Showing posts with label preliminary injunction. Show all posts
Showing posts with label preliminary injunction. Show all posts

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.

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.

Thursday, August 22, 2013

Umami Burger Chain Loses Bid to Block Pizzeria's Use of "Umami"

According to its Wikipedia entry, "UMAMI /uːˈmɑːmi/, a savory taste, is one of the five basic tastes, (together with sweetsourbitter and salty)."  Its linguistic origins are Japanese:  "A loanword from the Japanese (うま味), umami can be translated "pleasant savory taste".

A non-profit organization, the Umami Information Center (UIC) was established in 1982 in order to convey accurate information about umami as a basic taste. According to the UIC, the umami flavor is attracting the attention of chefs around the world, in part due to the boom in Japanese food.

However, the word has not left those American chefs trying to brand it into a trademark with a very pleasant taste in their mouths.

The gourmet hamburger chain had filed a trademark infringement case against Umami Mia Pizzeria, LLC in federal court in Austin, Texas. The Umami Burger chain boasts numerous locations in high-end areas in southern and northern California, as well as in Miami, Florida and Greenwich Village, New York.

According to its website, Umami Burger's founder Adam Fleischman developed the high-end burger restaurant concept dedicated to the all-American classic food after developing a palate for fine wines and managing some of Los Angeles' finest wine bars. He opened his first Umami Burger on La Brea [California] in 2009.

Its menu boasts burgers covered in "house-made truffle cheese," "port-caramelized onions," and even "Welsh Rabbit burgers." The New York City establishment boasts a 3 hour wait.

The Texas upstart, Umami Mia Pizzeria is located solely in Austin, and offers a more pizza-centric menudevoid of any type of hamburgers.

After holding a hearing, Federal District Court Judge Sam Sparks was apparently unconvinced that UMAMI could function as a trademark in this instance, and rejected the argument that consumers would likely be confused into associating the restaurants.

It is worth noting that Fleischman's recent difficulties in successfully monopolizing "UMAMI" as a trademark are not novel, and the word has endured a tortured history under U.S. trademark law.

For example, in 1995, Tucker Food Products, Inc., a Missouri company, had sought to trademark the word UMAMI in connection with sauces and marinades, volunteering that the "English translation of 'UMAMI' is 'deliciousness', 'taste', 'flavor' and/or 'relish'."  The mark was approved for publication, but Tucker never filed any statement of use, so the mark was later deemed abandoned.

Subsequently, the trademark "UMAMI" became successfully registered in 2009 by Mastronardi Produce, a Canadian company, in connection with tomatoes.

Initially, the Trademark Office deemed the word UMAMI "merely descriptive" as used in connection with tomatoes and refused Mastronardi's application on the basis that the term UMAMI merely described its taste.  According to the U.S. Trademark Office, UMAMI "is sometimes considered to be a fifth basic taste along with sweet, sour, salty, and bitter."  Further, ripe tomatoes are apparently rich in components that lead to UMAMI.

However, Mastronardi's trademark lawyers were able to convince the Trademark Office that "UMAMI TOMATO" currently has no particular linguistic significance in the trade or industry, and as such, is not descriptive of anything in particular about tomatoes. By further offering to disclaim any rights to the word "TOMATO," the Trademark Office permitted the mark UMAMI to become a registered trademark for tomatoes.

Subsequently, Fleischman was also able to register multiple federal trademarks on "UMAMI CAFE," and "UMAMI BURGER." He is apparently now attempting to register "UMAMI CHIPS," and "UMAMI ENERGY" (for energy drinks).

But Fleischman has company.  Many other companies and individuals have been similarly attempting to register "UMAMI BEER", "UMAMI SUSHI", "UMAMI OYSTER", and "UMAMI TSUNAMI" (for condiments).

The recent battle in Austin over use of the word is clearly not the end of the conflict. Even though Judge Sparks denied Fleischman's bid to stop Umami Mia Pizzeria, that is only a preliminary decision.  A full trial on the merits is expected in 2014.