"Champagne" Tastes Trigger Trademark Disputes with Apple, Others

For decades, the Comité Champagne, a French industry trade organization dedicated to protecting the French Champagne region's world famous vintners, have aggressively policed the marketplace and prosecuted any unauthorized use of the word "champagne." 

Such is the reason that the bottle of California's slightly cheaper bubbly you may have opened on New Year's Eve was termed "sparkling white wine," and not "champagne."

According to the Comité's website, the "reputation and importance of the Champagne appellation has long been a source of envy for other producers, spawning hundreds of imitations every year...Champagne is a unique product born of the shared heritage of Winegrowers and Champagne Houses whose livelihoods depend on protecting that heritage."

The website claims that the Comité has a "duty to protect consumers against misleading claims made for any wines, beverages or products that trade off Champagne’s reputation as an appellation of guaranteed origin and quality."

The Champagne Regions of France

Accordingly, it is the stated policy of the Comité Champagne  to prosecute anyone who misappropriates the reputation or identity of the Champagne appellation.

It seems perfectly reasonable for the Comité to try and thwart counterfeit champagne beverages, and is has done so very effectively.

However, the Comité also seems to take its role as defender of the appellation so seriously that it attacks any uses of the word "champagne" to describe color or style, even when not used in connection with beverages.

Most recently, for example, Apple introduced the new iPhone 5 series, in a metallic gold color initially planned to be described as "champagne."

However, the Comité saw fit to send a warning letter to Apple before the phone was launched, contending that the term "champagne" was a trademarked geographic designation, and that Apple's use would inevitably lead to litigation.  Apple backed off, and now simply calls the color "gold."

The Wall Street Journal now reports that the Comité is at it again, this time threatening a glass bottled water distributor that had planned on using the tagline: "the Champagne of waters."

Not wanting to fight a lawsuit, the distributor dropped the tag line.

The Gold/"Champagne" iPhone

In the past, the Comité has also successfully barred the use of the term ‘Champagne’ in connection with unauthorized toothpastes, mineral water for pets, toilet paper, underwear and shoes.

But is such aggressive policing of the wider marketplace really necessary?

Traditionally, brand protection advocates would argue that it is critical to protect the marketplace against any and all unauthorized uses, even those outside of the core area of protection.

Failure to do so, they warn, could lead to the most dreaded outcome: "genericide" and ultimate abandonment of the trademark itself.

Examples of once famous trademarks that have fallen victim to such a fate include aspirin, yo-yo, escalator, kerosene, zipper, cellophane and thermos.

But in none of these instances did the widespread unauthorized usage that led to the trademarks' destruction start outside of the core market, leading to the slippery slope of genericide that brand owners dread.

Rather, the trademark owners were simply so successful in their core market, everyone else adopted the term to describe the product category itself.  Eventually, no one knew that any particular thermos originated from one source or manufacturer.

It is that fear that drives makers of Kleenex-brand tissues, Xerox-brand copiers and Band-Aid brand bandages, to frequently remind us that their products are brands, not the names of generic products.

Brand protection advocates must carefully balance their clients' important need to protect against trademark erosion, and the wider realities of the marketplace.

Van Halen Sues Drummer's Ex-Wife for Commercializing Her Married Name

Van Halen was formed in California in 1972, and named after lead guitarist Eddie Van Halen and his brother, drummer Alex Van Halen. Other members of the band have included Wolfgang Van Halen (Eddie's son) on bass guitar, as well as David Lee Roth, Sammy Hagar, and Michael Anthony.

In 1984, drummer Alex Van Halen married Kelly Carter, who legally changed her name to Kelly Van Halen. Twelve years later, the couple divorced, but Kelly kept her married name.

More recently, Kelly started a construction and interior design company under her married name. Kelly applied for several federal trademark registrations for "KELLY VAN HALEN" on products such as chairs, children's blankets, bathing suits, building construction and interior design.

ELVH, Inc., the holding company that owns the band's intellectual property, has now sued her in federal district court in California, alleging that her use of the name "VAN HALEN" as a trade name is likely to cause confusion, dilute the fame of the VAN HALEN trademarks, and unfairly compete with the band.

It also alleges that Kelly Van Halen's use of the trade name is on goods and services that are "either identical to or closely related to the goods sold by" the band.  (It is unclear when the band ever sold furniture or offered any form of construction or interior design services, but I suspect that they have not and this is only a matter of posturing).

The Hollywood Reporter notes correctly that the legal question here is whether senior family name users like Eddie and Alex can permanently enjoin junior family name users like Kelly from using "Van Halen" in a commercial enterprise. 

Courts are often reluctant to enjoin individuals from using their own legal names to identify themselves in trade or commerce, unless the use was clearly likely to cause confusion, or if the junior family member had previously agreed to cease such use.

For example, in 2007, design house Paul Frank Industries, Inc. had sued its namesake and former designer Paul Frank Sunich after he had left the company and began to use his full name to sell competing products.

In that case, the court held that "under trademark law, there is no absolute right to use one's own personal name where that use would be confusingly similar to an established use of a famous mark that the public has come to associate with another source...Mr. Sunich...has no absolute right to make use of his name in a manner that would be confusingly similar..."

However, the Court went on to clarify that "Mr. Sunich, however, is entitled under trademark law to use his name in other contexts, commercial and otherwise, to identify himself 

and inform others about his work.  [There is] no right to prevent Mr. Sunich and the other Defendants from using Mr. Sunich's full name in contexts were such use will not result in any confusion with PFI's use of the Paul Frank mark."

In that case, Sunich's websites had prominently displayed disclaimers informing customers that the products were not affiliated with, sponsored by, or endorsed by PFI.  However, his further sale of T-shirts was prohibited by the Court.

Courts are therefore often willing to draw difficult lines in order to be fair to both parties, and will put the burden on the trademark owner to actually prove that there is a likelihood of consumer confusion.  If confusion can be demonstrated, the accused may be held in contempt of Court for violating the Court's order.

Further, the Hollywood Reporter astutely notes that "the outcome might depend on whether it can be shown that Kelly had intent to trade upon the goodwill or reputation of the famous band's moniker."

While that fact would not be dispositive, if it can be show that Kelly was deliberately attempting to benefit from the band's fame, that could present a problem for her continued use.

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.

TradeKey Found Liable for Contributory Counterfeiting

In a strongly-worded decision issued by a California federal district court judge this week, the owners of TradeKey.com were found liable for contributory counterfeiting and placed under a permanent injunction.

TradeKey is a multinational company with offices in Saudi Arabia, China and Pakistan, which claims to be one of the largest and fastest growing online business-to-business (B2B) marketplace that connects small and medium businesses across the globe for international trade.

For an annual fee of $519, wholesale sellers and distributors can set up customized accounts on TradeKey, offering thousands of items for sale to businesses in bulk quantities.  TradeKey also solicits its wholesale buyers and distributors worldwide to become "premium" members, which costs $3,000 annually.

TradeKey had garnered something of a reputation for being a retail counterfeiters' supermarket.

Undercover investigators working for Richemont became premium members, and were contacted by TradeKey's sales representatives.

When the undercover investigators (posing as wholesale distributors) asked TradeKey's sales representative if there was any problem with selling counterfeit luxury goods on the TradeKey website, the sales representative replied that it was "not a problem," and further said that "as far as the replica industry is concerned it's one of the businesses that we rely on to get us a whole lot revenue."

The investigators also were able to purchase numerous counterfeit goods from a variety of sellers on TradeKey.

Richemont filed suit in Los Angeles federal court against the individual sellers (who defaulted by not defending themselves), but also against TradeKey and its various corporate owners, alleging that they were contributorily liable for counterfeiting.

Essentially, Richemont's lawyers alleged that, by knowingly aiding and abetting the sale of counterfeit goods and receiving a direct financial gain from doing so, TradeKey's owners should be held liable for the sellers' conduct.  Richemont moved for summary judgment against TradeKey and won.

Notably, based on the written decision, it is clear that TradeKey's legal defense was an unmitigated disaster.

TradeKey's lawyers first tried to argue that the undercover investigation was "sloppy" and not credible, suggesting that technical defects in chain of custody forms injured the investigators' credibility.

The Court roundly rejected this criticism, finding that the goods that where purchased were clearly counterfeit and the results of the investigation was very persuasive.

Further, TradeKey alternatively tried to argue that the sales representative "clearly misunderstood the term replica."  The Court found this argument wholly unpersuasive, as it was "undermined by the plain language of his [own] statements, their context" and the fact that the investigators posted multiple listings for counterfeit goods using the term "replica," all with TradeKey's clear knowledge.

TradeKey also even tried to argue that counterfeit products don't cause any consumer confusion, because those consumers purchasing the spurious goods in bulk essentially knew the goods were fake.

Ultimately, the Court rejected all of these arguments, and found that TradeKey had known about widespread counterfeiting activity that was taking place on its website, and found that TradeKey had permitted it to continue in order to unlawfully profit.

Consequently, TradeKey was found legally responsible for the conduct of its counterfeit sellers, and a Court order was entered that permanently prohibits any seller on the site to sell goods bearing the Plaintiffs' counterfeit trademarks.

What lessons can be learned from this important decision?  

First, other trade boards similar to TradeKey should stop harboring counterfeiters.

Second, conducting a thorough undercover investigation before filing litigation is the paramount way to gather evidence.

Third, as a matter of legal strategy, if you are a lawyer defending a client with a difficult factual record, pick your best single legal argument and stick with it.

Attacking the credibility of reputable undercover investigators and simultaneously trying to claim that your client didn't know what the word "replica" means, is not likely to sustain your credibility with the Court, especially when combined with obviously silly arguments such "the sale of counterfeit goods doesn't cause consumer confusion."

Such a tactic will likely anger most judges and won't give you a very strong appellate record if you lose.