Articles Posted in Trademark

A supplier was found liable for selling counterfeit Fendi handbags, and after two separate lawsuits was obligated to Fendi and a retailer to whom those fake bags were sold for substantial damages. In an attempt to avoid paying those damages, the supplier turned to its insurance carrier for indemnification, based on a policy that insured the supplier against “advertising injury.”

In affirming the lower court in finding that there was no coverage for the Fendi infringement, the Second Circuit went through an instructive discussion of what advertising injury means, and what that coverage was intended to address. The court explained that New York law was clear that where policy language was ambiguous, it would be construed in favor of the insured. At the same time, the “plain language” of the policy is read in “common speech” and as reasonably expected or understood in the business community. For coverage to be found for advertising injury, the injury must have taken place as part of advertising activities and address items covered by the policy. Therefore, no coverage would be found where liability arose out of the importation, distribution or sale of infringing goods. On the other hand, a policy that covered injury from goods that were “‘marketed, distributed and sold,’” could provide coverage, at least to defend the infringement lawsuit.

In this case, the policy covered an injury arising out of (i) “oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; (ii) oral or written publication of material that violates a person’s right of privacy; (iii) the use of another’s advertising idea in your ‘advertising;’ and (iv) infringement of another’s copyright, trade dress or slogan in your ‘advertising.’” Items (i) and (ii) were not alleged to apply, but (iii) and (iv) were. In denying coverage, the court held that the requirement that the action take place “in your advertising” required that the infringement be part of the advertisement. Here, the supplier did not advertise at all and Fendi made no claim of infringement or injury that arose out of any advertising. Injury was alleged out of sales. Thus, the supplier could not avail itself of coverage.

The mark “Dickman’s” could not be registered as it was deemed a surname and ineligible for registration, despite the fact that the applicant’s last name was not Dickman.  This write up provides the details, and illustrates why blindly filing a trademark registration application is not always as straightforward as it seems.

Following our last article about “use” and its relationship with the trademark application process, another case we came across further illustrates this concept, albeit in a more limited manner.

Weld-Tech and Aquasol Corp. both sell a plumbing apparatus called “EZ-Purge.” After Aquasol filed for and received trademark registration for the EZ-PURGE mark, Weld-Tech sued claiming that it was the first to use that mark, although without trademark protection, and that Aquasol’s use infringed on Weld-Tech’s common-law trademark, obtained through Weld-Tech’s use. Weld-Tech argued that even if Aquasol had obtained a trademark registration, Weld-Tech’s prior use entitled it to some protection so long as the mark was eligible for registration.

The timing was as follows: Weld-Tech began marketing its product in late 2003 or early 2004 and made its first sale in late 2004. It filed a patent application in March 2004. On April 30, 2004, Aquasol filed a trademark application, based on Aquasol’s intent to use the mark in commerce. The question before the court was which party had priority over the mark, Weld-Tech’s common-law use or Aquasol’s intent to use application.

Late in 2015, Apple’s trademark application for “IPOD,” as used in connection with the pamphlet or instruction manual that accompanies an iPod, was found by an appeals panel to not be “used in commerce” in connection with any good, and denied registration by the United States Patent and Trademark Office (“USPTO”). The brief discussion of how this decision was reached is instructional as to what an applicant must establish to satisfy the “use in commerce” element that is part of a trademark application process.

Apple had filed for a trademark for the IPOD mark as used on its iPod instruction manual inserts. The USPTO denied Apple’s application, finding that the manual was merely instructional and not used in commerce as a “goods in trade.” Apple appealed.

The Trademark Trial and Appeal Board (“TTAB”) discussed generally the qualifications necessary for the issuance of a trademark registration. As part of that, the applicant must show either a use or intend to use of a good in commerce. Because a trademark is put in place by an owner of a good “‘to identify and distinguish” that good and to indicate its source, those goods must be “used” in commerce. This ties that good to the producer in the marketplace and allows that producer to alone be associated with a specific good. To do that, it must be deemed a “good in trade” or commerce. Apple’s IPOD pamphlets were not stand-alone goods in trade, but simply sold “incidental” to the iPod itself. As such, the IPOD mark as used on the pamphlet did not qualify for registration. The same refusal would be issued if an application sought protection for letterhead, for example.

There has been recent discussion about what constitutes “use” of a mark when seeking trademark registration (and which applies equally to a service mark). This discussion has addressed the requirement that a proposed trademark be “used” or be “in use” when a trademark registration is filed with the United States Patent and Trademark Office (“USPTO”). Before we explore this, and a recent straight-forward case that explains this issue in an easy to understand setting, a brief background is necessary.

When filing a trademark application for Federal registration and protection with the USPTO, one must allege either “actual use” of the proposed mark in interstate commerce, or a bona fide “intent to use” the proposed mark in interstate commerce. There is no ability for a trademark applicant to reserve a trademark registration if there is neither an actual “use” or a real intent to use a particular mark or logo in connection with a commercial venture. (This is obviously different than reserving a domain name or address, which has no such requirement.) If actual “use” is alleged in the application, the applicant must show that use. If the applicant elects “intent to use” as the basis for the application, the applicant signs a statement supporting that intent and will be required to update the application once actual interstate “use” is established. It goes without saying that both the “use” and “intent to use” claims must be legitimate.

The viability of the applicant’s alleged “use” was questioned in Couture v. Playdom, Inc., where Playdom sought the cancellation of Couture’s registered service mark based on Couture’s failure to actually use the PLAYDOM mark in connection with a viable business. The proof of use submitted to the USPTO by Couture in 2008, when Couture filed his application for PLAYDOM, included a screen shot of Couture’s website, which stated that entertainment services of his company, PlaydomInc.com, would be offered. However, no actual services were offered by Couture or PlaydomInc.com until 2010.

A dispute between The KatiRoll Company, Inc. and Kati Junction, Inc., both of which sell Indian food, produced a court decision useful in examining trademark/servicemark and trade dress issues.

In 2002, KatiRoll opened its first store-front in New York City. That location would expand to two additional restaurants in Manhattan. It sold distinctive food items, offered discounts on multiple purchases, and used an orange and white color scheme on its employee uniforms, signage and marketing. The location setup was consistent in all of the stores, so that each store had front windows, limited seating and an open kitchen. Finally, each store had wood trim in its interior. Because KatiRoll invested much time and expense in developing its natural menu items, each employee signed a non-disclosure agreement in addition to agreeing in their employee manuals that these food items were of secret formulations.

Kati Junction opened a restaurant some three blocks from a KatiRoll location. Kati Junction’s color scheme, menu, specials, store layout, and trim were nearly identical to those used by KatiRoll. Kati Junction hired seven current and former KatiRoll employees for this new store. Since Kati Junction opened, KatiRoll customers asked management if the Kati Junction store was part of the KatiRoll chain.

Hokto USA is a subsidiary of Japan-based Hokuto Co. Ltd. Hokuto Co. grows non-organic mushrooms in Japan. Hokto USA produces the same mushroom varieties in the United States as Hokuto Co. does in Japan, but Hokto USA’s products are certified organic. To earn organic certification, Hokto USA’s plants are state of the art and employ robotic machines in temperature controlled environments, all of which are computer controlled. Unlike other growers, Hokto USA does not use manure in its fertilizers. It uses a “sterilized culture medium made of sawdust, corn cob pellets, vegetable protein and other nutrients.”

For a time, Hokto USA imported mushrooms from Hokuto Co. These mushrooms were grown in Japan but in a controlled environment so as to meet the requirements for US organic produce. The packaging was in English and not Japanese. A small amount of goods, however, was not organic, but the packaging for those items was obviously different, and identified Hokto USA as a distributor of Hokuto Co.

After obtaining trademarks in Japan, Hokuto Co. sought US trademark registration for word and design marks.

Despite the uniform reaction of courts, trademark holders insist on filing lawsuits over gripe-sites. As discussed here in the past, websites that are created for the sole reason of complaining about a service or product, and which incorporate a trademark in doing so, are not guilty of trademark infringement. In Devere Group GMBH v. Opinion Corp. d/b/a Pissedconsumer.com, pissedconsumer.com was sued by a Swiss consulting company because the site hosted a number of sub-domains that hosted public complaints about the company. The company sought damages for trademark infringement, among other claims.

Although the court determined that the consulting company had established its trademark, it had failed to establish any infringement by the gripe-site. The court agreed with the gripe-site that no reasonable consumer, “‘even the dimmest Internet user'” would believe that the comments posted to the gripe-site were sponsored by the consulting company. This was especially true here, where the complaints could never be seen as an endorsement of the services protected by the trademark or endorsed by the company, and the gripe-site did not compete with the company’s website for viewers.

For the most part, the court’s outcome should be the same for a complaint website that was less obvious in identifying its purpose. The line is crossed, however, where the complaint website has a commercial purpose or seeks to benefit from the protected trademark. In that case, judges look at the relationship with a more critical eye, to understand the purpose of the complaint website, and are more reluctant to dismiss an infringement complaint.

An appellate decision from the Federal Circuit finds that the term Milanza is confusing when used in the same class of goods as Potenza and Turanza. Seemingly, these marks sound and feel similar.

Bridgestone Corporation, owns trademark registrations for the marks Potenza and Turanza and conclusively established that it used those marks in connection with popular and successful tires. Federal Corporation sought trademark registration for Milanza, and Bridgestone objected arguing that when used on tires, that mark was confusing. The United States Patent and Trademark Trial Appeal Board (the “TTAB”), finding no confusion between the marks despite Bridgestone’s survey that consumers were confused, refused to block Federal’s application. Bridgestone appealed.

In reversing and finding that market confusion existed sufficient to bar Federal’s application, the court highlighted the standards that a party must meet to establish confusion with an ordinary registered trademark compared with the strength of a famous mark.

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