Showing posts with label consumer confusion. Show all posts
Showing posts with label consumer confusion. Show all posts

Friday, February 7, 2014

Canadian Olympic Committee Sues North Face for Misleading Customers

An Accused North Face Product
Canadian news is reporting that the Canadian Olympic Committee (the "COC") is suing apparel maker The North Face, alleging that it infringed upon the Olympic trademarks and attempted to mislead customers into believing that it had sponsored the games, when it hasn't.

The lawsuit, which was recently filed in British Columbia, formally alleges that the North Face sold jackets and bags adorned with the maple leaf and "RU/14", which the COC alleges is a reference to Russia and the 2014 Sochi Games, while others featured "2.7.14", an alleged reference to the date of this week's opening ceremonies.  Further, the lawsuit alleges that some of the items were identified with such names as "Men's Sochi Full Zip Hoodie."

The lawsuit claims that the COC had warned the North Face about its concerns on multiple occasions, but that the warnings went largely unheeded.  

The North Face apparently responded by saying:  "[W]e are not an official sponsor of the COC or Team Canada and never indicated we were.  We do not agree with the COC's claims and we are disappointed they have taken this action."

The COC has been accused of overzealously protecting its brand. For example, in 2004, the COC launched a high-profile battle to force the Olympia Pizza and Pasta Restaurant in Vancouver to remove signs that featured the Olympic rings and torch. The restaurant owner defied the committee's demand, and the signage apparently still remains in place today.

Monday, November 11, 2013

Preliminary Injunction Against MAXIM Deodorant Denied, Court Finds "Insufficient" Harm to the Brand From Unlicensed Use

In a startling decision, a federal court refused to grant a court order against the continued unauthorized use the trademark "MAXIM" to sell antiperspirant, on the basis that the likely consumer confusion and harm to the brand was not sufficiently "irreparable" to justify a preliminary order halting the infringement.

Maxim magazine is a popular mens' "lifestyle" magazine with a circulation of over two million. Maxim magazine's publishers, Alpha Media Group, intend to license the "MAXIM" trademark to a line of body sprays, perfumes and colognes.

Corad Healthcare, Inc. manufactures antiperspirants to treat hyperhidrosis, a medical condition which causes excessive sweating. Corad has used the term MAXIM since 2001, but historically used clinical-looking packaging  on "prescription-strength" medication.

More recently, Corad began to use colorful packaging with "lifestyle" graphics, such as pictograms denoting golf and exercise. Further, Corad's "Maxim" name on its antiperspirant wipes started to look a lot more like Maxim's logo.  Consequently, upon learning of the new packaging, Alpha Media sued Corad, and sought a preliminary injunction.
The Accused Products

The court rejected the plaintiff's application for a preliminary injunction.  In its decision denying Alpha's motion, the District Court essentially agreed that there was the potential for Maxim's publishers to lose the ability to control its brand through Corad's unlicensed third party use. However, the Court then found that the publishers did not put forth evidence that such a result "will, in fact, occur."

The problem with the court's decision is that it requires a brand owner to prove the impossible until after the damage is already done.

Furthermore, a simple economic analysis demonstrates the flaw in the Court's logic.

It used to be the law that a preliminary injunction should usually issue when the use of a mark creates a likelihood of confusion in the consumers' minds as to the ownership or sponsorship of a product, because a high probability of confusion as to sponsorship almost inevitably establishes irreparable harm.

However, in 2010, in Salinger v. Colting, Judge Calabresi sitting in the Second Circuit Court of Appeals, penned a copyright decision finding that "a court deciding whether to issue an injunction must not adopt 'categorical' or 'general' rules or presume that a party has met an element of the injunction standard.

In plain English, Judge Calabresi effectively required that intellectual property owners factually "prove" the impossible, before it occurs:  that they are likely to be harmed by unlicensed third parties abusing their rights.

The reason such factual proof is impossible is not because it is untrue. It is because there is no simple way to measure the harm to a brand before such harm actually occurs. And once that harm occurs, it cannot be recovered. Judge Calabresi is a renowned law and economics scholar who should fully understand this point.

Here is an example:  Suppose Maxim's publishers seek to market and expand their brand to sell antiperspirants.  They set up a meeting with an established company that manufactures and distributes such products (such as Procter and Gamble).

In this hypothetical scenario, P&G would decline to market the Maxim-branded products on the basis that the trademark is already registered and used by Corad.

There is no way to ever calculate with precision the economic "harm" wrought on Alpha by the continued existence of Corad's unlicensed product in the marketplace.  

However, the economic opportunity cost to Alpha is significant:  It cannot meaningfully market a product that was its right to do so until after trial, which could be four years away.

At the conclusion of the lawsuit, a jury might award damages to Alpha Media based upon Corad Healthcare's infringement.

However, as this chart shows, the recovery of Corad's profits does not equal the opportunity cost to Maxim's publishers.  In other words, Alpha loses out on more than Corad actually gains:

The Second Circuit Court of Appeals has ignored this reality, and effectively would require that intellectual property owners suffer these losses.

The problem is that Corad will never be able to adequately compensate the publishers for the harm it causes to the brand owner.  Such "irreparable injury" is precisely why preliminary injunctions were commonplace when a brand owner could prove a high likelihood of confusion.

Under the new, "non-categorical" standard in the Second Circuit, brand owners must suffer these losses due to no fault of their own.

Sunday, November 10, 2013

Canada Goose Sues Sears For Selling "Knockoff" Parkas

Canada Goose, maker of high quality and fashionable parkas, has filed a trademark infringement lawsuit in a Toronto federal court against Sears Canada, Inc., accusing the department store of selling a 'lower-end' misleading 'knockoff' jacket that is causing consumer confusion.

The Canada Goose design at issue is three quarters length, with a genuine coyote fur-trimmed hood called the "Kensington Parka" that sells for $695.00.  Canadian news reports that the accused Sears jacket sells for $199.00.

Last year, Canada Goose launched a similar trademark infringement lawsuit against Toronto-based International Clothiers, Inc. The parties settled that suit on undisclosed terms. Both disputes center around the of a logo in a circle.

Monday, October 28, 2013

Use of Square Bottle Sparks Trade Dress Lawsuit With Jack Daniel's

Fox News is reporting on a newly-filed trademark lawsuit pending between Jack Daniel's Properties, Inc., a subsidiary of Brown-Forman, the makers of Jack Daniel's whiskey and Defendants J&M Concepts, and Popcorn Sutton Distilling, LLC, a small distiller.

Photo Courtesy of Ann Richardson
Sutton's whiskey is packaged in a very similar square bottle, with angular proportions and dimensions that are clearly reminiscent of the classic Jack Daniels' whiskey bottle.

Sutton's alcoholic beverage is named after a famous moonshiner Marvin "Popcorn" Sutton.  Sutton, known for his long gray beard and overalls, committed suicide by carbon monoxide poisoning in 2009 rather than go to prison for violating alcohol manufacturing laws.  According to Wikipedia, Sutton received his "Popcorn" nickname after damaging a bar's faulty popcorn vending machine with a pool cue in the 1960's.

Jack Daniel's, produced in Lynchburg, Tennessee, filed the suit in federal district court in Nashville, alleging that the Defendants' use of a square bottle is likely to cause confusion among consumers.

The Complaint further alleges that the Jack Daniel's square bottle has been "a consistent commercial impression" for decades. That packaging is part of "one of the oldest, longest-selling and most iconic consumer products" in U.S. history, the Complaint alleges.

Jack Daniel's specifically describes its claimed "Trade Dress" as a "combination of a square-shaped bottle with angled shoulders that house a raised signature on four sides, and beveled corners, and labeling with a white on black color scheme and filigree designs."

While Jack Daniel's does not own a federally registered trademark on the square bottle shape standing alone, it does own a trademark for the labeling elements of its claimed "Trade Dress."  

The Defendants' website which had been advertising the accused whiskey appears to have been shut down, possibly in response to the filing of the lawsuit.

Trade dress lawsuits involving alcohol bottle shapes are rare, but not unheard of. For example, in 2012, the Ninth Circuit Court of Appeals reversed the lower court's dismissal of a case involving a skull-shaped vodka bottle.  In that case, the Court noted that the shape of a skull for a bottle was purely ornamental, served no functional purpose whatsoever and may have garnered sufficient secondary meaning among the consuming public to be identified with its producer.  Further, the Appeals Court noted the availability of many alternative designs to competitors.

Friday, October 11, 2013

Federal Judge Prohibits Bentley "Car Kits"

If you are an upwardly mobile driver who can only afford a Ford but still wants to be seen around town driving a Bentley, before becoming a millionaire and spending a few hundred thousand dollars, you might have considered the Bentley "car kit."

The idea was to take a cheaper car and deck it out with sufficient copycat parts and trim elements to mimic a luxury automobile.  The only problem is that such a creative approach infringes upon the luxury car maker's trademarks and patents, at least according to a federal judge in Florida.

British luxury car manufacturer Bentley Motors, which is owned by Volkswagen Group of America, sued Matthew McEntegart and Fugazzi Cars in St. Petersberg, Florida, alleging that they had infringed upon the car maker's trademarks and patents by selling Bentley car kits.

McEntegart, for his part, had mounted an ineffective legal defense and ended up filing for bankruptcy.

He defended by asserting that he had used disclaimers that the molds used for the parts were not genuine Bentley molds, and that he had done nothing except paint cars that were already outfitted with the car kits.  The defense apparently wasn't persuasive and the Court entered an injunction against further sales.  A hearing on damages is scheduled for later this year.

Previous cases in Florida have directly addressed the issue of "car kits," with Ferrari previously winning such a case against a similar car kit maker.

Wednesday, October 9, 2013

Pinterest Sues Travel Planning Startup PinTrips

Social media service Pinterest has filed a federal trademark infringement lawsuit in California against travel startup PinTrips.

Pinterest is a pinboard-style photo-sharing website that allows users to create and manage theme-based image collections such as events, interests, and hobbies.  

Users can browse other pinboards for images, "re-pin" images to their own pinboards, or "like" photos.  The popular site was founded by Ben Silbermann, Paul Sciarra, and Evan Sharp.  It is managed by Cold Brew Labs and funded by a small group of entrepreneurs and investors.

Founded in 2011, is a Santa Clara, California-based startup.  PinTrips claims that it turns the tedious task of planning and coordinating travel into a seamless experience by allowing a user to "bookmark" specific flights from all travel sites you already use, track and compare results on a main dashboard, and collaborate with others.

According to Pinterest, the startup was faced with a challenging business environment, so it deliberately adopted a name to cause confusion with its popular service.  Further, Pinterest alleges that PinTrips deliberately uses a "Pin" button that Pinterest alleges is a knockoff of its "Pin It" button.

The full Complaint is embedded below:

Tuesday, October 8, 2013

Trader Joe's Lawsuit Against "Pirate Joe's" Thrown Out of U.S. Court

In August, we reported on the federal trademark infringement lawsuit that had been filed by Trader Joe's against a Vancouver-based retailer named "Pirate Joe's."

The District Court has now ruled that Trader Joe's did not sufficiently allege how commercial activities arising out of consumer confusion in Canada is harming Trader Joe's in U.S. commerce. Consequently, the Court dismissed Trader Joe's federal claims with prejudice.

"Here, all alleged infringement takes place in Canada and Trader Joe's cannot show economic harm," ruled the Court.  "Even if Canadian consumers are confused and believe they are shopping at a Trader Joe's or an approved affiliate when shopping at Pirate Joe's, there is no economic harm to Trader Joe's because the products were purchased at Trader Joe's at retail price."

Trader Joe's now faces a legal conundrum  -- since it has no stores and does not own a trademark in Canada, it is not clear that it can file a trademark lawsuit there against Pirate Joe's.

Additionally, since all the goods that Pirate Joe's sells are genuine and purchased at full price, as the District Court noted, the adverse ruling might lead the Canadian court to agree, and similarly rule that Trader Joe's suffers no harm there either.

Maybe Trader Joe's should just offer Pirate Joe's a distribution agreement?  Just a thought.

Wednesday, September 4, 2013

Counterfeit UL Stickers End in Conviction and Bankruptcy For GuildMaster

Example of a Counterfeit UL Sticker
Missouri-based furniture and home decor company GuildMaster was sentenced in federal court after pleading guilty to importing thousands of lamps marked with counterfeit "UL" (Underwriter Laboratories) certification mark stickers.

UL is an independent product safety certification organization accredited for safety testing by the federal Occupational Safety and Health Administration (OSHA).

If a product carries an authentic UL certification mark, it means UL found that representative product samples met UL's safety requirements. These requirements are primarily based on UL's own published standards for safety. According to the UL website, this type of mark is seen commonly on appliances and computer equipment, furnaces and heaters, fuses, electrical panel boards, smoke and carbon monoxide alarms, fire extinguishers and sprinkler systems, personal flotation devices, bullet resistant glass, and thousands of other products.

A counterfeit UL sticker has the potential to mislead consumers into believing an electrical item has met the UL's safety requirements, when it may not have.

GuildMaster's website proclaims that "it is every company's responsibility to operate in a manner that is respectful of people and the planet." The company further claims that it has an "open book management" philosophy, in which it encourages its employees to "think and act like owners."

Nonetheless, in December 2011, U.S. Customs and Border Protection officials reportedly discovered that thousands of lamps that were being imported into the U.S. from China by GuildMaster were emblazoned with counterfeit UL labels.

According to a press release issued by the U.S. Attorney's Office, GuildMaster, which was formerly a client of UL, stopped producing its own lamps in 2005. Since 2005, GuildMaster has purchased lamps manufactured in China and imported them into the United States under the GuildMaster label.

GuildMaster maintains that none of its agents or employees had personal knowledge that they violated U.S. laws by importing the lamps. However, GuildMaster acknowledges that the knowledge and actions of its subsdiary's employees and agents are fairly attributed to GuildMaster.

Before the federal seizures, GuildMaster admitted that it did not inspect lamps coming from China to ascertain the authenticity of the "UL" certification marks placed upon the lamps. GuildMaster acknowledges that had it inspected the lamps, its employees would likely have seen counterfeit and unauthorized UL marks.

The sentence imposed in federal court requires destruction of nearly two million dollars worth of the lamps, and 5 years of probation.

Following the indictment, GuildMaster had filed for Chapter 11 bankruptcy. It is unclear if the sentence imposed will affect the company's continued existence, as GuildMaster had recently filed a request to extend time to file its bankruptcy exit plan, citing the government's demands that the lamps be destroyed.

Monday, August 26, 2013

Texas Roadhouse Sues to Protect Its Restaurants' Country Western Style

Can the style of a country western restaurant function as a valid trademark?

Texas Roadhouse believes that it can -- and does, and has sued to block other rustic-themed restaurants with similar country western motifs and names located in Indiana, Illinois and Michigan.

Texas Roadhouse is an American chain restaurant headquartered in Louisville, Kentucky, that specializes in steaks and barbecue fare, and promotes a rustic country western theme.  The chain operates over 300 locations in nearly every state.  The restaurants are known for their rough and ready look, with steel buckets of peanuts on every table.

The company is now demanding that a federal court order competing restaurant chains Texas Corral and Amarillo Roadhouse to cease their uses of confusingly similar names and themes, claiming that consumer confusion is likely.
According to the lawsuit filed in the Western District of Michigan, Texas Corral operates a Western-themed, casual, family restaurant that is "markedly similar in appearance to the Texas Roadhouse concept."
In an interview with the press, the senior director of public relations for Texas Roadhouse claimed that instances of actual confusion have occurred, with "even delivery drivers going to the wrong location on occasion."

Texas Roadhouse is claiming exclusive ownership of "the overall appearance" of its restaurants, including wooden booths and tables with light brown stain and green bench seat cushions, dish shaped, green metal light fixtures hung over individual tables, galvanized metal pails filled with free peanuts on the tables, and upbeat country music playing over speakers.

Texas Roadhouse's argument is not unprecedented.  Indeed, the U.S. Supreme Court has unequivocally held that federal trademark law can protect the theme of a restaurant.

Taco Cabana operated a chain of fast food restaurants in Texas which served Mexican food. Taco Cabana described its Mexican-themed trade dress as "a festive eating atmosphere having interior dining and patio areas decorated with artifacts, bright colors, paintings and murals. The patio includes interior and exterior areas with the interior patio capable of being sealed off from the outside patio by overhead garage doors. The stepped exterior of the building is a festive and vivid color scheme using top border paint and neon stripes. Bright awnings and umbrellas continue the theme."

Subsequently, a Two Pesos restaurant opened in Houston.  Two Pesos adopted a motif very similar to Taco Cabana's trade dress.  Two Pesos' restaurants expanded rapidly in Houston and other markets, but did not enter San Antonio.  In 1986, Taco Cabana entered the Houston and Austin markets and expanded into other Texas cities, including Dallas and El Paso where Two Pesos was also doing business.

A Texas jury found that Taco Cabana owned a distinctive concept as a form of "trade dress," that taken as a whole, was non-functional, and that there was a significant likelihood of consumer confusion between the two restaurants based on Two Pesos' intentional copying of the distinctive Mexican motif.

Texas Roadhouse is no stranger to litigation over its "style."

In recent years, it faced EEOC charges that hiring managers at the company allegedly told jobseekers ages 40 and older that “we need the young, hot ones who are ‘chipper’ and stuff” and that they were “basically looking for young teenagers.” 

The company has also been sued for underpaying its waitstaff, allegations which it reportedly settled by paying millions.