S. District Court for the Southern District of New York dismissed plaintiff Associated Press’ (“AP”) complaint that defendant All Headline News Corp. (“AHN”) infringed its trademarks in “AP,” “Associated Press,” and the “The Associated Press,” in connection with AHN’s news service. In so ruling, the district court rejected AP’s argument that AHN’s news articles mislead readers into believing that they are issued by plaintiff by using phrases like “(a)ccording to an AP report.” The district court held that such allegations were merely conclusory and not supported by factual assertions. Additionally, the district court found no merit in AP’s unfair competition claim under the Lanham Act. Assuming the truth of plaintiff’s allegation that AHN labels itself a “news service” but employs no reporters, the district court could not hold AHN liable under this claim because the statute does not render such conduct unlawful. || This action arose out of the activities of AHN, an online venture that disseminates news reports to customer web sites, including reports of breaking news. In its amended complaint, AP described itself as “one of the world’s oldest and largest news organizations” and “the ‘gold standard’ of objective journalism.” Opinion, p. 1. AP brought this action alleging that defendants engaged in “free riding” on the AP’s news articles. Specifically, it alleged that defendants have unlawfully copied and altered AP news stories in violation of the federal Copyright Act, 17 U.S.C. §§ 106, the Digital Millennium Copyright Act, 17 U.S.C. § 1202, and the Lanham Act, 15 U.S.C. §§ 1114 & 1125(a), among others. Pursuant to Rule 12(b)(6), Fed. R. Civ. P., defendants moved to dismiss the claims. By way of background, AP focuses on providing reports of timely, breaking news. It makes its news available to a variety of subscribing publications and licenses its stories to clients with internet web sites. It alleged in its amended complaint that it offers various licensing options for its clients, who pay a subscription fee and agree to terms and limitations on their use of AP stories. AP’s amended complaint alleged that defendant AHN does not undertake any original reporting. According to AP, AHN hires individuals to find news stories on the internet and prepare them for republication under the AHN banner, either rewriting the text or copying the stories in full. Among other allegations, AP’s amended complaint stated that the Associated Press trademark has been infringed under section 32 of the Lanham Act, 15 U.S.C. § 1114(1). According to the amended complaint, plaintiff has valid registered trademarks in “AP,” “ASSOCIATED PRESS,” and “THE ASSOCIATED PRESS.” AP alleged that defendants infringed upon the marks by using them in connection with the sale and offering for sale of the AHN’s news service, thereby causing confusion and mistake among clients and potential clients. In dismissing this claim, the district court cited Dow Jones & Company, Inc. v. International Securities Exchange, Inc., 451 F.3d 295, 307 (2d Cir. 2006). In Dow Jones, the Second Circuit concluded that a trademark claim “fails under even the liberal standard of Rule 12(b)(6)” when a complaint “consists of conclusory allegations unsupported by factual assertions.” Id., p. 12. Here, the memoranda of law indicated that AP’s claim was based on a theory that AHN’s articles mislead readers into believing that they are issued by the plaintiff, by using a phrase such as “(a)ccording to an AP report.” Id. However, the district court explained that the amended complaint consisted entirely of “conclusory allegations” that lacked factual support, and that the theory of liability stated in plaintiff’s opposition to the motion to dismiss is of the type that the Dow Jones court concluded must fail as a matter of law. Id., citing Dow Jones, 451 F.3d at 307-08. Based on the foregoing, the district court dismissed plaintiff’s trademark infringement claim made under the Lanham Act. Additionally, the district court dismissed AP’s unfair competition claim under the Lanham Act, 15 U.S.C. § 1125(a). In its amended complaint, AP alleged that defendants falsely indicated that AHN maintains a “news division” when it does no original reporting; that AHN falsely implied that it has permission to republish Associated Press articles; and that AHN wrongfully deletes information that would identify sources of the reports that it publishes. The district court rejected all these assertions. The district court explained that AHN’s self-described status as a news-gathering organization is an inadequate basis for a Lanham Act claim. As framed here, this claim would require a court or a jury to sit in judgment of whether a self-described news service is required by the Lanham Act to do “original reporting.” Id., p. 14. Assuming the truth of plaintiff’s allegation that AHN labels itself a “news service” but employs no reporters, the statute does not render such conduct unlawful. The Second Circuit has held that puffery (defined in part as “subjective claims” not susceptible to being proved true or false) is not actionable under the Lanham Act, and “‘amounts to a seller’s privilege to lie his head off, so long as he says nothing specific.’” Id., citing Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 159 (2d Cir. 2007). As to the plaintiff’s allegation that consumers and potential AP customers could mistakenly believe that AHN was affiliated with the AP, the district court held that conclusory assertions made in AP’s opposition to the motion to dismiss are not a substitute for plausible allegations in a complaint. Accordingly, the district court dismissed AP’s Lanham Act claims.

Ill District Court Dismisses “Graffiti Blasters” Service Mark Suit for Laches

2009-03-2T17:55:00+00:00

Trademark Law | New Judicial Opinions || No. No. 07 C 5828 || U.S. District Court for the Northern District of Illinois, 03/2/2009 || For sleeping on his rights, the U.S. District Court for the Northern District of Illinois has dismissed plaintiff Rudolfo Garcia’s claims that the City of Chicago infringed his service mark “Graffiti Blasters,” the name of his business that removed graffiti from buildings and other sites. Specifically, the district court held that Garcia’s delay between his acquiring knowledge of City’s usage of the name in 1993 until he filed suit in 2007 is almost five times the three year statute of limitations that is drawn by analogy from the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFDBPCA”). And in terms of laches, the district court added, Garcia’s 10-year silence between the 1997 exchange of communications and the filing of suit in 1997, coupled with the City’s enormous activities and expenditures in the interim, all indicated that the City’s laches defense was meritorious. In so stating, the district court dismissed Garcia’s action with prejudice. || By way of background, Garcia sued the City for the claimed infringed of his alleged service mark rights in the name “Graffiti Blasters” for the removal of graffiti from buildings and other sites in the Chicago area – an activity that each of them had concededly pursued for many years (Garcia since 1985, the City since 1993) under the identical name. The City in response moved for summary judgment under Fed. R. Civ. P. (“Rule”) 56 on laches grounds. In his Brief, Garcia admitted that it took him four years, from 1993 to 1997, after learning about the City’s use of the mark, during which time the City had already cleaned more than 200,000 buildings and had spent a huge sum for such use, before he even complained about it. Sustaining the city’s motion to dismiss, the district court noted that Garcia filed the instant suit fourteen years after he first became aware of the City’s use of the mark, and 10 years after he sent a cease and desist letter to the City. The district court cited the City’s argument that allowing Garcia to enforce his claimed rights against the City, 14 years after the City expanded its program and invested millions of dollars into the program, could unfairly prejudice the City. This is laches as a matter of law. Opinion, p.2, citing defendant’s Memorandum. Citing Chattanoga Mfg., Inc. v. Nike, Inc., 301 F.3d 789, 792-99 (7th Cir. 2002) ( also involving a 14-year delay), the district court found that there was no genuine issue of material fact, and the City was entitled to a judgment as a matter of law pursuant to Rule 56. Accordingly, the district court dismissed the action with prejudice.

2LSU v. Smack Apparel: Trademark Protection for Color Schemes

2009-02-6T17:50:00+00:00

Trademark Law || Board of Supervisors for Louisiana State University v. Smack Apparel Co., et al., 02/6/2009 || In Bd. of Supervisors for La. State Univ. v. Smack Apparel Co., 550 F.3d 465 (5th Cir. 2008), the Fifth Circuit upheld the district court’s finding that a t-shirt maker who used school color schemes in combination with specific facts and indicia about the school infringed on the schools’ trademark rights in those color schemes, even if neither the school logo nor other marks appeared on the t-shirt. The case is a huge victory for universities and their respective trademarks. More importantly, however, the case marks the first time a court has analyzed the trademark rights of a color scheme separate and apart from an accompanying word mark or logo.

2Audi v. Shokan Coachworks: Trademark Infringement in Email Signature

2009-01-27T23:38:00+00:00

Trademark Law || Audi AG v. Shokan Coachworks, Inc., 01/27/2009 || In the case Audi AG v. Shokan Coachworks Inc., 2008 WL 4911730, No. 1:07-CV-00173 (N.D.N.Y. 2008), the federal district court grappled with a slew of trademark claims, combining into one opinion many of the issues raised by a number of other previous courts. Specifically, the court could not grant summary judgment in Audi’s favor on one issue because it did not properly authenticate archive.org website printouts. The court also joined the ranks of many federal district courts that chose the 9th Circuit test for nominative fair use over the 3rd Circuit court’s test. The parties’ previous settlement agreement, in which certain limited uses were allowed, played a major role in the outcome of the cross-motions for summary judgment.

School Colors Legally Protectible Trademarks, Fifth Circuit Concludes

2009-01-12T23:16:00+00:00

Trademark Law | New Judicial Opinions || No. No. 07-30580/07-30887 || U.S. Court of Appeals for the Fifth Circuit, 11/25/2008 || In this trademark dispute that has wide implications on sport franchises and colleges, the U.S. Court of Appeals for the Fifth Circuit has concluded that universities’ school-color schemes are legally protectible marks. These consolidated appeals involved a trademark dispute between four universities and an apparel company and its principal. The Universities alleged in the district court that the apparel company violated the Lanham Act and infringed their trademarks by selling t-shirts with the schools’ color schemes. The district court issued summary judgment to the Universities. On appeal, the Fifth Circuit affirmed. It reasoned that the color schemes have attained secondary meaning. It based its ruling on the longstanding use of the color scheme marks and their prominent display on merchandise, in addition to the well-known nature of the colors as shorthand for the schools themselves. The Fifth Circuit further wrote that many consumers would likely be confused and believe that the apparel company’s t-shirts were sponsored or endorsed by the Universities. || Plaintiffs are Louisiana State University (“LSU”), the University of Oklahoma (“OU”), Ohio State University (“OSU”), the University of Southern California (“USC”), and Collegiate Licensing Company (CLC), which is the official licensing agent for the schools. Opinion, p. 2. Defendants are Smack Apparel Company and its principal, Wayne Curtiss (collectively “Smack”). Each university has adopted a particular two-color scheme as its school colors (purple and gold for LSU, crimson and creme for OU, scarlet and gray for OSU, and cardinal and gold for USC). The Universities have used their respective color combinations for over one hundred years, and the color schemes are immediately recognizable to those who are familiar with the Universities. Id. The schools also grant licenses for retail sales of products, including t-shirts, that bear the university colors and trademarks. Since 1998 Smack has manufactured t-shirts targeted toward fans of college sports teams, and it uses school colors and printed messages associated with the Universities on its shirts. Smack sells some of the shirts over the Internet, but most are sold wholesale to retailers and t-shirt vendors. The instant case involved six of Smack’s t-shirt designs that concern the appearance of the OU and LSU football teams in the 2004 Sugar Bowl in New Orleans, Louisiana, and the number of national championships previously won by OSU and USC. The Universities alleged in the U.S. District Court for the Eastern District Louisiana that defendants violated the Lanham Act and infringed their trademarks by selling t-shirts with the schools’ color schemes and other identifying indicia referencing the games of the schools’ football teams. The district court granted summary judgment to the Universities for trademark infringement and conducted a jury trial as to damages, with the jury returning a verdict favoring plaintiffs. Defendants appealed the summary judgment order. In this appeal, the Fifth Circuit wrote that the parties had correctly agreed that a color scheme can be protected as a trademark when it has acquired secondary meaning and is non-functional. Id., p. 9, citing Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163–64, 115 S. Ct. 1300, 1303–04 (1995).The Fifth Circuit however disagreed with Smack’s contention that that the claimed marks are too broad to encompass a trademark because the concept of color along with other identifying indicia is not distinctive. It reasoned that the statute contemplates that a trademark may include any word, name, or symbol “or any combination thereof.” Id., citing 15 U.S.C. § 1127. It noted the Supreme Court’s ruling that the Lanham Act describes the universe of permissible marks “in the broadest of terms.” Id., citing Qualitex at 162, 1302. In finding that plaintiffs’ color schemes had attained secondary meaning, the Fifth Circuit recognized the absence of dispute between the parties about the significant period of time the Universities have been using their color schemes along with other indicia to identify and distinguish themselves from others. It pointed to the record showing that the Universities have been using their color combinations since the late 1800s. The color schemes appear on all manner of materials, including brochures, media guides, and alumni materials associated with the Universities. Given the longstanding use of the color scheme marks and their prominent display on merchandise, in addition to the well-known nature of the colors as shorthand for the schools themselves and Smack’s intentional use of the colors and other references, the Fifth Circuit held that there was “no genuine issue of fact that when viewed in the context of t-shirts or other apparel, the marks at issue here have acquired the secondary meaning of identifying the Universities in the minds of consumers as the source or sponsor of the products rather than identifying the products themselves,” Id., p. 13. The Fifth Circuit thus concluded that the record established secondary meaning in the marks here. Next, the Fifth Circuit discussed the matter of likelihood of confusion, stating that once a plaintiff shows ownership in a protectible trademark, he must next show that the defendant’s use of the mark “creates a likelihood of confusion in the minds of potential customers as to the ‘source, affiliation, or sponsorship’” of the product at issue. Id., p. 14, citing Westchester Media v. PRL USA Holdings, Inc, 214 F.3d 658, 663 (5th Cir. 2000). In finding the existence of likelihood of confusion, the Fifth Circuit considered that it called the “digits of confusion,” to wit: (1) the type of mark allegedly infringed, (2) the similarity between the two marks, (3) the similarity of the products or services, (4) the identity of the retail outlets and purchasers, (5) the identity of the advertising media used, (6) the defendant’s intent, and (7) any evidence of actual confusion.” Id., p. 14, citing PRL USA Holdings, at 664. Another one was (8) the degree of care exercised by potential purchasers. Id., citing Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008). Analyzing these “digits,” the Fifth Circuit found that such factors weighed in favor of plaintiffs. “This is so, we have noted, because Smack’s use of the Universities’ colors and indicia is designed to create the illusion of affiliation with the Universities and essentially obtain a “free ride” by profiting from confusion among the fans of the Universities’ football teams who desire to show support for and affiliation with those teams. Boston Athletic Ass’n v. Sullivan, 867 F.2d 22, 33 (1st Cir. 1989). This creation of a link in the consumer’s mind between the t-shirts and the Universities and the intent to directly profit therefrom results in “an unmistakable aura of deception” and likelihood of confusion. Id. at 35.” The Fifth Circuit further wrote that many consumers would likely be confused and believe that Smack’s t-shirts were sponsored or endorsed by the Universities. The Fifth Circuit observed that the Universities exercise stringent control over the use of their marks on apparel through their licensing program. It recognized that the Universities annually sell millions of dollars worth of licensed apparel, and that there is the public’s indisputable desire to associate with college sports teams by wearing team-related apparel. For the foregoing reasons, the Fifth Circuit concluded that a likelihood of confusion connecting the presence of the Universities’ marks and the Universities’ themselves was demonstrated in this case. The Fifth Circuit thus affirmed the questioned judgment.

NY District Court Sides with Audi in Infringement Suit Against Car Recycling Company

2009-01-12T22:54:00+00:00

Trademark Law | New Judicial Opinions || No. No. 1:07-CV-00173 || U.S. District Court for the Northern District of New York, 11/13/2008 || The U.S. District Court for the Northern District of New York has ruled that Shokan Coachworks, Inc., ("Shokan"), an Audi vehicle recycling facility, infringed the "Audi" marks and logo of plaintiff Audi AG ("Audi"). Considering the strength of the "AUDI" mark, that defendants’ use was identical to Audi’s mark, and that the parties were in competitive proximity, the district court found as a matter of law that Shokan’s use of the email signature block, “Shokan Audi Parts” created a likelihood of consumer confusion. Accordingly, the district court granted Audi's motion for summary judgment with regard to Audi's trademark infringement claim over Shiokan's signature block, “Shokan Audi Parts.” On the other hand, because questions of fact remained regarding the length of time the Audi logo appeared on Shokan's website, as well as Shokan’s knowledge regarding same, the district court held that it could not decide as a matter of law that the logo’s existence on the website created a likelihood of consumer confusion, or that defendants acted in bad faith in placing the Logo on the website. Hence, the district court granted-in-part and denied-in-part Audi's motion for summary judgment on its trademark infringement claims. || Presented before the district court in this trademark infringement action were cross motions for summary judgment by plaintiffs Audi and Volkswagen of America, Inc. (“Volkswagen”) (collectively “plaintiffs”) and by defendants Shokan and John H. Smith (“Smith”) (collectively “defendants”). Opinion, p. 1. By way of background, plaintiffs’ complaint involved defendants’ alleged improper use of certain of plaintiffs’ registered trademarks, including the name “AUDI” as well as the “AUDI RING” logo. (“the Audi Marks”). Among others, plaintiffs’ in this action were (1) trademark and trade dress dilution in violation of Section 43 of the Lanham Act, 15 U.S.C. § 1125(c), and (2) federal trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114. Plaintiff Audi is a German corporation that sells its vehicles, parts, services and other products throughout the world. Plaintiff Volkswagen is an American corporation, which is the exclusive licensee for the sale of Audi vehicles, parts, services and products in the United States. Defendant Shokan is a New York Corporation whose only facility is located in West Shokan, New York. Defendant John Smith is the President and sole owner of defendant Shokan. Shokan is an Audi vehicle recycling facility, which has been in operation for over twenty five years, and only sells parts for Audi vehicles. Defendants raised the defense of nominative fair use, arguing that that they only use the Audi Marks to fairly and accurately describe the Audi parts they sell. However, the district court rejected such defense, stating that defendants have failed to sufficiently explain how any of the remaining alleged incidents of infringement are appropriately deemed nominative fair use of Plaintiffs’ marks. To summarize, the alleged incidents of infringement were (1) defendants’ use of the “AUDI RING” logo on their website; (2) Defendants’ use of the “AUDI RING” logo as a sign or sticker on a door at their business premises; (3) Defendants’ use of the “AUDI” mark by answering their business telephone, “all Audi”; (4) defendants’ use of the ” “AUDI” mark in their email signature block, “Shokan Audi Parts”; (5) defendants’ use of the “AUDI” mark in their email address, allaudi.shokan@verizon.net; and (6) defendants’ use of the “AUDI” mark in the phrase, “Audi Parts Warehouse” as a sign or sticker on a door at their business premises. In New Kids on the Block v. News America Publishing Incorporated, 971 F.2d 302 (9th Cir.1992), the court found nominative fair use to exist because, among other things, there was nothing to suggest the plaintiff sponsored defendant’s use of the mark. Here, each of the alleged infringing uses could imply sponsorship by plaintiffs or defendants. Accordingly, the district court held that defendants could not avoid a finding of liability on plaintiffs’ infringement claims based on a nominative fair use defense. The district court next held that plaintiffs have established the validity of the “AUDI"and “AUDI RING” logo trademarks as a matter of law. According to the district court, defendants incorrectly contended that proof of ownership of a trademark must be certified, citing case law which merely supports the proposition that trademarks may be authenticated because they are certified, not that certification is required. Id., p. 34, citing Nabisco v. Warner-Lambert Co., 32 F.Supp.2d 690, 695 (S.D.N.Y. 1999). In addition, the district court found likelihood of confusion, weighing the factors set forth in Polaroid Corporation v. Polarad Electronics Corporation, 287 F.2d 492, 495 (2d Cir. 1961). These factors are: (1) strength of the plaintiff’s mark; (2) similarity of the parties’ marks; (3) proximity of the parties’ products in the marketplace; (4) likelihood that the plaintiff will bridge the gap between the products (enter a market related to that in which the defendant sells its product); (5) evidence of actual confusion between the two marks; (6) the defendant’s bad faith (intent in adopting the mark); (7) quality of the defendant’s product; and (8) sophistication of the relevant consumer group. The district court found that the majority of these factors, such as the strength of plaintiffs’ marks and similarity of the parties’ marks, weighed in plaintiffs’ favor. Specifically, the district court found no questions of fact existed regarding defendants’ use of the “AUDI” mark through the email signature block, “Shokan Audi Parts.” Defendants’ attempt to dispute Plaintiffs’ allegation that same appeared on 38,000 messages produced during discovery should fail by reason of Smith’s admission that a sampling of those emails were a true and accurate representation of messages sent by Shokan. Considering the strength of the “AUDI” mark, that defendants’ use was identical to plaintiffs’ mark, and that the parties were in competitive proximity, the district court found as a matter of law that defendants’ use of the email signature block, “Shokan Audi Parts” created a likelihood of consumer confusion. Accordingly, plaintiffs’ motion for summary judgment was granted and defendants’ motion for summary judgment was denied, regarding plaintiffs’ trademark infringement claim as it related to the signature block, “Shokan Audi Parts.” On the other hand, because questions of fact remained regarding the length of time the logo appeared on the website, as well as defendants’ knowledge regarding same, the district court held that it could not decide as a matter of law that the logo’s existence on the website created a likelihood of consumer confusion, or that defendants acted in bad faith in placing the Logo on the website. Likewise , because plaintiffs failed to discharge their burden of proving the elements of their trademark infringement claim as it related to defendants’ use of the email address, allaudi.shokan@verizon.net, defendants’ motion for summary judgment was granted, and plaintiffs’ motion for summary judgment is denied, in this regard. Regarding plaintiffs’ trademark dilution claim over defendant’s use of the Audio ring logo on their website, the district court granted plaintiffs’ motion for summary judgment. The district court held that while questions remained regarding the issue of bad faith, that absence should not preclude a finding of likelihood of confusion. It was undisputed that the logo did appear on defendants’ website.

Ninth Circuit Dismisses Trademark Infringement Claim Against "Grand Theft Auto" Video Games Maker

2009-01-8T17:37:00+00:00

Trademark Law | New Judicial Opinions || No. No. 06-56237 || U.S. Court of Appeals for the Ninth Circuit, 11/5/2008 || The U.S. Court of Appeals for the Ninth Circuit has dismissed a trademark lawsuit by owners of the East Los Angeles strip club"The PlayPen" against Rockstar's video game depiction in "Grand Theft Auto" of a similar strip club called "The Pig Pen," located in the game's fictional city of East Los Santos. In its complaint, ESS alleged that Rock Star’s use of the PlayPen logo and look without their permission was likely to confuse customers as to whether ESS endorsed or was associated with the virtual strip club. Citing court precedent, the Ninth Circuit held that the First Amendment protected Rockstar from liability. It reasoned that the video game’s similarity in the look and feel to “The Play Pen” has some artistic relevance to Rockstar’s artistic goal, which was to develop a cartoon-style parody of East Los Angeles. The Ninth Circuit added that nothing indicated that the buying public would reasonably have believed that ESS produced the video game or that Rockstar operated a strip club. It is true that a player can enter the virtual strip club in Los Santos, but ESS failed to provide any evidence that the setting is anything but generic. On the basis of the foregoing, the Ninth Circuit affirmed the district court's grant of summary judgment. || The issue in this case is whether a producer of a video game in the “Grand Theft Auto” series has a defense under the First Amendment against a claim of trademark infringement. Opinion, p. 15146. Rockstar Games, Inc. (“Rockstar”), a wholly owned subsidiary of Take-Two Interactive Software, Inc., manufactures and distributes the Grand Theft Auto series of video games (the “Series”), including Grant Theft Auto: San Andreas (“San Andreas” or the “Game”). The Series is known for an irreverent and sometimes crass brand of humor, gratuitous violence and sex, and overall seediness. Id., pp. 15146-15147. Consistent with the tone of the Series, San Andreas allows a player to experience a version of West Coast “gangster” culture. The Game takes place in the virtual cities of “Los Santos,” “San Fierro,” and “Las Venturas,” based on Los Angeles, San Francisco, and Las Vegas, respectively. Los Santos, of course, mimics the look and feel of actual Los Angeles neighborhoods. Instead of “Hollywood,” “Santa Monica,” “Venice Beach,” and “Compton,” Los Santos contains “Vinewood,” “Santa Maria,” “Verona Beach,” and “Ganton.” ESS Entertainment 2000, Inc. (“ESS”), operates a strip club, which features females dancing nude, on the eastern edge of downtown Los Angeles under the name Play Pen Gentlemen’s Club (“Play Pen”). ESS claims that Rockstar’s depiction of an East Los Santos strip club called the Pig Pen infringes its trademark and trade dress associated with the Play Pen. ESS filed the underlying trademark violation action in the U.S. District Court for the Central District of California against Rockstar. The heart of ESS’s complaint is that Rockstar has used Play Pen’s distinctive logo and trade dress without its authorization and has created a likelihood of confusion among consumers as to whether ESS has endorsed, or is associated with, the video depiction. Id., p. 15149. In response, Rockstar moved for summary judgment on all of ESS’s claims, arguing that the affirmative defenses of nominative fair use and the First Amendment protected it against liability. It also argued that its use of ESS’s intellectual property did not infringe ESS’s trademark by creating a “likelihood of confusion.” Although the district court rejected Rockstar’s nominative fair use defense, it granted summary judgment based on the First Amendment defense. The district court did not address the merits of the trademark claim because its finding that Rockstar had a defense against liability made such analysis unnecessary. In this appeal, Rockstar argued that, regardless of whether it infringed ESS’s trademark under the Lanham Act or related California law, it is entitled to two defenses: one under the nominative fair use doctrine and one under the First Amendment. Addressing the nominative fair use defense of Rockstar, the Ninth Circuit held that since Rockstar did not use the trademarked logo to describe ESS’s strip club, the district court correctly held that the nominative fair use defense does not apply in this case. Id., pp. 15150-15151, citing Playboy Enters, Inc. v. Welles, 279 F.3d 796, 801. With regard to Rockstar’s first Amendment defense, ESS argued both that the incorporation of the Pig Pen into the Game has no artistic relevance and that it is explicitly misleading. It based its argument on two observations: (1) the Game is not “about” ESS’s Play Pen club the way that “Barbie Girl” was “about” the Barbie doll in Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 902 (9th Cir. 2002) ; and (2) also unlike the Barbie case, where the trademark and trade dress at issue was a cultural icon (Barbie), the Play Pen is not a cultural icon. The Ninth Circuit described ESS’s objection as factually accurate, but missed the point. Specifically , it held: “Under MCA Records and the cases that followed it, only the use of a trademark with ’ ‘no artistic relevance to the underlying work whatsoever’ ‘does not merit First Amendment protection. Id. (emphasis added) (quoting Rogers, 875 F.2d at 999). In other words, the level of relevance merely must be above zero. It is true that the Game is not ‘about’ the Play Pen the way that Barbie Girl was about Barbie. But, given the low threshold the Game must surmount, that fact is hardly dispositive. It is also true that Play Pen has little cultural significance, but the same could be said about most of the individual establishments in East Los Angeles. Like most urban neighborhoods, its distinctiveness lies in its ‘look and feel,’ not in particular destinations as in a downtown or tourist district. And that neighborhood, with all that characterizes it, is relevant to Rockstar’s artistic goal, which is to develop a cartoon-style parody of East Los Angeles. Possibly the only way, and certainly a reasonable way, to do that is to recreate a critical mass of the businesses and buildings that constitute it. In this context, we conclude that to include a strip club that is similar in look and feel to the Play Pen does indeed have at least ‘some artistic relevance.’ See id.” Id., pp. 15152-15153. ESS also argued that Rockstar’s use of the Pig Pen “ ‘explicitly misleads as to the source or the content of the work.’ ” Id. The Ninth Circuit however rejected this argument of ESS, stating that both “San Andreas and the Play Pen offer a form of lowbrow entertainment; besides this general similarity, they have nothing in common. The San Andreas Game is not complementary to the Play Pen. Nothing indicates that the buying public would reasonably have believed that ESS produced the video game or, for that matter, that Rockstar operated a strip club. A player can enter the virtual strip club in Los Santos, but ESS has provided no evidence that the setting is anything but generic. It also seems far-fetched that someone playing San Andreas would think ESS had provided whatever expertise, support, or unique strip-club knowledge it possesses to the production of the game.” Id., p. 15154. Considering all of the foregoing, the Ninth Circuit concluded that Rockstar’s modification of ESS’s trademark is not explicitly misleading and is thus protected by the First Amendment. Since the First Amendment defense applies equally to ESS’s state law claims as to its Lanham Act claim, the Ninth Circuit held that the district court properly dismissed the entire case on Rockstar’s motion for summary judgment.

2E.S.S. Entm’t 2000 v. Rock Star Videos: First Amendment Trumps Trademark Rights

2009-01-7T03:43:41+00:00

Trademark Law || E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc., 01/6/2009 || In E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir. 2008), the 9th Circuit U.S. Court of Appeals confirmed that when trademark rights clash with the First Amendment, the First Amendment usually wins – at least in cases involving artistic or creative endeavors. The court affirmed the grant of summary judgment in favor of the creators and publishers of the Grand Theft Auto series of video games against the owner of a Los Angeles strip club who claimed that the game infringed on the club’s trademark and trade dress. Specifically, the court applied the Rogers v. Grimaldi two-prong analysis to find that the First Amendment protects the game’s use of the club’s mark in the face of a Lanham Act challenge.

Naked Cowboy, M&M candy Maker End Suit with a Close-Door Settlement

2008-11-24T18:44:00+00:00

Trademark Law | New Settlements and Verdicts || No. No. 08- cv-1330 || U.S. District Court for the Southern District of New York, 11/7/2008 || The Naked Cowboy, whose real name is Robert Burck, and who sued candy-maker Mars, Inc. for $6 million for dressing an animated M&M in Burck’s signature outfit and broadcasting it on a video billboard, has decided to end his lawsuit for unspecified reasons. In papers filed in the U.S. District Court for the Southern District of New York, Burck and Mars, Inc. both agreed and stipulated that the action be dismissed with prejudice, with each party bearing his own costs and attorney's fees. Burck, a fixture in Manhattan's Times Square for more than 10 years, sued in February 2008, accusing Mars of copying his trademarked image. Burck said he holds a federal trademark for his likeness and occasionally licenses it to companies for ads. The parties resolved to terminate the case with a closed-door settlement. || Plaintiff Robert Burck is a “street entertainer” who performs in New York City’s Times Square as The Naked Cowboy, wearing only a white cowboy hat, cowboy boots, and underpants, and carrying a guitar strategically placed to give the illusion of nudity. Opinion of the district court of 06/23/2008, p. 4, citing Complaint, p. 26. Starting in April 2007, defendants Mars, Incorporated (“Mars”) and Chute Gerdeman, Inc. (“Chute”) began running an animated cartoon advertisement on two oversized video billboards in Times Square, featuring a blue M&M dressed “exactly like The Naked Cowboy,” wearing only a white cowboy hat, cowboy boots, and underpants, and carrying a guitar. Mars sells candies and chocolate products, including the world-famous M&M’s. Id., citing Complaint, paragraph 33. Mars retained Chute, an advertising and design agency, to create a video for two electronic billboards in Times Square and a mural for its M&M World store located in Times Square. Id., citing Complaint, paragraph 32-33. In this case, plaintiff Burck sued defendants for compensatory and punitive damages. He alleged that defendants violated his “right to publicity” under New York law and infringed his trademarks under federal law by using his likeness, persona, and image for commercial purposes without his written permission and by falsely suggesting that he had endorsed M&M candy. In an opinion issued on June 23, 2008, the district court ruled that the Burck’s Lanham Act claim should proceed. The district court then held that whether the M&M Cowboy characters were parodies of The Naked Cowboy raised factual questions that were not for the court to decide at this stage of the litigation. The district court also rejected defendants’ argument that some consumers might view the M&M Cowboy characters as a part of a larger work depicting New York scenes and parodying famous New York characters. The district court reasoned that other consumers might mistakenly believe that The Naked Cowboy himself endorsed the copying of his “trademarked likeness” because the M&M Cowboy characters appear in a commercial setting (i.e., on the video billboard and inside the M&M World store). Moreover, even assuming that the M&M Cowboy characters were parodies, a fact-finder may nevertheless conclude that the parodies were too weak to negate the potential for consumer confusion. Id. , pp. 18-19, citing Schieffelin & Co. v. Jack Co. of Boca, Inc., 725 F. Supp. 1314, 1324 (S.D.N.Y. 1989). On a motion to dismiss, a court must accept the factual allegations in the complaint and may consider only whether the pleading plausibly states a claim for relief. Id., p. 19, citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007). Here, the complaint alleged that the M&M Cowboy characters, dressed just like The Naked Cowboy, “implied, falsely, that Burck’s character, The Naked Cowboy, endorse(d) the M&M product.” Id., citing Complaint, paragraph 41. The complaint plausibly argued that consumers would believe that the M&M Cowboy characters were promoting a product rather than merely parodying The Naked Cowboy, and that viewers would believe that The Naked Cowboy had endorsed M&Ms. Hence, the complaint alleged sufficient facts to support a false endorsement claim. Accordingly, the district court denied defendants’ motion to dismiss plaintiff Burck trademark infringement claim (Lanham Act claim).

Amendments to Trademark Rules of Practice to Take Effect on January 16, 2009

2008-11-24T18:34:00+00:00

Trademark Law | New Statutes, Regulations and Rules || No. 37 CFR Parts 2, 3, 6 and 7, Docket No. PTO–T–2005–0018, RIN 0651–AB89 || , 11/17/2008 || || The United States Patent and Trademark Office (‘‘USPTO’’) is amending the Trademark Rules of Practice to clarify certain requirements for applications, intent to use documents, amendments to classification, requests to divide, and Post Registration practice; to modernize the language of the rules; and to make other miscellaneous changes. For the most part, the rule changes are intended to codify existing practice, as set forth in the Trademark Manual of Examining Procedure (‘‘TMEP’’). This rule will take effect on January 16, 2009. Among several revisions in existing rules, the USPTO is amending § 2.21(a) to require that an application under section 1 or section 44 of the Trademark Act must be in the English language to receive a filing date. The USPTO is amending § 2.32(a)(3)(iii) to indicate that the requirement for inclusion of the names and citizenship of the general partners in an application by a partnership applies only to domestic partnerships. Similarly, the USPTO is adding § 2.32(a)(3)(iv) to provide that if the applicant is a domestic joint venture, the application must include the names and citizenship of all active members of the joint venture. These requirements are consistent with TMEP section 803.03(b). Because the USPTO does not track the varying legal effects of partnership and joint venturer status in foreign countries, and the relevance of this additional information has not been established, this requirement does not apply to foreign partnerships or foreign joint ventures. The USPTO is amending § 2.33(b)(1) to remove the requirement that an application include a verified statement that the applicant ‘‘has adopted and is using the mark shown in the accompanying drawing.’’ This language is not required by statute and is deemed unnecessary. The rule as amended requires an allegation that ‘‘the mark is in use in commerce.’’ The USPTO is also amending §§ 2.34(a)(1)(i), (a)(2), (a)(3)(i), and (a)(4)(ii) to change ‘‘must allege’’ to ‘‘must also allege.’’ This clarifies that the requirement for an allegation of current use or bona fide intention to use the mark in commerce applies to verifications filed after the application filing date.

NY Court Restrains Use of Viagra Marks in Sach's Condom and Missile Ad Campaign

2008-10-20T16:18:00+00:00

Trademark Law | New Judicial Opinions || No. No. 08 Civ. 8065 (WHP) || U.S. District Court for the Southern District of New York, 10/8/2008 || In this trademark infringement suit, the U.S. District Court for the Southern District of New York restrained the use or display of Viagra marks in a condom and missile campaign promoted by defendants Arye Sachs and JetAngel.com. Plaintiff Pfizer Inc. brought this action in response to defendants' launch of a "Voter Awareness Program" throughout major U.S. cities, featuring Pfizer's "Viagra" and "Viva Viagra" marks on defendants' jet cockpits and condoms with the images of presidential candidates Barack Obama and John McCain in an effort to encourage people to vote. Applying the eight factors cited in a court precedent, such as defendants' bad faith and strength of the marks, the district court found the defendants' use of the Viagra marks created a likelihood of confusion. Accordingly, Pfizer was able to satisfy the requirements for a preliminary injunction with regard to defendants' use of the marks. || Plaintiff Pfizer Inc. (“Pfizer”) brought this trademark infringement action against defendants Arye Sachs (“Sachs”) and Jetangel.com for violations of the Lanham Act, 15 U.S.C. sections 1114, et seq., among others. Pfizer moved for a preliminary injunction on its Lanham Act claims. By way of background, Pfizer is a global pharmaceutical company, manufactures and sells Viagra, a prescription drug used for the treatment of erectile dysfunction. Opinion, p. 1. Pfizer uses two trademarks in connection with Viagra: (1) the Viagra mark, and (2) the “Viva Viagra” mark (collectively, the “Viagra Marks”). On the other hand, Sachs is the proprietor of an unincorporated business that maintains a website – JetAngel.com. Through that website, Sachs sells outdoor mobile advertising on decommissioned military equipment such as figher jets and missiles. Id., p. 2. The filing of this suit was prompted by the defendants’ launch of a “Voter Awareness Program” throughout major U.S. cities, featuring the Viagra Marks on their fighter jet cockpits and condoms with the images of presidential candidates Barack Obama and John McCain in an effort to encourage people to vote. Likewise, defendants issued a press release, promoting the “Voter Awareness Campaign” as well as providing information marketing JetAngel.com’s advertising services. Id., p. 3. Pfizer thus filed this civil action, and obtained a temporary restraining order, prohibiting defendants from utilizing the Viagra Marks in connection with their advertising business. The district court first found that because defendants offered no evidence to rebut the presumption that the Viagra mark, as a registered mark, is entitled to protection. As for the “Viva Viagra” mark, “viva” is a common, albeit Spanish, word used to refer to Viagra. Therefore, the “Viva Viagra” mark is an arbitrary mark entitled to protection. In finding that there existed a likelihood of confusion, the district court considered the following eight factors: (1) strength of the senior user’s mark; (2) degree of similarity between the marks; (3) competitive proximity of the product; (4) likelihood that the senior user will bridge the gap; (5) evidence of actual confusion; (6) defendant’s bad faith; (7) the quality of defendant’s product; and (8) sophistication of the relevant group. Id., p. 5, citing Polariod Corp. v. Polard Elec. Corp., 287 F.2d 492, 495 (2d. Cir. 1961). In particular, with respect to the first factor, the strength of the Viagra Marks, the district court held that because the Viagra Marks are inherently distinctive marks, they are entitled to the utmost protection. Pfizer has spent millions of dollars advertising its Viagra product, which includes a campaign featuring “Viva Viagra” mark. This factor thus weighed in favor of finding a likelihood of confusion. With respect to the second factor, degree of similarity of marks, the district court found that the marks that defendants displayed were identical to the Viagra Marks. Accordingly, this factor weighed in plaintiff’s favor. The district court likewise found the third factor, competitive proximity and likelihood of bridging the gap, in plaintiff’s favor. According to the district court, although there were differences between the plaintiff’s product and defendant’s services, consumers are likely to be confused as to the relationship between the parties’ respective advertising. Id., p. 7, citing MGM-Pathe Commenc’ns Co. v. Pink Panther Patrol, 774 F. Supp. 869, 875 (S.D.N.Y. 1991). The fourth factor, actual confusion neither weighed in favor of nor against a likelihood of confusion. Although Pfizer did not submit evidence of actual confusion, defendants’ Viagra-branded missiles only entered the market place within the past several weeks. The fifth factor of bad faith weighed in favor of finding a likelihood of confusion. Defendants made no attempt to hide their awareness of plaintiffs’ mark, as defendants’ visit to Pfizer’s world headquarters made clear. The next factor – quality of defendants’ product – weighed in favor of Pfizer. Defendants’ intent to feature the Viagra Marks on their fighter cockpits while distributing condoms with the images of the presidential candidates could harm Pfizer’s reputation. There was nothing that indicates that purchasers of the Viagra product are a particularly sophisticated group of consumers. Accordingly, this last factor – sophistication of the relevant group – weighed in favor of finding a likelihood of confusion. Weighing all of these factors, the district court found that defendants’ use of the Viagra Marks created a likelihood of confusion. Accordingly, Pfizer was able to satisfy the requirements for a preliminary injunction with regard to defendants’ use of the Viagra Marks. Id. p. 9. For the foregoing reasons, the district court granted plaintiff’s motion for a preliminary injunction, enjoining defendants, and all who act in concert with them, from displaying the Viagra Marks in any media including the internet , and from advertising, promoting, or distributing any goods or services in connection with the Viagra Marks.

GA Court Dismisses Auction Management's Trademark Suit over its Online RingMan Service Mark

2008-10-20T15:47:01+00:00

Trademark Law | New Judicial Opinions || No. No. 1:05-CV-0639-RWS || U.S District Court for the Northern District of Georgia, 09/30/2008 || The U.S. District Court for the Northern District of Georgia dismissed a trademark infringement suit over a wholesale auction company's OnLine RingMan service mark. In this case, plaintiff Auction Management Solutions, Inc. (“AMS”) sued defendant Manheim Auctions, Inc. (“Manheim”), claiming that Manheim improperly used both a confusingly similar variant of AMS’ marks OnLine RingMan, and RingMan in various forms - including GM OnLine RingMan, RingMan, and RingMan Simulcast - to identify Manheim’s online auction system. After reviewing the entire record, the district court concluded that AMS failed to show evidence of a likelihood of confusion. Specifically, AMS did not present studies or surveys assessing confusion, nor did it alleged that there were any customers or prospective customers who experienced any potential confusion. Because AMS disclaimed exclusive rights to the individual term “ringman," the district court concluded that plaintiff’s claim of infringement with regard to Manheim's use of the term “ringman” ultimately should fail. In sum, based on the absence of any evidence of wrongful conduct or likelihood of confusion, the district court granted Manheim’s motion for summary judgment. || Defendant Manheim is a wholesale auction company, which re-markets vehicles for other individuals and entities (collectively, “consignors”) that wish to sell vehicles that they own. Manheim sells consignors’ vehicles to licensed franchise and independent auto dealers (collectively, “dealers”). From 2000 to 2003, Manheim operated more than eighty auction houses in the United States. Opinion, pp. 1-2. On the other hand, plaintiff Auction is the vendor of a product called OnLine Ringman. OnLine Ringman is software that allows remote bidders to participate in a live auction taking place at an auction house. The software broadcasts audio, video, and bidding-related information over the internet simultaneously with live auctions and permits internet users to bid in the auction. Id., p. 2. Before using OnLine Ringman, an auto auction house must set up equipment in an auction lane, including computers with OnLine Ringman software installed on a network to AMS’s computer system. Id. In September 2002, AMS obtained a registered logo service mark for OnLine Ringman.2 In registering this mark, AMS represented that “[n]o claim [was] made to the exclusive right to use ‘RINGMAN,’ apart from the mark as shown.” Id., p. 3, citing Ex. 13.) The trademark examiner also found “RINGMAN” to be a descriptive term, describing the auctioneer’s assistant who accepts the bids and reports them to the head auctioneer. Id., citing Ex. 6. Manheim never licensed OnLine Ringman on a company-wide basis. It only permitted its auction houses to decide individually whether to use the software. Of the eighty houses, eleven of them elected to do so for varying periods of time ranging between March 2001 and August 2003. AMS did not allege any improper marketing by nine of the eleven Manheim auction houses that utilized OnLine Ringman. AMS’s trademark infringement and unfair competition claims rested solely on marketing performed by two Manheim auction houses: Manheim Auto Auction (“MAA”) and Portland Auto Auction (“PAA”). AMS alleged trademark infringement under both Section 43(a) of the Lanham Act and under the common law based on two separate types of wrongful acts by Manheim. First, AMS claimed that Manheim improperly used both a confusingly similar variant of AMS’ design mark ONLINE RINGMAN, as well as its word mark ONLINE RINGMAN and RINGMAN in various forms - including GM ONLINE RINGMAN, RINGMAN, and RINGMAN SIMULCAST - to identify Manheim’s online auction system. Id., p. 11. Second, AMS alleged unfair competition and deceptive trade practices based on Manheim’s alleged improper use of its own trademark SIMULCAST in association with AMS’ online auction system. AMS’s state law claims rise and fall with its federal claims. Id., citing Optimum Techs. V. Home Depot U.S.A., 217 Fed. Appx. 899, 902 (11th Cir. 2007). According to the district court, the record showed that AMS disclaimed exclusive rights to the individual term “ringman.” AMS alleged that Manheim committed trademark infringement by using this portion of the composite mark. Because of the AMS disclaimer however, the district court concluded that plaintiff’s claim of infringement with regard to the two instances where Manheim utilized the term “ringman” ultimately should fail. Id., p. 12. The plaintiff also alleged that defendant used the phrase “GM Online Ringman” on PAA’s website but had “simulcast” listed at the bottom. While this may be a potential misuse, plaintiff did not present evidence of any confusion occurring as a result of this misuse. Further, the district court added, it was very unlikely that any confusion would have taken place, since a user would immediately know the difference between the products when he or she accessed the web page. Id., p. 13. The district court also concluded that the marketing at-issue created no likelihood of confusion. Even if AMS had evidence that Manheim engaged in conduct that could amount to infringement of a federally registered mark, AMS would need to make a further showing that the particular challenged conduct created a likelihood of confusion among relevant consumers. Id., p. 14, citing Lipscher v. LRP Publ’ns, Inc., 266 F.3d 1305, 1314 (11th Cir. 2001). After reviewing the entire record, the district court concluded that AMS failed to show evidence of a likelihood of confusion. It did not present studies or surveys assessing confusion, and it failed to allege that there were any customers or prospective customers who experienced any potential confusion at any time since the introduction of Manheim’s Simulcast system. Id., p. 15. The district court noted that the customers at issue here - auction houses - are sophisticated commercial actors that make significant investments in time and resources to use these types of products. Additionally, Manheim never sought to license its Simulcast system to competing auction companies, nor did it target its marketing to other auction companies. Other auction companies were Manheim’s competitors, not their customers. Id. Finally, Manheim presented evidence that AMS’s customers were not in fact confused by the complained-of terminology and marketing. In conclusion, even if AMS showed a likelihood of confusion exists, it failed to demonstrate that such confusion was caused by the complained-of marketing. Based on the absence of any evidence of wrongful conduct or likelihood of confusion, the district court granted Manheim’s motion for summary judgment.

Importer of Fake 'Tommy' Watch May Be Liable Under Tariff Act: Ninth Circuit

2008-10-6T17:13:00+00:00

Trademark Law | New Judicial Opinions || No. No. 06-56033 || U.S. Court of Appeals for the Ninth Circuit, 09/25/2008 || In this case involving imported watches bearing the "Tommy" mark, the U.S. Court of Appeals for the Ninth Circuit ruled that the Bureau of Customs and Border Protection ("Customs") may impose a civil penalty under the Tariff Act upon an importer of merchandise bearing a counterfeit mark, even though the owner of the registered mark does not manufacture the same type of merchandise. Tommy Hilfiger Licensing, Inc. is the registered owner of the mark in dispute, but does not manufacture watches. Customs filed a civil penalty action against the watch importer, Able Time, Inc. ("Able"), which responded by filing a motion for summary judgment. The U.S. District for the Central District of California granted Able's motion. It reasoned that the imported watches could not be counterfeit because Tommy Hilfiger did not make watches at the time of the seizure. On appeal, the Ninth Circuit reversed. Construing the Lanham Act and the Tariff Act together, the Ninth Circuit held the imposition of a civil penalty under the Tariff Act does not require a trademark holder to manufacture or sell the same good as the goods imported with the offending counterfeit mark. The Ninth Circuit, however, remanded for the district court to determine whether (1) the mark on the watches is identical to or substantially indistinguishable from the registered mark pursuant to the Lanham Act and (2) whether the offending mark copies or simulates the registered mark pursuant to the same statute, which amounts to the traditional likelihood of confusion test for infringement. || Defendant-appellee Able imported a shipment of watches into the United States. The watches bore the mark “TOMMY,” which is a registered trademark owned by Tommy Hilfiger Licensing, Inc. The Bureau of Customs and Border Protection seized the watches pursuant to the Tariff Act, which authorizes seizure of any “merchandise bearing a counterfeit mark.” Opinion, p. 13656, citing 19 U.S.C. § 1526(e). Tommy Hilfiger did not make or sell watches at the time of the seizure. Customs later issued Able Time several notices of civil penalty in February and March of 2004. Customs filed this civil penalty action pursuant to the Tariff Act, 19 U.S.C. § 1526(f), on April 15, 2004. Able Time filed a motion for summary judgment which the district court initially denied, concluding that jurors could reasonably return a verdict for the government that the watches bore a counterfeit mark. The district court subsequently issued sua sponte an order to show cause why it should not reconsider its decision. After further briefing, the district court granted Able Time’s motion for summary judgment, concluding as a matter of law that the imported watches could not be counterfeit because Tommy Hilfiger did not make watches at the time of the seizure. Id., p. 13659. The government timely appealed. In this appeal, the government argued that the Tariff Act and the statutes that it incorporates do not require the owner of the trademark to manufacture the same goods as those bearing the offending mark. Id., p. 13660. Able Time responded by arguing that other sources, such as other statutory language and legislative history, show Congress’s intent to require identity of goods or services in the Tariff Act. The applicable rule in this appeal, the Tariff Act, prohibits the importation of merchandise bearing a registered trademark without the permission of the owner of the trademark . Id., p. 13661, citing 19 U.S.C. § 1526(a). The Tariff Act also authorizes seizure and forfeiture if the merchandise bears a counterfeit mark. Id., citing 19 U.S.C. § 1526(e). The Tariff Act authorizes the imposition of a civil penalty upon an importer whose goods are seized, in an amount not more than the value the merchandise would have had if it were genuine. Id., pp. 13661-13662, citing 19 U.S.C. § 1526(f). According to the Ninth Circuit, none of these provisions require the owner of the registered mark to make or sell the same goods as those bearing the offending mark. Id. Subsection (e) of the Tariff Act incorporates two other statutes, 15 U.S.C. § 1127 and 15 U.S.C. § 1124. Both are part of the Trademark Act of 1946, known as the Lanham Act, and neither contains an identity of goods or services requirement, stated the Ninth Circuit. Id., p. 13662. The Tariff Act incorporates the definition of the term “counterfeit” from the first statute: “A ‘counterfeit’ is a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” Id., citing 15 U.S.C. § 1127. The Ninth Circuit further wrote that to run afoul of the civil penalty provision of the Tariff Act, then, the offending merchandise must bear a mark identical to or substantially indistinguishable from a registered trademark owned by a United States citizen or corporation, where the offending merchandise copies or simulates the registered trademark, meaning that it is likely to cause the public to associate the offending merchandise with the registered trademark under the Sleekcraft factors. Id., p. 13663, citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979); 19 U.S.C. § 1526(e)-(f); 15 U.S.C. §§ 1124, 1127; 19 C.F.R. § 133.22(a). Construing all these statutes together, the Ninth Circuit held that nowhere does this statutory scheme require the owner of the registered mark to make the same goods as those bearing the offending mark. Id. On the basis of the foregoing discussion, the Ninth Circuit concluded that Customs may impose a civil penalty pursuant to 19 U.S.C. § 1526(f) upon an importer of merchandise bearing a counterfeit mark, even though the owner of the registered mark does not manufacture the same type of merchandise. The Ninth Circuit however remanded for the district court to determine whether (1) the mark on the watches is identical to or substantially indistinguishable from the registered mark pursuant to 15 U.S.C. § 1127, and (2) whether the offending mark copies or simulates the registered mark pursuant to 15 U.S.C. § 1124, which amounts to the traditional likelihood of confusion test for infringement.

CA Court: Schussler, and not Webster, Owns "Hot Dog Hall of Fame" Mark

2008-10-6T16:48:00+00:00

Trademark Law | New Judicial Opinions || No. No. 07cv2016 IEG || U.S. District Court for the Southern District of California, 09/22/2008 || In this suit relating to the "Hot Dog Hall of Fame" mark, the U.S. District Court for the Southern District of California ruled that the owner of an online newsletter at www.thehotdoghalloffame.com, J. Frank Webster, had no enforceable right over this disputed mark. Plaintiff Schussler Creative, Inc. registered this mark, and filed this action for a declaration that its trademark is valid. In ruling in Schussler's favor, the district court held that since Schussler registered the mark, it is presumed valid. A defendant like Webster can rebut the presumption of validity if he used the trademark in commerce prior to Schussler’s registration of the mark. Here, Webster failed to rebut this presumption. Specifically, Webster added a “store” to his website only after the commencement of this lawsuit. Because Webster started this activity after plaintiffs registered the trademark, this activity was not “prior” use. In addition, Webster’s miscellaneous activities had not included any commercial component. An intent to eventually commercially exploit an idea is not sufficient to confer trademark rights or meet the “in commerce” requirement. On this basis, the district court granted plaintiffs' motion for summary judgment. || Plaintiffs brought this action, inter alia, for a declaration that Schussler Creative, Inc. owns the trademark for “Hot Dog Hall of Fame.” Opinion, p. 2. Defendant Webster, also known as “Uncle Frank” and “Mr. Hot Dog,” owned a large collection of hot dog memorabilia which he has been collecting since the 1970’s. He maintained a website with an online newsletter at www.thehotdoghalloffame.com. The last hot dog restaurant he operated closed in 1983. Id. He had never sought or received money in connection with his activities on his website or with the memorabilia collection, although he considered it more than a hobby. It is his eventual plan to open a museum showcasing the collection with an on-site restaurant and other hot-dog related activities. Id. On the other hand, plaintiffs developed concepts for themed restaurants. Plaintiffs’ previous projects included the “Rainforest Café” and “T-Rex.” In 2005, Schussler Creative filed a trademark application for the mark “Hot Dog Hall of Fame.” Together with its business partner, RED Development, LLC, (“RED Development”) Schussler Creative is developing a restaurant franchise called “Hot Dog Hall of Fame.” The first “Hot Dog Hall of Fame” opened on August 13, 2008, at the Mohegan Sun Casino at Pocano Downs, Wilkes-Barre, Pennsylvania. Id. In June of 2007, defendant sent e-mails to various media organizations, hospitality companies, civic leaders, and RED Development regarding plaintiffs’ plan to open the Hot Dog Hall of Fame restaurants. In the e-mails, defendant claimed Mr. Schussler stole the concept of Hot Dog Hall of Fame from defendant; plaintiffs did not own the intellectual property of the Hot Dog Hall of Fame; and Mr. Schussler was a “liar,” a “thief,” and a “con man.” Id. Presented before the district court was plaintiffs’ motion for summary judgment. In particular, plaintiffs sought a declaratory judgment as to their claim that Schussler Creative has a valid trademark for the mark “Hot Dog Hall of Fame.” Id., p. 4. The district court resolved this motion in plaintiffs’ favor. According to the district court, because Schussler Creative has registered the trademark, it is presumed valid. Id. Defendant can rebut the presumption of validity if he used the trademark in commerce prior to Schussler’s registration of the mark. Id., referring to Brookfield Comm., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1047 (9th Cir. 1999). Here, defendant was unable to rebut this presumption, i.e. he used the trademark in commerce prior to plaintiffs’ registration. Defendant claimed that he has been using “The Hot Dog Hall of Fame” to describe his activities for approximately thirty years. Defendant’s relevant uses of the mark are: (1) registration of the domain name “hotdoghalloffame.com”; (2) maintenance of an on-line store on the website; (3) display of memorabilia at a restaurant in 1983; (4) other miscellaneous activities; and (5) intent to commercially exploit the mark in the future. Looking at all these circumstance, the district court however held that these uses were not sufficiently commercial when viewed individually and in their entirety. Specifically, defendant added a “store” to his website only after the commencement of this lawsuit. Id., p. 5. Because defendant started this activity after plaintiffs registered the trademark, this activity was not “prior” use. Id., citing Brookfield, 174 F.2d at 1047. Also, defendant used the mark on the wall of a restaurant called “Hot Diggity Dogs” for approximately six months in 1983. This does not constitute “continuous” commercial use up until the registration of the mark by Schussler Creative in 2005, and any trademark rights acquired in 1983 have been abandoned. Id., p. 6, citing L.A. Gear, Inc. v. E.S. Originals, Inc., 859 F. Supp. 1294, 1299 (C.D. Cal. 1994). In addition, defendant’s miscellaneous activities have not included any commercial component. Finally, the district court considered defendant’s “plan to make money” by eventually opening up a museum to showcase his collection and a restaurant to support that collection. An intent to eventually commercially exploit an idea is not sufficient to confer trademark rights or meet the “in commerce” requirement. Id., citing Brookfield, 174 F.3d at 1052. In sum, viewing the evidence in the light most favorable to defendant as the non-moving party and considering the totality of defendant’s uses of the mark, the district court found that defendant did not use the mark in a sufficiently “commercial” manner to create an enforceable trademark right. Accordingly, the district court granted plaintiffs’ motion for summary judgment as to the claim for a declaratory judgment of trademark rights.

AZ Court Grants Injunctive Relief to Garduno in Restaurant Trademark Suit Versus Tortilla, Inc.

2008-09-29T16:21:00+00:00

Trademark Law | New Judicial Opinions || No. No. CV08-1090-PHX-DGC || U.S. District Court for the District of Arizona, 09/16/2008 || In this dispute over the restaurant mark "Garduno's," the U.S. District Court for the District of Arizona issued injunctive relief to plaintiff Garduno's of Arizona, LLC. Defendant Tortilla, Inc. was the owner of this disputed mark, and licensed defendant to use it in the latter's chain of restaurants. Claiming that plaintiff had failed to pay royalties, defendant sent a letter purporting to terminate the license agreement. In response, plaintiff filed the instant suit, arguing that defendant should be restrained from terminating its right to use the "Garduno's" name. The district court granted plaintiff's motion for preliminary injunction, concluding that it had established a probability of success on the merits and the prospect of irreparable harm. In addition, the district court found that plaintiff was able to demonstrate that the hardship of forcing to close its restaurants outweighed the hardship defendant would incur if plaintiff would continue operating under the "Garduno's" name. || Plaintiff Garduno’s of Arizona, LLC, operated three restaurants in Maricopa County, Arizona, using the “Garduno’s” name. Defendant Tortilla, Inc., a New Mexico corporation, owned the rights to the Garduno’s name and had licensed them to plaintiff. Opinion, p. 2. Defendant argued that plaintiff has breached the terms of the license agreement by failing to pay royalties owed to defendant. Plaintiff responded by filing this lawsuit, alleging that defendant has engaged in various wrongs and should be enjoined from terminating plaintiff’s right to use the Garduno’s name. Id. Plaintiff filed an Application for Preliminary Injunction to prevent defendant from terminating the license. Id. Plaintiff asserted that defendant’s attempt to terminate the license agreement was invalid. Id., p. 3. Plaintiff also argued that it entered into the license agreement on January 1, 2003, and agreed to pay a royalty fee of 1% of all sales at plaintiff’s Arizona stores. Id. On the other hand, defendant argued that plaintiff’s purported license agreement was a fraud and that the parties in fact entered into a different license agreement that called for the payment of 4% of sales. Id. On May 29, 2008, defendant sent plaintiff a letter (the “Notice Letter”) demanding the payment of $1,377,315.88 in delinquent fees and threatening to terminate plaintiff’s rights in the Garduno’s name if the fees were not paid. When plaintiff did not make the payment, defendant sent plaintiff a June 17, 2008 letter purporting to terminate the license agreement and plaintiff’s right to use the Garduno’s trademarks, trade name, and trade dress (the “Termination Letter”). Id. The parties sharply disagreed on whether plaintiff’s or defendant’s version of the license agreement was valid. Each party accused the other of forgery. Id.The parties did not dispute, however, that they entered into an earlier agreement, in 1995, that licensed to plaintiff the right to use the Garduno’s name. Their disagreement was over which version of the license agreement replaced the 1995 contract. Id. Resolving the contending positions of the parties, the district court found that the factors of irreparable harm and balance of hardship weighed in plaintiff’s favor. On this basis, it granted plaintiff’s application for preliminary injunction. With regard to the factor of irreparable, the district court specifically found that plaintiff’s restaurants have been in business for some years and have generated substantial customer good will. This good will is associated with plaintiff’s Arizona business operations and quality, not just with the Garduno’s name owned by defendant. Courts have recognized that “the loss of such good will could not readily be recouped and is mostly noncompensable. That, plus the more compelling prospect of the loss of livelihood on the part of [Plaintiff’s] employees tips the balance on the issue of irreparable harm[.]” Id., p. 4, citing American Standard, Inc. v. Meehan, 517 F. Supp.2d 976, 989 (N.D. Ohio 2007). With regard to the factor of balance of hardship, the district court found that it should weigh in favor of plaintiff. The district court reasoned that defendant’s termination seeks to prevent Plaintiff from using the Garduno’s name and to require plaintiff to change its menu and decor. Such a termination would compel plaintiff to revamp the restaurants that have engendered substantial good will, restaurants in which plaintiff had invested millions of dollars. Id. The district court thus concluded that the hardship of forcing plaintiff to close its restaurant substantially outweighs the hardship defendant would incur if plaintiff continues operating under the Garduno’s name. On the basis of the foregoing, the district court granted plaintiff’s application for injunctive relief. The preliminary injunction shall be effective upon the posting of a security in the amount of $10,000.00.

Fl Court Orders Auction Sale of Tabacalera Trademark to Satisfy Cuban Cigar's Judgment Lien

2008-09-29T15:52:00+00:00

Trademark Law | New Judicial Opinions || No. No. 02-23124-CIV || U.S. District Court for Southern District of Florida, 09/16/2008 || In this controversy relating to the "Popular" and "Tabacalera Popular Cubana" design and marks, the U.S. District Court for the Southern District of Florida ruled that a creditor could cause the seizure and auction sale of a debtor's trademarks to satisfy the latter's judgment debt. Here, the district court determined that defendants owned the marks in dispute and that plaintiffs Cuban Cigar Brands, N.V. and Max Rohr were able to comply with the requirement of Florida statute that as judgment holders, they must file an affidavit stating that they hold an unsatisfied judgment. With regard to the due process rights of the third-party trademarks licensee, the district court determined there was nothing in the record to indicate that any of the licensee's property rights would be directly altered if the trademark were to be seized and sold to the highest bidder at auction. Significantly, under the license agreement, defendants were entitled to sell or transfer their ownership rights in the trademarks without notifying the licensee in advance or obtaining its consent. On such basis, the district ordered the U.S. Marshall to seize the trademarks-at-issue for sale at a judicial auction to be applied toward the satisfaction of defendants' judgment debt. || Presented before the district court was plaintiffs’ motion for final summary judgment. After defendants failed to file a response within the time provided, plaintiffs filed a separate motion for final summary judgment by default. Order, p. 1. By way of background, on November 26, 2003, plaintiffs obtained a final judgment against defendants in the amount of $900,000 . Id. Plaintiffs obtained Judgment Lien Certificates and unsatisfied Writs of Execution in recognition of the judgment. Plaintiffs filed the instant motion for summary judgment based on their argument that, as a matter of law, defendants’ trademarks must be seized and sold in order to satisfy defendants’ judgment debt. Id., p. 2. Although defendants admitted the existence of the debt that they owed to plaintiffs by virtue of the final judgment, they denied that they control the trademark rights at issue or that the trademarks are owned by Tabacalera Popular Cubana, Inc.; they denied that plaintiffs are entitled to seize and sell the trademark rights; and, they denied that plaintiffs are entitled to proceedings supplementary, including the recovery of attorneys fees and costs pursuant to Florida Statute § 56.29. The district court however determined that under Florida law, intangible assets, such as trademark rights, are amenable to execution. Id., pp. 4-5, citing Continental Cigar Corp. v. Edelman & Co., 297 So. 2d 957, 957-58 (Fla. 3d DCA 1981). Further, summary judgment may be entered to grant the relief plaintiffs sought in their motion for proceedings supplementary, including the seizure and sale of defendants’ valuable trademark rights. Id., p. 5, referring to Riley v. Crossings Community Church, Inc., 881 So. 2d 685, 685 (Fla. 5th DCA 2004). Here, several factors favored the grant of plaintiffs’ motion to have an auction sale of defendants’ trademarks. Firstly, despite defendants’ suggestion otherwise, Tabacalera Popular Cubana, Inc. was listed as the owner of the trademarks at issue. In fact, plaintiffs provided copies of the trademark registrations, which were issued in the name of Tabacalera Popular Cubana, Inc. Second, defendants did not dispute this fact when it was addressed at the May 21, 2008 status conference before the Magistrate Judge. Third, plaintiffs was able to comply with the requirement of Florida statute that as the judgment holder, plaintiffs in this case, must “file an affidavit” stating that the “person or entity holds an unsatisfied judgment.” Id., p. 6, citing Fla. Stat. § 56.29(1). Finally, the fact that a third party held a pre-existing license to use a trademark at issue in this case did not preclude the issuance of summary judgment in plaintiffs’ favor. Id., pp. 7-8. Plaintiffs correctly pointed out that defendants failed to mention the existence of this license agreement in the three months in which this motion was pending, during which time defendants’ counsel appeared at three separate status conferences before the Magistrate Judge and said nothing to correct their previous statements. Regardless of this troubling fact, the district court concluded that the entry of summary judgment would not affect the due process rights of the third-party licensee in this case, Virginia Carolina Corporation, Inc. (“VCC”). Id. At most, VCC’s rights may be tangentially affected as a consequence of the proceedings supplementary, but there was nothing in the record to indicate that any of VCC’s property rights would be directly altered if the trademark is seized from defendants and sold to the highest bidder at auction. Id., p. 10. Significantly, under the license agreement, defendants were entitled to sell or transfer their ownership rights in the trademark without notifying VCC in advance or obtaining VCC’s consent. Thus, since defendants were free to sell their trademark rights at will for private pecuniary gain, there was no reason to require VCC’s involvement in connection with the sale of those trademark rights for the purpose of satisfying the judgment debt that defendants owed to plaintiffs. Id. On the basis of the foregoing the district ordered the U.S. Marshall to seize the trademarks-at-issue for sale at a judicial auction to be applied toward the satisfaction of defendants’ judgment debt.

2Tiffany v. eBay: A Trademark Owner Must Police Its Own Marks on the Internet

2008-09-26T16:59:00+00:00

Trademark Law || Tiffany (NJ) Inc., et al. eBay, Inc., 09/26/2008 || In its significant opinion in Tiffany v. eBay, ___ F. Supp. 2d ___, 2008 WL 2755787 (No. 04 Civ. 4607) (S.D.N.Y. , July 14, 2008) the Southern District of New York rejected an effort by renowned jeweler Tiffany to expand the reach of contributory trademark infringement. Tiffany’s theory of secondary liability would have imposed liability for trademark infringement upon web-based intermediaries whose users infringe on trademarks by selling counterfeit goods. The opinion fills an important gap in the precedent of contributory trademark infringement, but it also emphasizes that trademark law is about consumer protection, not the suppression of speech. Tiffany has filed an appeal of the decision with the U.S. Court of Appeals for the 2nd Circuit.

UT Court Grants Injunctive Relief to Talisker Corp. in Row over "Talisman" Real Estate Mark

2008-09-22T18:44:00+00:00

Trademark Law | New Judicial Opinions || No. No. 2:06-CV-1034 TC || U.S. District Court for the District of Utah, 09/12/2008 || The U.S. District Court for the District of Utah granted injunctive relief to plaintiffs Talisker Corp. and Talisker Deer Valley Corp. (collectively, "Talisker) in their trademark row with defendants Prime West. Both plaintiffs and defendants were engaged in real estate development, but the former sued the latter, claiming that Prime West's mark, "Talisman," infringed their own "Talisker" mark. The district court sided with plaintiffs because there was a strong and substantial likelihood that they would succeed in their infringement claim. Citing court precedents, the district court found that almost all factors used in determining likelihood of confusion, such as degree of similarity of the marks and intent of the alleged infringer, weighed in Talisker's favor. In this regard, an injunction would eliminate any confusion between the Talisman development and Talisker’s developments and facilities. Such an injunction would also enforce Talisker's marks. The district court therefore ruled that issuance of preliminary injunction to be effective immediately upon the posting of a bond. || This case involved a dispute involving the “Talisker Trademarks” and the “Talisman Trademark”. Talisker owned and used the Talisker Trademarks in connection with real estate marketing, recreational activities, and other purposes in the area around Park City, Utah. Opinion, p. 1. On the other hand, defendants Prime West Jordanelle, LLC and Prime West Jordanelle II, LLC (collectively “Prime West”) use the Talisman Trademark in connection with real estate marketing in the same area: Park City, Utah. Id. Talisker alleged that Prime West’s use of the Talisman Trademark infringed the Talisker Trademarks. Id. Talisker is a real estate developer. Talisker is developing and marketing three residential communities in the area around Park City. Prime West is also a real estate developer and is also developing and marketing a residential community named Talisman near Park City. Id., p. 2. Presented before the court was Talisker’s motion for a preliminary injunction barring Prime West from continuing to use the Talisman Trademark in marketing its development. Id. To obtain a preliminary injunction, Talisker must establish that: (1) it will suffer irreparable injury unless the injunction issues; (2) the threatened injury to it outweighs whatever damage the proposed injunction may cause Prime West; (3) its proposed injunction would not be adverse to the public interest if issued; and (4) it has a substantial likelihood of success on the merits of its claims. Id., p. 7, referring to Schrier v. University of Colo., 427 F.3d 1253, 1258 (10th Cir. 2005). Here, the district court found that Talisker was substantially likely to succeed on the merits of its trademark infringement claim against Prime West. To prove its claim of trademark infringement, Talisker must show that Prime West’s use of the Talisman Trademark is “likely to cause confusion in the marketplace concerning the source of the different products.” Id., p. 8, citing Sally Beauty Co., Inc. v. Beautyco, Inc., 304 F.3d 964, 972 (10th Cir. 2002). The Tenth Circuit uses a six factor test to determine the likelihood of confusion: (1) the degree of similarity between the marks; (2) the intent of the alleged infringer in adopting the mark; (3) evidence of actual confusion; (4) similarity of products and manner of marketing; (5) the degree of care likely to be exercised by purchasers; and (6) the strength or weakness of the marks. Id., p. 9, citing Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1239-40 (10th Cir. 2006)(citing Sally Beauty, 304 F.3d at 972). Applying the foregoing test, the district court found that these six factors weighed in Talisker’s favor. Specifically, the first factor, the similarity prong, favored Talisker, because both the Talisker Trademarks and Talisman Trademark were used to market upper end real estate developments in the Park City area. Id., p. 13. The second factor, evidence of actual confusion, also favored Talisker. In particular, Talisker was able pointed to several anecdotal instances of actual confusion of Talisker and Talisman by people in the Wasatch and Summit County areas. Those confused included acquaintances of people selling Talisman homes, potential Talisker clients, a Wasatch County planner and others. The district court likewise found the third factor, similarity of products and manner of marketing, weighing in favor of Talisker. Both Talisker and Talisman were real estate developers, and there was strong evidence that Talisker regularly associated its marks with each of its development and facilities. With regard to the fifth factor – degree of care, the district court found it to be neutral, even though this factor had little or no weight in the district court’s analysis. The sixth factor – strength or weakness of the marks – likewise weighed in Talisker’s favor. The district court found the Talisker Trademark “quite strong.” Id., p. 15. On the other hand, the strength or weakness of the Talisman Trademark was “unclear to the court.” Id., p. 16. In granting injunctive relief to Talisker, the district court likewise considered other factors, such as irreparable harm, balance of injuries, and public interest. Such factors also weighed in Talisker’s favor. Specifically, Talisker was able to show irreparable harm here in the form of potential loss of reputation and goodwill by being confused with the Talisman development. Id., pp. 16-17, referring to GTE Corp. v. Williams, 731 F.2d 676, 679 (10th Cir.1984 ). Talisker had the potential injury of losing interested customers to Prime West and would face a loss of good will and reputation by being associated with a competitor. Id. In this regard, an injunction would eliminate any confusion between the Talisman development and Talisker’s developments and facilities. Consumers would accordingly be better informed about who is developing and marketing which communities in the Park City area. Such an injunction would also enforce the Talisker Trademarks. Id., pp. 17-18. In view of the foregoing, the district court granted Talisker’s motion for preliminary inunction to be effective immediately upon the posting of a bond.

Seventh Circuit Reverses $2.67M Award to WMS Gaming, Orders Lower Court to Reassess Damages to Include All Profits of PartyGaming

2008-09-22T18:06:00+00:00

Trademark Law | New Judicial Opinions || No. No. 07-3585 || U.S. Court of Appeals for the Seventh Circuit, 09/8/2008 || In this controversy relating to the "Jackpot Party" and Super Jackpot Party" marks, the U.S. Court of Appeals for the Seventh Circuit reversed the district court's award of $2.67 million in damages to WMS Gaming, Inc. (“WMS”). The U.S. District Court for the Northern District of Illinois had earlier issued a default judgment for trademark infringement against defendant PartyGaming. But WMS still appealed, claiming that the district court did not properly account for profits in determining relief. On appeal, the Seventh Circuit found that the district court erred in assuming that revenues earned from infringing sales are separate from legitimate revenues in determining the amount of damage awards. The proper rule to apply, according to the Seventh Circuit, is that the infringer had the burden of proof to establish that certain portions of its sales were not derived from infringement of a plaintiff's mark. Here, PartyGaming failed to discharge such burden. Hence, WMS may be entitled to an award equal to all profits earned by PartyGaming during the infringing period. || This appeal involved a trademark infringement dispute between gaming companies. Opinion, p. 1. It began when WMS, sued WPC Productions Ltd. and its parent corporation, PartyGaming PLC (collectively, “PartyGaming” or “the defendants”), for PartyGaming’s unapologetic infringement of WMS’s registered trademarks JACKPOT PARTY and SUPER JACKPOT PARTY. By way of background, PartyGaming is based in Gibraltar, but the electronic gaming services that it provides span the globe. Id., p. 2. After several failed attempts to persuade PartyGaming voluntarily to cease its infringing uses of WMS’s marks, WMS filed this suit district court seeking injunctive relief, damages, and an equitable accounting of the profits PartyGaming reaped from its use of WMS’s marks in the United States. Id. Despite receiving proper notice, the defendants opted to ignore WMS’s lawsuit entirely. The result was a default judgment for both monetary and injunctive relief entered in WMS’s favor. The damages awarded was in the amount of $2,673,422.10. Id., pp. 4-5. Believing that it was entitled to additional relief, however, WMS appealed, arguing that the district court applied the wrong standard to its claim for an accounting of profits. Though the district court granted relief to WMS, the monetary award that WMS had sought was exponentially larger than the one it got: WMS had requested $287,391,140.70. It arrived at this figure by determining the total amount of revenue that PartyGaming had earned as a result of its business in the United States in 2004, 2005, and 2006. WMS obtained that data from PartyGaming’s website, which featured links to its public financial statements and annual revenue reports. Id. WMS maintained that its central claim was for an accounting, not for damages, and so the district court committed reversible error when it failed to recognize that distinct standards apply to each type of claim, which in turn led it to conflate the standards for damages with those that govern an equitable accounting of profits. Id., p. 8. In reversing the district court’s finding, the Seventh Circuit cited the rule laid down in Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251 (1916). This rule states that “[t]he burden is the infringer’s to prove that his infringement had no cash value in sales made by him. If he does not do so, the profits made on sales of goods bearing the infringing mark properly belong to the owner of the mark.” Id., p. 13. Here, the burden was therefore on PartyGaming to show that certain portions of its revenues—which for purposes of the award after its default judgment WMS established by using PartyGaming’s own public financial statements and Reports—were not obtained through its infringement of WMS’s marks. There was no evidence in the record that would have helped PartyGaming to meet that burden. Id., pp. 14-15. Similarly, in this case PartyGaming has not come forward with any evidence suggesting that deductions are warranted from the revenues that its own annual reports reflect. Courts consistently find that when a trademark plaintiff offers evidence of infringing sales and the infringer fails to carry its statutory burden to offer evidence of deductions, the plaintiff’s entitlement to profits under the Lanham Act is equal to the infringer’s gross sales. Id., p. 15, referring to Tex. Tech. v. Spiegelberg, 461 F. Supp. 2d 510, 526 (N.D. Tex. 2006). Here, WMS was able to provide evidence of the profits that PartyGaming earned from its U.S. sales. In the absence of evidence from PartyGaming showing that deductions are warranted, WMS was entitled to the revenues supported by its evidence. Based on the foregoing, the Seventh Circuit reversed the district court’s judgment, and ordered a remand to assess WMS’s claim for an accounting in accordance with the proper legal standard for that claim.

Venture Wins $0.42M Award Against McGills Glass in First Circuit

2008-09-8T18:20:00+00:00

Trademark Law | New Settlements and Verdicts || No. No. 07-1186 || U.S. Court of Appeals for the First Circuit,, 08/28/2008 || In this case regarding the "Venture Tape" and "Venture Foil" marks, the U.S. Court of Appeals for the First Circuit affirmed the award of about $426,486 in damages and attorney's fees in favor of Venture Tape Corp. ("Venture"), a manufacturer of specialty adhesive tapes and foils used in the stained-glass industry. The U.S. District Court for the District of Massachusetts in its judgment ordered McGills, an internet-based retailer of stained-glass supplies, to pay Venture $230,339.17 in damages, plus $188,583.06 in attorney's fees, and $ 7,564.75 in costs. On appeal, the First Circuit found no error in such determination, citing court precedent on the eight factors of "likelihood of confusion, such as similarity of the parties' marks and goods. McGills' admissions regarding the existence of most of these eight factors, particularly its owner's admission that his purpose in using the Venture marks was to lure customers to his site, justified the conclusion that no genuine dispute existed regarding the likelihood of confusion. As a result, Venture was entitled to summary judgment on Venture's claim for damages. || Defendant-appellant McGills Glass Warehouse (“McGills”), an internet-based retailer of stained-glass supplies, and its owner Donald Gallagher, appealed from a district court judgment finding them liable for infringement of the registered trademarks “Venture Tape” and “Venture Foil,” and awarding the marks’ owner, plaintiff-appellee Venture, an equitable share of McGills’ profits, as well as costs and attorney’s fees. Opinion, p. 1. In 1990, Venture, a manufacturer of specialty adhesive tapes and foils used in the stained-glass industry, procured two federal trademark registrations for products called “Venture Tape” and “Venture Foil,” respectively. Over the next fifteen years, Venture expended hundreds of thousands of dollars to promote the two marks in both print and internet advertising. Id. On the other hand, through its internet website, McGills also sold adhesive tapes and foils which directly compete with “Venture Tape” and “Venture Foil.” Id. Beginning in 2000, and without obtaining Venture’s permission or paying it any compensation, McGills’ owner Donald Gallagher intentionally “embedded” the Venture marks in the McGills website, both by including the marks in the website’s metatags— a component of a webpage’s programming that contains descriptive information about the webpage which is typically not observed when the webpage is displayed in a web browser— and in white lettering on a white background screen, similarly invisible to persons viewing the webpage. Gallagher, fully aware that the McGills website did not sell these two Venture products, admittedly took these actions because he had heard that Venture’s marks would attract people using internet search engines to the McGills website. Id., pp. 2-3. In the district court, although Venture adduced evidence that McGills generated almost $1.9 million in gross sales during the period of its infringement from 2000-2003, Venture eventually requested only $230,339.17, the amount that it estimated to be McGills’ net profits. Id., p. 5. Citing McGills’ willful infringement and alleging McGills engaged in obstructionist discovery tactics, Venture sought $188,583.06 in attorney’s fees and $7,564.75 in costs. After a hearing on Venture’s motion, the district court granted Venture’s requested recovery. McGills and Gallagher thus appealed from the district court’s grant of summary judgment to Venture on Lanham Act liability, and from the district court’s award of profits and attorney’s fees. Id. Given McGill’s admission that it had intentionally embedded the Venture marks in its website without plaintiff-appellee’s prior consent for the purpose of attracting internet users, the First Circuit determined whether there existed the “likelihood of confusion” among internet consumers. This inquiry required the First Circuit to assess eight criteria: (1) the similarity of Venture’s and McGills’ marks; (2) the similarity of their goods; (3) the relationship between their channels of trade (e.g., internet-based commerce); (4) the relationship between their advertising; (5) the classes of their prospective purchasers; (6) any evidence of actual confusion of internet consumers; (7) McGills’ subjective intent in using Venture’s marks; and (8) the overall strength of Venture’s marks. Id., p. 7, citing Boston Duck Tours, LP v. Super Duck Tours, LLC, 531 F.3d 1, 10 n.6 (1st Cir. 2008) (citing Pignons S.A. de Mecanique de Precision v. Polaroid Corp., 657 F.2d 482, 487 (1st Cir. 1981)). According to the First Circuit, by the conduct of its case below, McGills effectively admitted seven of the eight elements of the Pignons analysis. Id. Specifically, the First Circuit pointed to McGills’ numerous admissions that metatags and invisible background text on its website incorporated Venture’s exact marks. Id. For example, in his deposition, Gallagher admitted that the parties were direct competitors in the stained glass industry and that both companies used websites to promote and market their products. Id., p. 8. These admissions illustrated the similarity (indeed, identity) of the marks used, the similarity of the goods, the close relationship between the channels of trade and advertising, and the similarity in the classes of prospective purchasers. Id. They also supported the conclusions that McGills acted with a subjective intent to trade on Venture’s reputation and that Venture’s mark is strong. Accordingly, only the sixth factor— evidence of actual consumer confusion—was potentially in dispute. Id. Although Venture might have attempted to adduce evidence of actual consumer confusion (e.g., internet user market surveys) in support of a favorable Pignons determination, the absence of such proof was not dispositive of the Pignons analysis. Id., p. 9. McGills’ admissions regarding the other seven Pignons factors, particularly Gallagher’s admission that his purpose in using the Venture marks was to lure customers to his site, justified the conclusion that no genuine dispute existed regarding the likelihood of confusion. Id., p. 10. As a result, Venture was entitled to summary judgment on the liability issue. With regard to the award of profits under the Lanham Act, the First Circuit concluded that Venture was entitled to recover McGills’ profits during the period that McGills infringed the Venture. The First Circuit reasoned that such conclusion was based on McGills’ entitlement to summary judgment on Lanham Act liability. Id. In particular, Venture met its burden by introducing tax returns showing Venture’s gross sales over the relevant time period. McGills then had the burden of producing evidentiary documentation that some of those sales were unrelated to and unaided by McGills’ illicit use of Venture’s marks. The company produced no such evidence. As a result, there was no clear error in the district court’s determination that $230,339.17 represented an equitable share of McGills’ $1.9 million in gross sales during the three-and-a-half year infringement period. Id., pp. 14-15. With regard to the district court’s award of attorney’s fee to Venture, the First Circuit similarly affirmed. Specifically, it cited the Lanham Act that permits the court to award reasonable attorney’s fees to the prevailing party in “exceptional cases.” Id, p. 15, citing 15 U.S.C. § 1117(a). The district court had already concluded that McGills’ infringement was “willful.” Accordingly, the First Circuit found that the district court did not abuse its discretion in determining that this case was “exceptional case” where an award of attorney’s fees should be appropriate.

UT District Court Dismisses "Chemisan TM" Claim, Orders Field Sanitation to Amend Complaint

2008-09-8T18:02:01+00:00

Trademark Law | New Judicial Opinions || No. No. 2:08CV186 DAK || U.S. District Court for the District of Utah, 08/20/2008 || The U.S. District Court for the District of Utah dismissed a Lanham Act claim relating to a waste technology named "Chemisan TM." Plaintiff Field Sanitation Solutions, Inc., Faith Unlimited, Inc., and Charles W. Kallman asserted under the Lanham Act that defendant Hansen Energy & Environmental, LLC acted to falsely mislead third parties to believe that the alleged "Waste Technology" product at issue was developed by or otherwise affiliated with defendants. In response, defendants filed a motion to dismiss, arguing that the complaint was simply deficient in alleging a Lanham Act claim because it failed to allege that a product/good or service actually existed, and failed to allege any false statements regarding the origin or endorsement of same. Because plaintiffs failed to assert that defendants took plaintiffs’ actual, physical good and repackaged it as defendants’ own, the district court dismissed the Lanham Act claim, but granted plaintiffs leave to file an amended complaint. || For resolution by the district court was the motion to dismiss filed by defendant Hansen Energy and Environmental, LLC, Conly Hansen, Carl S. Hansen, Jaron C. Hansen, and Jason Miller’(“defendants”). Plaintiffs asserted fourteen causes of action against defendants, all of which arose under state law, except for the Ninth Cause of Action, which arose under the Lanham Act. In this motion, defendants claimed that plaintiffs failed to state a Lanham Act claim, and therefore, the district court should dismiss the Ninth Cause of Action. Memorandum Decision and Order, pp. 1-2. With regard to their purported Lanham Act claim, plaintiffs contended that the acts of defendants and their agents caused third parties to believe that the “Waste Technology” at issue here has its origin in, is to be affiliated with, and/or was developed by defendants. Id. They further alleged that the statements by defendants and their agents to third parties that the Waste Technology has its origin, is to be affiliated with and/or was developed by defendants are false and misleading statements and representations of fact. Id. Defendants, on the other hand, contended that this Lanham Act claim failed to identify any unfair competition contemplated by the Lanham Act, 15 U.S.C. § 1125(a). Defendants’ primary argument was that the existence of a good or service for which protection was sought is a prerequisite for a Lanham Act claim, and plaintiffs failed to identify a good or service that is currently offered by plaintiffs. Id. Instead, defendants contended, plaintiffs claimed to have “developed a concept” known as the “Waste Technology” for which a patent application had been filed, but no patent had been granted. In addition, plaintiffs assert only that “Kallman sought to name the Waste Technology with the brand name Chemisan TM.” Id., referring to Complaint ¶22. According to defendants, the Complaint was simply deficient in alleging a Lanham Act claim because it failed to allege that a product/good or service actually existed and failed to allege any false statements regarding the origin or endorsement of same. Id., p. 3, referring to Hutchinson v. Pfeil, 211 F.3d 515, 520 (10th Cir. 2000). Under court precedents (i.e. Dastar Corp. v. Twentieth Century Fox Film Corporation, 539 U.S. 23 (2003), and Tao of Systems Integration, Inc. v. Analytical Services & Materials, Inc., 299 F. Supp. 2d 565, 572 (E. D. Va. (2004)) that applied the Lanham Act, courts have ruled that protection of this statute covers only actual goods or services. The issue here is, is the failure of the plaintiff to allege that defendant took a tangible product or actual service a ground to dismiss his Lanham Act claim? The district court answered this issue in the affirmative. In Tao of Systems Integration, Inc. it was held that to state a claim for reverse passing off, a claimant must allege that the actual goods provided by defendant were in fact produced by plaintiff, or the actual services provided by defendant were in fact performed by plaintiff. In the case at bar, defendants argued that plaintiffs failed to assert that defendants took plaintiffs’ actual, physical good and repackaged it as defendants’ own. Id., p. 4. Similarly, the United States Supreme Court in Dastar limited a “reverse passing off” claim of the Lanham act to the actual producer of the good or service, thus removing undeveloped technology from protection under the Lanham Act. Id., p. 3, citing Dastar, 539 U.S. 23 (2003). In response to the foregoing points, plaintiffs did not dispute defendants’ characterization of the law, including the allegations necessary to properly state a Lanham Act claim. Rather, plaintiffs essentially argued that they have indeed stated a claim and/or that they could state a claim if given the opportunity to amend their Complaint. In view of the foregoing, the district court granted defendants’ motion to dismiss plaintiffs’ Lanham Act claim, under its Ninth Cause of Action. This dismissal was without prejudice. The district court granted plaintiffs to file a Second Amended Complaint to re-allege this cause of action.