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.

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.

Gioconda Law Group and Arthur Kenzie Settle Domain Name Dispute

The Gioconda Law Group PLLC and Arthur Wesley Kenzie have settled the dispute that had been pending before the New York federal district court, involving the misspelled domain name GIOCONDOLAW.COM.

The parties to the underlying dispute settled their differences through a mutually acceptable Settlement Agreement under which the GIOCONDOLAW.COM domain name will be permanently transferred to the law firm.  The Agreement is in the process of being submitted to the federal district court for final approval.

The parties disagree about whether the particular methodologies employed constitute an 'interception' of e-mail, and could therefore violate the Wiretap Act.  Furthermore, Arthur Kenzie has denied any wrongdoing or cybersquatting.

However, both parties agree that the vulnerability that this case exposes is indeed very important and one that all organizations should take seriously.

Furthermore, the public disclosure of discovery in this case may have revealed third parties' vulnerabilities in a manner that could have raised even greater data security concerns.

The use of unencrypted, misaddresses e-mail can create significant security risks to organizations, and all all organizations should also consider registering multiple misspellings of their domain names and using encrypted e-mail protocols to mitigate this risk.

Stock Image on ObamaCare Site Invites Scorn, Ridicule on Amateur Model

Aspiring models, be warned.

Now that the initial launch of the federal "ObamaCare" website has been declared an unmitigated logistical disaster, an odd intellectual property issue has been mentioned by bloggers and political pundits:  the rights of the models depicted in the stock photography used on the site.

When HealthCare.gov launched live on October 1, tens of millions of Americans visited the site to view an ethnically ambiguous, attractive 20-something woman smiling back, promising affordable health care.  "ObamaCare Girl" is precisely the target demographic that the administration is hoping sign up for health care.

Fox News called the smiling woman depicted in the stock photograph "mysterious," writing that "she smiles back at countless frustrated Americans as they tried to log onto the ObamaCare website."  The Washington Times dubbed her "Glitch Girl," and created a pseudo-mystery around her identity.

Since its launch, the website has crashed repeatedly, leading Congressional leaders to demand an accounting for the $300M dollars that have been spent on the website so far, given that few applicants have been satisfactorily able to sign up through the portal.

The unknown model whose face was used on the site may not be pleased with the newfound notoriety, but may have no legal recourse.

"Stock" photography is offered commercially by a wide variety of sources, such as Getty Images, Corbis, iStockPhoto.com and ShutterStock.com.  For an appropriate license fee, any user can easily download and use stock images for a variety of applications, including blogs and websites.

When objects depicted in the stock images are inanimate, the only release that is secured by the distributor is a license or assignment from the photographer.  Photographers are paid a scaled fee based on, among other things, the number of times that their images are downloaded and used.

However, when models are used in the images, the photographer typically secures a standard "release," which grants the licensees (including the distributors and end users) the right to pretty much plaster the image all over their websites and blogs.

The models essentially agree to release any claims that they might otherwise have for invasion of privacy, or appropriation of likeness under states' laws, in exchange for a nominal sum received from the photographer. In most cases, amateur models are paid very little to nothing per image, and give up all rights to control how their likenesses are used.

In the case of the anonymous woman whose face ended up appearing on a website viewed by millions of annoyed Americans, that notoriety might have been more than she bargained for.

The New York Daily News has noted that the image of ObamaCare Girl has now been removed, only to be replaced by stale graphics.

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.

"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.