associating two differently named products can't cause dilution, which requires similar marks

In re Soclean, Inc., Marketing, Sales Practices & Prods. Liab. Litig., No. 22-mc-152, MDL No. 3021, 2024 WL 4444819 (W.D. Pa. Oct. 8, 2024)

Previous discussion of MDL. As previously noted, SoClean is a dominant player in the market for medical devices that sanitize continuous positive airway pressure machines (CPAPs), which treat sleep apnea and respiratory conditions. It alleged that the Philips defendants, who make such devices, engaged in false advertising about one of SoClean’s devices in order to deflect blame for the Philips devices’ design defects. Philips counterclaimed for false advertising, trademark dilution, and state-law deceptive trade practices. This opinion adopts in part and rejects in part a special master recommendation that SoClean’s motion to dismiss the counterclaims be denied.

False advertising: SoClean argued that Philips failed to allege adequately causation because there are multiple intervening steps between the alleged consumer deception and Philips’ alleged injury. Philips’ theory was that SoClean’s claim that its device was compatible with the Philips devices was false, which influenced consumers to use SoClean’s device with Philips devices -- thereby damaging Philips’ products by causing the foam to degrade, as well as harming the reputation of Philips’ products, and causing a decline in Philips’ sales.

This satisfied Lexmark and created a factual issue on proximate cause because the alleged harm flowed from SoClean’s own pronouncement that its device was compatible with Philips’ devices. Intervening causes such as the FDA alert about cleaning CPAP machines and Philips’ voluntary recall could affect damages but weren’t enough to warrant dismissal.

Trademark dilution: This requires an association arising from similarities between two marks that causes damage. There is no dilution claim for associating one marked product with a differently marked product. Thus, SoClean’s compatibility chart, which stated that SoClean’s products were “compatible with free adapter” with Philips’ products, could not “lessen the capacity of Philips’ mark to identify and distinguish Philips’ mark from SoClean’s mark.”

New Hampshire Consumer Protection Act: The relevant theories were that (1) SoClean made representations about characteristics its product did not have (i.e., full compatibility); and (2) SoClean made representations about its sponsorship, approval, affiliation or connection with Philips.

As for the first, it was

certainly reasonable to infer that a consumer would understand the references to 'compatibility” to mean that the SoClean device can actually be used with the Philips device without causing harm to the Philips device or to consumers who use both devices together. As Philips analogized, a consumer seeing a claim that a charging cable was compatible with a certain phone would conclude that the cable not only physically fit, but also would “charge their phone without frying the motherboard.”

This was enough at the motion to dismiss stage, as was pleading consumer confusion about affiliation or approval.

SoClean argued that the counterclaims were untimely even under the discovery rule.

Under New Hampshire law, “Once a defendant has established that the statute of limitations would bar an action, the plaintiff has the burden of raising and proving that the discovery rule is applicable to an action that would otherwise be barred by the statute of limitations.” On the face of the counterclaims, the action wasn’t brought within three years (the state consumer protection period). Thus, the burden shifted to Philips to plead sufficient facts to plausibly support the application of the discovery rule, and it didn’t explain why it reasonably took so long to reach the conclusion that SoClean’s product increased the risk that Philips foam would degrade. So the state claims were dismissed with leave to amend.

As for the Lanham Act, laches generally can’t be determined on the basis of the pleadings, despite laches being apparent on the face of the counterclaims because of the relevant dates. The Third Circuit is more plaintiff-friendly: the discovery rule has a “fundamentally plaintiff-friendly purpose” and “is grounded in the notion that it is unfair to deny relief to someone who has suffered an injury but who has not learned of it and cannot reasonably be expected to have done so.” And “a plaintiff is not required to plead, in a complaint, facts sufficient to overcome an affirmative defense.” We don’t yet know when Philips knew or reasonably should have known about its counterclaims; at this stage, that helps Philips.

Old Bay or 420 Bud?

 This sticker doesn't seem particularly likely to confuse to me, and dilution is bunk:

New paper: Bad Spaniels, Counterfeit Methodists, and Lying Birds: How Trademark Law Reinvented Strict Scrutiny

On SSRN, in advance of the JDI v. VIP case:

Bad Spaniels, Counterfeit Methodists, and Lying Birds: How Trademark Law Reinvented Strict Scrutiny

Abstract:

Does trademark law cover noncommercial speech, defined as it is in First Amendment doctrine as speech that does more than merely propose a commercial transaction? This basic question has three different answers, all regularly used in any given jurisdiction. The answers are yes, no, and sometimes, a list both comprehensive and dismaying. The Supreme Court is presently considering a case that may require it to choose—or may leave the field more confused than ever.

In response to the massive expansion of trademark’s scope over the last century, lower courts have implicitly devised a compromise by which trademark is pulled back to a more traditional anti-fraud-like scope when it is applied to noncommercial speech sold in the marketplace, such as movies, newspapers, songs, and visual art, or used as the name of an organization with dues-paying members, such as a political party or congregation. This compromise explains an otherwise surprising feature of the cases: Political speakers and religious speakers can expect worse outcomes than “commercial” publishers engaged in noncommercial speech, given the kinds of cases brought against them.  Of particular note, churches can be prohibited from using names that their worshipers sincerely believe are accurate descriptions of their faith. Although the doctrines articulated by courts are confused and sometimes directly contradictory, the results approximate what would happen if First Amendment strict scrutiny were applied to trademark claims brought against noncommercial speech—as long as material deception, not consciousness of wrongdoing, is the standard for liability.

We would be better positioned to understand the law and to decide future cases if courts were honest about their uses of the commercial/noncommercial line to police whether trademark law can be used for more than anti-fraud purposes. Understanding the relationship of noncommercial speech to trademark law also offers broader insights into the relevance of scienter and actual deception for speech regulation.

dismissal of ASU's claim against ASU_covid.parties Instagram upheld

Arizona Bd. of Regents v. Doe, 2022 WL 1514649, No. 21-16525 (9th Cir. May 13, 2022)

I wrote an amicus brief in this case. A post on the decision below. The court of appeals affirmed in a memorandum. The Board appealed denial of its motion for default judgment and dismissal of its complaint. It was ok to convert the motion for default judgment to dismissal because amendment would have been futile “given the implausibility of the allegations and of a finding of likelihood of confusion.” Although the Instagram account at issue was called ASU_covid.parties, “only one post included the use of [ASU’s] mark and trade dress. That one post contained profanity and a reasonable consumer would not think that a university would use such language when addressing the public. Reviewing the posts in their totality does not change the result, but rather reaffirms it.”

In addition, “amendment would have also been futile given the non-commercial nature of Doe’s activities.” In the Ninth Circuit, “infringement claims are subject to a commercial use requirement.” Bosley Med. Inst., Inc. v. Kremer, 403 F.3d 672, 676 (9th Cir. 2005). The complaint did not support the conclusion that Doe used ASU’s marks “for the sale of goods or services,” but rather “to criticize and mock [ASU] and [ASU’s] policies and administration.” To be sure, some posts did refer to a future party, but none had any particulars. The mere statement that Doe was a “party planner” was not enough, in the overall context, to allege commercial use.

In a footnote, the court noted that, even assuming Doe’s posts were commercial, Rogers and the First Amendment would protect the conduct. “Doe’s Instagram posts appear to constitute expressive work under Rogers as the posts communicated messages that mocked [ASU’s] policies and administration. To the extent [the Board’s] appeal attempts to improperly use trademark laws to block the expression of negative views about the university and its administration, such efforts fail.”

The district court thus did not abuse its discretion, even though it didn’t evaluate all the Sleekcraft likely confusion factors. Nor did it err by refusing to apply initial interest confusion, which requires likely confusion. Nor did it err in its false advertising analysis, which requires likely deception of reasonable consumers. And it was ok to reject the state law unfair competition claim but merely decide not to exercise supplemental jurisdiction over the state law dilution claim. [I hope and expect ASU will come to its senses and not refile in state court.]

Amicus against dilution in Vans v. MSCHF

Here, as filed (the court granted the motion so it is no longer "proposed"). Dilution is content-based, viewpoint-based, and so vague and pervaded with exceptions as to be unconstitutional. An interest in fixing meaning on behalf of famous trademarks is not a legitimate government interest!

dissatisfaction w/Amazon's partner program isn't TM infringement/false advertising

Melwani v. Amazon.com, Inc., 2022 WL 670919, NO. C21-1329RSM (W.D. Wash. Mar. 7, 2022)

Melwani owns the Royal Silk trademark for “a wide variety of products.” His marks are enrolled in Amazon Brand Registry, and Royal Silk Direct maintains an authorized Royal Silk “storefront” on Amazon.com. Nonetheless, Melwani alleged that Royal Silk was “plagued” by third party infringers, and his legal actions and notices allegedly resulted in the removal of about 200 infringing listings from Amazon.com that were attributed to about 100 different unauthorized third-party sellers over the last 2-3 years. Melwani alleged that Amazon’s Brand Registry has not offered proactive brand protection and that it has been “almost impossible” to remove any listing through Amazon’s Brand Registry.

His  “central allegation of wrongful conduct” was that, “when customers use Amazon’s Search Box (the search bar at the top of its e-commerce website) to search for ‘Royal Silk,’ results regularly include many products not manufactured by Plaintiff. These products are sold by other third-party sellers and Amazon itself.” For example, one search for “Royal Silk” under all departments on Amazon.com, yielded 60 product listings. Seventeen were for official Royal Silk products; 40 listings were “totally unrelated” to the query Royal Silk—of which 8 were paid sponsored ads for sellers who allegedly purchased the keywords “Royal Silk”; 32 were for third party sellers who allegedly “likely” purchased this keyword; and the remaining 3 were third party infringers, unlawfully using or showing the words “Royal Silk” in their product listings. But the Royal Silk Amazon storefront didn’t show up, nor “any product listings for Royal Silk pocket squares or handkerchiefs, of which there are allegedly over 200 product listings.” [So: is Amazon just bad at search?] Similar searches were also “frustrating”; Melwani alleged that the search results were “erroneous, scattershot, mingled” as well as “consistently confusing, misleading, false, and deceptive.”

Melwani alleged misappropriation of his trademark through use of “Royal Silk” as a keyword/metatag in ways that confuse the customer, “rob and thwart Plaintiff’s ability to exercise his right to quality and image control,” and ultimately allow Amazon to “unlawfully profit[ ] from its own targeted use of Plaintiff’s marks.” He also alleged that Amazon “avoid[s] serving up infringers when it comes to keyword searches for its own products” by not allowing third party sellers to bid on “Fire TV” or “Echo Show” or “Ring Doorbell.”

Infringement:  Multi Time Mach., Inc. v. Amazon.com, Inc., 804 F.3d 930 (9th Cir. 2015), held as a matter of law that “[b]ecause Amazon’s search results page clearly labels the name and manufacturer of each product offered for sale and even includes photographs of the items, no reasonably prudent consumer accustomed to shopping online would likely be confused as to the source of the products.” MTM was directly on point and precluded any liability, given the search results that were part of the complaint’s allegations. It didn’t matter that, if a user searches “royal silk,” the phrase will appear in the URL for the search page. “[T]he URL merely shows how the website’s data is organized and/or the search term entered by the consumer, and … this does not violate trademark law.”

False designation of origin/false advertising: Lasoff v. Amazon.com, Inc., 741 F. App’x 400, 401 (9th Cir. 2018), “rejected trademark infringement claims like Mr. Melwani’s, holding that ‘Amazon is permitted to use a trademarked search term to direct consumers to competing products, as long as the search results are clearly labeled.’” And it dismissed false advertising claims as “duplicative of his infringement claim.” In providing results for trademarked search terms, “Amazon did not make any statements about the quality of Mr. Lasoff’s products.” So too here.

But the false designation of origin claim wasn’t dismissed because the court didn’t think Amazon addressed it (I don’t see why—how could it differ from trademark infringement here?).

Trademark dilution: Not plausibly pled to be famous, but leave to amend.

NY unfair competition/dilution: These require bad faith, and the only supporting fact alleged was that Amazon is “generally aware of Plaintiff’s infringement concerns and related legal actions,” which wasn’t enough. Even “[p]rior knowledge of a senior user’s trade mark does not necessarily give rise to an inference of bad faith and may [actually] be consistent with good faith.” Thus, “[m]ore than inaction is needed here.”

Netflix prevails over claims by lawyers that they were misportrayed in money laundering film

Mossack Fonseca & Co., S.A. v. Netflix Inc., 2020 WL 8509658, No. CV 19-9330-CBM-AS(x) (C.D. Cal. Dec. 23, 2020)

MFSA brought trademark dilution and false advertising claims against Netflix for its portrayal in the film “The Laundromat.” (It’s about money laundering.) No. (Libel/false light claims aren’t addressed in this decision; see below.)

Rogers governed the false advertising claim. There was artistic relevance because the film is about MFSA and the Panama Papers, so the use of the mark was relevant to the film. And using a mark without the owner’s authorization does not explicitly mislead consumers about the source or content of the film. Gordon v. Drape Creative, Inc., 909 F.3d 257 (9th Cir. 2018), is not to the contrary, because Netflix used the mark in a different context, as opposed to using it exactly the same way the plaintiffs do. “Plaintiffs use their mark in the offshore shell company finance industry, whereas Defendant used Plaintiffs’ mark in a film.” Plus, and also distinguishable from Gordon, the mark appears in several scenes of the film, “and is therefore only one component of Defendant’s larger expressive work.” This was not explicitly misleading.

MFSA also argued that the trailer made false statements, because it “portrays the Plaintiffs as criminals and/or in the false light of criminality in the provision of their services as overseas lawyers.” But they failed to identify any false statement in the trailer for the Film. And use of MFSA’s logo in the trailer was also protected by Rogers.

Trademark dilution/tarnishment. Among the problems, Netflix’s use of the MFSA logo was noncommercial because it had some artistic relevance to the film. (Not precisely the full reason, but really I can’t blame the court for cutting some corners on a claim this terrible.)

Mossack Fonseca & Co., S.A. v. Netflix Inc., 2020 WL 8510342, No. CV 19-9330-CBM-AS(x) (C.D. Cal. Dec. 23, 2020)

Special motion to strike the state-law claims of libel/false light invasion of privacy. “The Laundromat” is allegedly “based on” investigative journalist Jake Bernstein’s book entitled Secrecy World: Inside the Panama Papers Investigation of Illicit Money Networks and the Global Elite. It “tells the story of the documents known as the Panama Papers ... leaked in 2015,” which “revealed how Panamanian law firm Mossack Fonseca illegally funneled money for the wealthy in Panama and worldwide.”

Plaintiffs initally failed to authenticate internet stories reviewing the film, e.g., the description: “When a widow gets swindled out of insurance money, her search for answers leads to two cunning lawyers in Panama, who hide cash for the super rich.”

The film was disseminated in a public forum, and it covered a public issue/an issue of public interest. The burden shifted to MFSA to show a probability of success on their claims.

They didn’t.

The Court finds no reasonable viewer of the Film would interpret the Film as conveying “assertions of objective fact,” particularly given the statement at the beginning of the Film “BASED ON ACTUAL SECRETS” which sets the stage and the disclaimer at the end of the Film that states the Film is fictionalized for dramatization and is not intended to reflect any actual person or history.

Even assuming a reasonable viewer would view the Film as statements of actual fact, the Film does not portray Plaintiffs as directly involved in the murders, drug cartels, and other criminal activity committed by their clients as referenced in the Complaint.

And the complaint admitted that some of the offshore entities created by Plaintiffs “appears to have been utilized by some [end users] for criminal activity including, but not limited to, money laundering, tax evasion, bribery and/or fraud.” So the film’s portrayal of persons for whom MFSA created shell companies as engaging in criminal activity was not false. Fonseca and Mossack were also criminally charged, so depicting them as being arrested and jailed wasn’t false. There was no reason to allow them discovery.

 

Penn. dilution is broader than federal dilution; former licensee might not own marks despite its registrations

I.M. Wilson, Inc. v. Otvetstvennostyou “Grichko,” No. 18-5194, 2020 WL 6731109 (E.D. Pa. Nov. 13, 2020)

The OG parties are Russian and Czech entities that manufacture and sell ballet and pointe shoes under the name GRISHKO.

In the early 1990s, Grishko and I.M. Wilson partnered to distribute Grishko-branded products in the United States via an exclusive licensing agreement. Around that time, Mr. Grishko wrote two letters that allowed I.M. Wilson to register the GRISHKO house mark, the ownership of which, among other things, is currently contested here. The partnership lasted until the music stopped in 2016, when Grishko terminated the exclusive licensing agreement. The exclusivity arrangement officially ended in March 2018 and Grishko began directly selling to U.S. customers.

IMW then sued; a preliminary injunction in its favor was subsequently vacated after the court found that “[e]njoining the defendants from selling GRISHKO-branded products in the U.S. in no way rectifies the irreparable harm the Court found to be caused by Mr. Grishko’s communications,” which had interfered with IMW’s relationships with its distributors by claiming that IMW didn’t have the rights it claimed.

This opinion deals with the OG parties’ counterclaims: (1) Lanham Act and common law claims arising from I.M. Wilson’s use of disputed marks and trade dress, (2) claims arising from the parties’ since-terminated licensing agreement, and (3) claims arising from I.M. Wilson’s actions while this litigation was pending.

Grishko produces several lines of pointe shoes, each bearing unique model names, and it’s applied to register certain of them at the PTO.

Mr. Grishko purportedly gave IMW permission to register the Grishko mark in the US based on the understanding that I.M. Wilson would own the registration so long as that I.M. Wilson remained in an exclusive relationship with Grishko. He signed the following statement, which reads in full: “I agree that I.M. Wilson, Inc. is the owner of the Trademark, GRISHKO and its goodwill in the United States of America. I further consent to the use of my name in that trademark.” The PTO wanted more, and so he signed another document: “In addition to the consent to I.M. Wilson, Inc. that I previously granted on August 5, 1992, I hereby grant I. [sic] Wilson, Inc. the right to register the trademark GRISHKO in the U.S. patent and trademark office.”

Some years later, the USPTO declined to register Mr. Grishko’s applications for the marks GRISHKO and NICOLAY GRISHKO due to the existence of IMW’s registration. As a result, the parties allegedly reached an agreement that IMW wouldn’t renew that registration upon its expiration, so it expired in 2004. In 2007, IMW applied to register GRISHKO in connection with “ballet slippers; dance shoes; dance tights; dance leotards; and dance dresses.” It eventually submitted the August 1992 and March 1993 documents to support its application, which then succeeded in 2009; IMW now owns seven federal registrations consisting of or incorporating the GRISHKO name, four of which are now incontestable.

Mr. Grishko’s cancellation proceeding is suspended pending the outcome of this litigation.

Grishko alleged that, after their agreement terminated, IMW subsequently began using a third-party Chinese manufacturer to produce its shoes, which has allegedly caused widespread consumer confusion as to the source of IMW’s products, constituting trademark and trade dress infringement, trademark dilution, and unfair competition.

In addition, Grishko alleged that IMW falsely advertised itself as the “Exclusive Distributor for North America,” not just the US, while there was an exclusive distributor in Canada and a nonexclusive arrangement in Mexico. IMW allegedly continues to advertise online that it is the exclusive U.S. distributor of Grishko-branded pointe shoes even though the exclusive licensing arrangement has been terminated. IMW also allegedly made false statements to U.S. dance retailers. Specifically: “[Grishko] began a major campaign to undercut us and you, our valued retailers, through their trademark-infringing sales via grishkoshop.com .... You may have received a letter from Nikolay Grishko on I.M. Wilson’s GRISHKO letterhead containing unfortunate and misleading claims.” When the court granted the preliminary injunction, IMW notified retailers that Grishko was enjoined from selling GRISHKO-branded products in the United States before the injunction formally took effect.

Trademark/trade dress counterclaims: The court couldn’t resolve ownership of the house mark or model marks at this stage. The first writing was ambiguous as to whether it was irrevocable. “The Court would not ordinarily expect an agreement irrevocably transferring the ownership of a valuable mark—particularly one’s own surname—to be concluded in two lines of text.” The agreement was so short that it was silent on the issue of consideration, which IMW argued was “in exchange for its ongoing efforts to invest in and develop the U.S. market for Grishko products.” But that wasn’t evident, just as it wasn’t evident that it was a temporary assignment for registration purposes only as Grishko argued. Ambiguity also inhered in the fact that IMW “drafted the document and presented it to Mr. Grishko in English—not his native language.” This couldn’t be resolved on a motion to dismiss.

So too with the model marks, “sole mark,” and trade dress, though IMW argued that they were necessarily transferred in order to ensure that the assignment of the main mark wasn’t naked/without associated goodwill. In particular, the court wasn’t persuaded that acquiring the main mark’s goodwill necessarily included the model marks:

I.M. Wilson cites exclusively to case law from the 1980s for the general proposition that trademarks must be owned by a single source. Defendants rely on the USPTO Manual that suggests that trademarks can have multiple owners and a case holding that evidence is capable of “decoupl[ing] the product marks from the famous house mark” where product marks have independent significance. Suffice it to say, neither effort wins the day yet.

One case did conclude that the goodwill symbolized by certain trademarks did not include the transfer of unregistered product marks and trade dress. Hetronic Int’l, Inc. v. Hetronic Germany GmbH, No. CIV-14-650-F, 2019 WL 3003679, at *31 (W.D. Okla. Mar. 22, 2019). And Callman’s treatise distinguishes goodwill that follows the house mark and that which is associated with the model marks. The treatise explains that “an exclusive transfer of a trademark apart from the business organization can only be done with respect to product marks. House marks are inseparable from the organization.” The court characterized this as “quite the opposite of I.M. Wilson’s argument,” but the question is: what is transferred? The quoted Callman language addresses a transfer of a single product mark out of a business organization versus an attempted transfer of the house mark without the business; it doesn’t directly address what happened here.

Anyway, ownership of the model marks, sole mark, and trade dress is contested! The court pointed out that a schedule listing all the marks to be transferred would have been a lot more probative of intent.

Also, Grishko could plead ownership/first use in the US by relying on IMW’s licensed use. “Because Grishko introduced all but one of the model marks while I.M. Wilson was acting as its licensee, I.M. Wilson’s use of the marks were on behalf of, and so for the benefit of, Grishko.” IMW argued that the second writing was a pure transfer, not a license, but that was contested.

And the incontestable registrations could be challenged because of Grishko’s possible prior rights and the allegations of fraud on the PTO in using the allegedly outdated/revoked consents in 2007, which were sufficient to survive a motion to dismiss. However, the court cautioned that it would be hard to prove fraud on the PTO. The party against whom fraud is alleged enjoys “considerable room for honest mistake, inadvertence, erroneous conception of rights, and negligent omission.” And, “even were Grishko to prevail on the fraud theory, at most, the marks would revert to an unregistered status but still be the property of I.M. Wilson” unless Grishko further proved that it was the owner.

Also, “[s]witching to an arguably inferior manufacturer without more does not rise to misrepresentation sufficient to warrant cancelling the registration.”

Grishko also sufficiently pled the existence of a protectable trade dress. It provided specifics and photos, and while some of the elements were not unique (“use of pink satin for the exterior of the pointe shoes made of an unremarkable shade of pink”), it did plead that Grishko was the only manufacturer that places a “unique identification number that can be used to identify the specific individual who inspected” the shoe, and spelled out other components and their locations. While certain aspects of the alleged trade dress could be seen as inherently functional—including the unique inspector identifier number and the placement and orientation of the size and width markings—other aspects were plausibly “inherently aesthetic (i.e., the pink satin trim, white inner sole, stitch patterns, and diamond sole mark)”—and thus nonfunctional. The trade dress as a whole was plausibly nonfunctional.

And Grishko adequately alleged secondary meaning. While IMW argued that its allegations about sales and advertising didn’t show that the trade dress had independent secondary meaning, Grishko did enough for a motion to dismiss.

Since likely confusion was also pled, trademark infringement counterclaims survived. So too with false designation of origin. “Should a dancer wearing an allegedly harmful shoe—but believing it to be a Grishko—suffer an injury, so too would Grishko’s business and reputation. Section 43(a) of the Lanham Act is designed to reach this type of conduct.”

Pennsylvania trademark dilution: The state law requires state fame, but did not specify whether “niche” fame sufficed. Because a pre-2006 federal court had reasoned that federal fame allows niche fame, and reasoned that the state would do the same thing, the court here concluded that state law—which wasn’t amended after the TDRA was enacted—still allows for niche fame. Thus, dilution was properly alleged. I don’t think this is a great idea. There’s still no reason to think that Pennsylvania wanted niche fame; it just got dragged along with the Third Circuit’s interpretation of the federal law, which Congress deemed wrong. Pennsylvania’s legislature shouldn’t be forced to correct that mistake too. (Insert your own comment about the Pennsylvania legislature.)

 Compare Componentone, L.L.C. v. Componentart, Inc., No. 02: 05CV1122, 2007 WL 4302108, at *1 (W.D. Pa. Dec. 6, 2007) (reaching the opposite result; noting that “niche market fame” was a “creature of judicial construction of federal law” and does not appear in the Pennsylvania anti-dilution statute). Rejecting that case, the court here reasoned that it was still bound by the Third Circuit’s old interpretation of Pennsylvania law, since state courts haven’t spoken. (The court acknowledged that “this issue is unlikely to reach a Pennsylvania state court given removal jurisdiction, and the fact that parties often plead both federal and state law trademark claims.” To me this is extra reason not to stick with the mistake!) “In the 14 years since the TDRA, Pennsylvania has chosen not to reform its state anti-dilution law to conform with the federal standards. …. Principles of federalism restrain this Court from reading in a stricter standard than the law currently provides.”

Anyway, Grishko sufficiently alleged fame in the performing arts community and among dancers. It alleged that its marks and trade dress were recognized by Pennsylvania’s premier professional ballet company—the Pennsylvania Ballet—in addition to the “American Ballet Theatre, West Ballet, and other organizations throughout the United States.”

False advertising: Grishko alleges that IMW’s “exclusive North American distributor” claims harmed its relationship with distributors in Canada and Mexico and impacted its ability to enter into new exclusive distribution and licensing agreements worldwide, and that it continues to advertise online as the exclusive wholesale distributor for Grishko-branded products.

IMW argued that Grishko only pled injury to its reputations with retailers, not that consumers withheld trade from it, and that it wasn’t plausible that advertisements in the U.S. directed to U.S. consumers harmed Grishko’s worldwide reputation. No:

I.M. Wilson incorrectly attempts to cabin the scope of “consumers” within the meaning of the Lanham Act. “[N]othing in the language of § 43(a) specifically requires a false representation be intended to influence the ultimate consumer, whoever that might be.” The relevant “purchasing public” varies according to the specifics of the industry.… Grishko sells goods through retail relationships as well as through wholesaling.

Grishko alleged that IMW’s marketing necessarily diverted sales away from Grishko because “[c]onsumers and retailers viewed I.M. Wilson as the sole purveyor of Grishko-branded products.” This was enough to allege statutory standing.

And a false statement made in the US is cognizable under §43(a) even if the economic harm occurs outside the US.

So too with the allegedly false claim of being the exclusive distributor after the parties’ relationship ended.

Litigation-related allegations: Grishko alleged defamation because IMW told retailers that Grishko was (1) undercutting and undermining retailers; (2) no longer supplying high-quality products; and (3) not abiding by court orders. Shortly after the preliminary injunction issued, IMW sent a cease and desist letter to one of the largest U.S. dance retailers and a letter to various retailers supposedly apprising them of the recent order. Though IMW argued that it was substantially true, the court wasn’t going to resolve that at this stage.

In Pennsylvania, out-of-court statements made by parties to a proceeding enjoy a qualified privilege provided those “statements are a fair and accurate report of statements made or pleadings filed” in the proceeding and the individual does not “make his report with the sole purpose of causing harm to the person defamed.” The C&D “sufficiently remains within the bounds of protected statements. The letter recounts I.M. Wilson’s litigation position that it is the exclusive owner of the GRISHKO house mark and notifies the recipient of the pending litigation.” So too with the letter to retailers. Though it says those retailers “have been undercut” by Grishko’s recent sales efforts, “read in context, these statements provide the basis for I.M. Wilson to seek an injunction,” and IMW made the very same claims in court (unlike certain political campaigns one could mention).

Even though the letter was sent before IMW posted the bond and so the PI wasn’t in effect, the court order had been entered, and the letter “expressly notes that it was ‘perfect[ing] the injunction,’ and attached a copy of the order granting the preliminary injunction. The Court rejects Grishko’s attempt to fashion a defamation claim on a technicality.”

The remaining possible basis was IMW’s July 2019 letter to its customers, which “rehashed” the present trademark claims and discusses the “unsatisfactory” quality of Grishko’s recent shipments. While IMW argued that this was mere opinion, the court thought that statements about the quality of goods should have been, and weren’t, pled as commercial disparagement. “Opining on the quality of the ballet shoes does not go to the honesty and fairness of Grishko’s dealings” and thus the letter wasn’t capable of defamatory meaning. Nor could it be defamation per se, since it was just a negative opinion. (In a footnote, the court noted that it’s not clear why corporate entities should be eligible for defamation per se, because corporations can’t be embarrassed or humiliated, but “Pennsylvania law continues to recognize it as a viable claim for corporations to assert.”)

Tortious interference with business relations: Under Pennsylvania law, interference is “privileged when the actor believes in good faith that his legally protected interest may otherwise be impaired by the performance of the contract.” Where the parties are competitors, there must be a showing that the defendant engaged in “independently actionable conduct” for plaintiff to succeed on a tortious interference claim. The court was persuaded by IMW’s argument that it had a duty to send notice to the retailers to apprise them that the court had entered an order enjoining Grishko, in order to bind them, since the Federal Rules of Civil Procedure say that PIs bind only people who receive “actual notice.” Plus, the defamation claims failed and so there was nothing independently actionable, even though Grishko sufficiently alleged actual damages.

9th Circuit shows some hostility to functionality for product design, gets federal fame right

Blumenthal Distributing, Inc. v. Herman Miller, Inc., Nos. 18-56471 & 18-56493 (9th Cir. Jun. 25, 2020) 

HM and Blumenthal/OSP engaged in litigation over “knockoffs” of HM’s Eames chairs and Aeron chairs. A jury found that HM’s registered and unregistered claimed EAMES trade dresses were protectable, and that OSP willfully infringed and diluted them, resulting in an award of $3,378,966 in infringement damages and $3,000,000 in dilution damages, and OSP was enjoined. The jury also found that HM’s registered and unregistered claimed AERON trade dresses were unprotectable because they were “functional.” 

The court of appeals affirmed the infringement judgment on the Eames chairs, reversed on dilution for want of federal fame, and reversed and remanded on the Aeron trade dress because the jury wasn’t properly instructed on functionality. The basic problem is an insight that the Ninth Circuit has had before, but has often put badly: if consumers want the product because of the way it looks, but they want the way it looks because of the reputation of the source, then the appearance is not aesthetically functional simply because consumers want it for the way it looks. The problem is causation, because if consumers want the product for the way it looks, that is often aesthetic functionality. In addition, being known for introducing a design to the market shouldn’t itself count as the relevant reputation—that’s the rule of Dastar—as opposed to being known for making quality physical instantiations of the design. But making that distinction can prove difficult.

 

Eames chairs

“HM introduced the first Thin Pad Eames chair in 1958, and has sold hundreds of thousands of them in the United States, along with a related line of Soft Pad Eames chairs. The Aeron chairs were introduced in 1994 and were even more successful; by the time of trial, HM had sold 6.5 million of them in the United States.” Versions have been “exhibited in American art museums and made repeated appearances in American pop culture.” The claimed unregistered Eames trade dress was “the overall appearances of its Thin Pad and Soft Pad Eames chairs, excluding the chairs’ colors and all components beneath the chairs’ seats.” The registered trade dress was the same, except that it excludes the chairs’ upholstery.

 

Aeron chair

The claimed unregistered Aeron trade dress was the overall appearance of the Aeron chair with an oval-shaped lumbar support, excluding the portion of the chair beneath the seat and the chair’s color. The registered Aeron trade dress was the same, except that it also included the control box under the seat. The difference between the registered and unregistered trade dresses were not material to the appeal.

The court framed the aesthetic functionality test as “whether, if one seller were given exclusive rights to use the claimed trade dress, other sellers would be forced to use alternative designs that make their products more costly to sell, or for which consumers’ willingness to pay would be lower for reasons having nothing to do with the reputation of any source (e.g., the alternative designs would not have as much intrinsic aesthetic appeal). If such competitive disadvantages would be significant, then this second requirement for aesthetic functionality is satisfied.” 

The court of appeals rejected utilitarian functionality arguments for the Eames chairs, because the fact that they had some utilitarian functionality didn’t make the overall appearance functional, nor did the functionality of various features make the overall appearance functional. “For example, the jury could have reasonably concluded that the metal trapezoidal design of the Eames chairs’ armrests was motivated by design considerations, at the expense of the comfort that a softer surface could have provided.” OSP argued that this shape enabled the “armrests to be attached to the [rest of the chair] at three points” rather than two points, but cited no evidence that the extra point of attachment has any utilitarian benefit. 

The Aeron verdict was reversed because this instruction (taken from the Ninth Circuit Model Civil Jury Instructions) was bad: 

A product feature . . . is non-functional if its shape or form makes no contribution to the product’s function or operation. If the feature is part of the actual benefit that consumers wish to purchase when they buy the product, the feature is functional. However, if the feature serves no purpose other than as an assurance that a particular entity made, sponsored or endorsed the product, it is non-functional. 

The middle sentence misstated the law, because it’s not true that being “part of the actual benefit that consumers wish to purchase when they buy the product” is sufficient proof that a feature is functional under Au-Tomotive Gold. The instruction didn’t capture the utilitarian functionality factors, such that “a feature that provides a utilitarian benefit is not functional unless the Disc Golf factors weigh in favor of finding it so,” and it didn’t capture the rule that “a feature that provides an aesthetic benefit is not functional unless that benefit is wholly independent of any source-identifying function and the feature’s protection would put competitors at a significant non-reputation-related disadvantage.” This error was presumptively harmful, requiring reversal and remand. 

Comment: As far as I can recall, no court has ever opined on how to determine “significance” for these purposes. Is it qualitative? Quantitative? What increment of non-reputation-related market share is a trademark claimant entitled to by virtue of having some reputation-related market share, especially since functionality ordinarily trumps secondary meaning? With respect to phrases conveying a particularized message such as "Lettuce Turnip the Beet," our recent amicus brief indicates that the First Amendment interests in conveying such a message are inherently significant. Again, I think there's a real insight here but the word "significant" isn't super helpful in implementing it: the mere fact that a design is, aesthetically speaking, decent doesn't mean that it is aesthetically functional. I have occasionally suggested framing the question as whether, in a counterfactual world in which the plaintiff has no source-related reputation, the design would still have particular attractions beyond "eh, it's a fine design"; Justin Hughes has suggested looking for a larger tradition or principles, which would often accomplish much the same thing as my test, to protect things that have preexisting associations or meanings, e.g., a champagne container in the shape of a slipper or a heart-shaped chocolate box or a black (slimming) engine for a boat. The Betty Boop case is a good one here because it clarifies the normative nature of the inquiry: given that the copyright in Betty Boop expired, is the ability to compete in the Betty Boop market significant? I think Dastar means that it is, even if other mugs and T-shirts exist at the same price point.

Dilution: requires federal fame, which means “household name” status. This HM did not prove. The Ninth Circuit’s earlier Trek case held that Trek failed to show such fame even though the company spent “between $3 million and $5 million per year” on advertising, including in mainstream publications; had around 4.5 million visitors to its website per year; made products sold by over 1,600 independent dealers in 2,000 locations across the nation; and sponsored superstar Lance Armstrong, who prominently used Trek bicycles. The court reasoned that “incidental media coverage,” such as that connected to Lance Armstrong, did not “by itself constitute evidence” that the mark was famous, because “[m]any products receive broad incidental media coverage.” Also, “[a]dvertising to a mass audience is not the same as achieving fame with a mass audience and, by themselves, such advertisements prove only that Trek desires widespread fame, not that it has achieved it.” By contrast, “surveys showing that a large percentage of the general public recognizes the brand, press accounts about the popularity of the brand, or pop-culture references involving the brand would provide evidence of fame.” Though Trek was a FTDA case, the TDRA didn’t lower the standard for fame among the general consuming public. 

HM’s evidence, viewed in the most favorable light, showed: 

HM spent, on average, $550,000 per year on advertising the Eames chairs from 2004 through 2015 (and under $400,000 per year from 2004 through 2009); the Eames chairs appeared in obscure publications such as Contract, Metropolis, and an “industry publication” called Monday Morning Quarterback; at the time of trial in 2016, HM had, at the very most, around 875,000 unique followers on Facebook, Twitter, and Instagram combined; most of the Eames chairs are sold through a distribution channel consisting of only around 45 independently owned dealers with 130 locations across the country; and the Eames chairs were “very heavily” featured in the TV show Mad Men, have appeared in other TV shows and movies, and have been exhibited at several American museums, including the Museum of Modern Art and the Henry Ford Museum.

This was plainly weaker than the Trek evidence, which was legally insufficient. Even if the jury instructions accurately stated the law, HM didn’t offer evidence sufficient to allow a reasonable jury to conclude that the Eames trade dress met the standard for fame. The dissent wanted more leeway for trade dresses than trade names, but it’s still required that the mark be famous among the general consuming public as a mark, not just recognizable (e.g., the Statue of Liberty is famous, but it’s not famous as a mark). “Even assuming that the shape of the Eames chair is more recognizable than the name ‘Trek,’ there nonetheless was no basis from which the jury could reasonably infer that the general consuming public would link all Eames-shaped chairs to a single source of goods.” 

Judge Friedland, as mentioned, dissented, relying on the idea that a mark can be a mark even if the consuming public doesn’t know the identity of the (singular) producer; that HM was not well known did not mean that the Eames chair was not well known. The dissent would have held that the jury could “deem HM’s experts credible and … infer from their testimony that the general consuming public had become familiar with the Eames chairs through encounters in business environments, pop culture, and museums.” Because the design was distinctive, the jury could find that it served as “a signature of chairs made by a leading furniture manufacturer, even if they could not specifically name HM as that manufacturer.” 

I think the majority clearly has the better of this because of the difference between being well known and well known as a mark. 

The dissent rejected the side-by-side comparison of the facts here with the facts in the Trek case because it thought there was more evidence here of “actual consumer recognition” because the Eames chairs are “ubiquitous” in office environments and depicted in “countless” TV shows and movies. [One could do a very interesting class analysis of the imagined “general consuming public” here: although Mad Men was surely culturally significant for us New Yorker types, what portion of the public was actually exposed to these TV shows and office environments, or went to the museums that focused on the chair design?] Also, the design here is “iconic” and museum-worthy while Trek is a “non-distinctive four-letter term with multiple meanings.” The media coverage wasn’t “incidental” as it was in the Trek case because the chair was a distinctive product design “that the jury could have inferred was memorable to many consumers who saw the chairs.” 

Excellent example of casual empiricism here: “While members of the public can consume products or encounter advertisements for products without focusing on the marks they feature, it would be difficult for consumers to interact with a product without forming an impression of its overall appearance (its dress)—particularly when that appearance is distinctive.” [I think this is just made up: at least, I don’t recall any literature suggesting that overall appearance does any better than any other kind of feature at sticking in a consumer’s mind; like most things we encounter, most design probably doesn’t go into long-term memory at all, certainly not as source-identifying. And as a legal matter it’s inconsistent with the Wal-Mart rule that all product design requires secondary meaning for protection.]

Humvees in Call of Duty are constitutionally protected realism, not confusing/diluting

AM General LLC v. Activision Blizzard, Inc., No. 17 Civ. 8644 (GBD) (S.D.N.Y. Mar. 31, 2020)

The district court allows Humvees to appear in realistic videogames by performing a full confusion analysis, despite purporting to follow Rogers v. Grimaldi.

The Humvee has become “an iconic and a ubiquitous symbol of the modern American military.” AMC has granted licenses to use the Humvee trademark “on or in connection with a wide variety of products,” including toys and at least four video games. Humvees have also appeared in “a wide variety of other media, including Hollywood blockbusters, … television series, … and Academy Award-winning dramas,” as well as in video games. 

Call of Duty is a popular, realistic military video game. Humvees are depicted in nine Call of Duty games, sometimes in the background or mentioned; players sometimes ride in a Humvee for several minutes during a scene or level and they can occasionally “assum[e] control of the (Humvee],” including by firing a turret-mounted machine gun. Humvees are also shown in several trailers for the games and in Call of Duty-brand d strategy guides. Activision also licensed a toy company to manufacture Call of Duty-branded construction sets, two of which include toy vehicles that allegedly bear the distinctive elements of the Humvee’s trade dress.          

An instruction manual for Call of Duty 4: Modern Warfare included the following language:

All title, ownership rights and intellectual property rights in and to this Program (including but not limited to any patches and updates) and any and all copies thereof (including but not limited to any titles, computer code, themes, objects, characters, character names, stories, dialog, catch phrases, locations, concepts, artwork, animation, sounds, musical compositions, audio-visual effects, methods of operation, moral rights, any related documentation, and “applets” incorporation into this Program) are owned by Activision, affiliates of Activision or Activision’s licensors.

Similar language occurs in other manuals for other iterations. Activision also received a letter in 1998 complaining about the use of Humvees in the video game Sin, which is unaffiliated with the Call of Duty franchise; Activision supposedly “agreed to remove [Humvee] vehicles from the video game Sin.”

Infringement: Rogers is the test for uses in artistic works generally, not just for titles. But then the court cites a title-v-title case for the proposition that a First Amendment-sensitive analysis must be done using the Polaroid factors, which is not the rule in the Second Circuit when the plaintiff doesn’t own rights in the title of an expressive work.  Rogers prong two is meaningless if it’s just likely confusion all over again, but the court cited Twin Peaks Prods., Inc. v. Publ’ns lnt’l, Ltd., 996 F.2d 1366, 1379 (2d Cir. 1993) (title v. title) and DeClemente v. Columbia Pictures Indus., Inc., 860 F. Supp. 30, 51 (E.D.N.Y. 1994) (which indeed also completely misread Rogers as just something to think about when you’re doing the multifactor confusion analysis, which is kind of amazing if you’ve read Rogers, which among other things rejects a consumer survey and evidence of confusion by sophisticated marketers).

By contrasting a non-title trademark case (the Hangover case with Louis Vuitton) with a title-v-title case (The Book of Virtues v. The Children’s Audiobook of Virtues), the court concludes that “an artistically relevant use will outweigh a moderate risk of confusion where the contested user offers a ‘persuasive explanation’ that the use was an ‘integral element’ of an artistic expression rather than a willful attempt to garnish the trademark owner’s goodwill for profit.”  At least the court is clear that the Humvees don’t need to be “metaphysically” required for the game; an integral element is one that “communicate[s] ideas—and even social messages,” either “through many familiar literary devices (such as characters, dialogue, plot, and music)” or “through features distinctive to the medium (such as the player’s interaction with the virtual world).”

Of course there was artistic relevance. “Featuring actual vehicles used by military operations around the world in video games about simulated modern warfare surely evokes a sense of realism and lifelikeness to the player who ‘assumes control of a military soldier and fights against a computer­ controlled or human-controlled opponent across a variety of computer-generated battlefields.’”

Proceeding to the Polaroid factors, the court found that the use wasn’t explicitly misleading because it wasn’t confusing. [sigh] It even quoted Rogers: “no amount of evidence showing only consumer confusion can satisfy the ‘explicitly misleading’ prong of the Rogers test because such evidence goes only to the ‘impact of the use’ on a consumer.” And then it did the multifactor confusion test anyway.

Unsurprisingly, some distortions appeared in the multifactor test: the court said that the marks weren’t very similar because the purpose of the uses were different. “Plaintiff s purpose in using its mark is to sell vehicles to militaries, while Defendants’ purpose is to create realistically simulating modern warfare video games for purchase by consumers.” AMC’s licensing practices were “sporadic and marginal” and thus didn’t show market overlap. And anyway, First Amendment considerations required the court to give minimal weight to bridging the gap.

AMC’s survey allegedly “found that 16% of consumers shown actual video game play from Activision’s games were confused as to AM General’s association with Call of Duty.” That wasn’t enough, given Rogers.

Bad faith: the 1998 letter couldn’t show bad faith, because Activision didn’t respond to it; silence wasn’t probative of Activision’s agreement about rights in the Humvee.  Nor were a handful of statements by Activision employees, the use of Humvees decorated with Call of Duty logos at several in-person promotional events, or the statements in user guides evidence of an intent to confuse:

For instance, the user guide statements do not affirmatively tell consumers that Activision either owns or licenses the Humvee IP. All that reasonably may be said is that a paragraph in miniscule type buried in a user guide—a paragraph which does not allude to, let alone mention, Humvees at all—does not “tell consumers” much of anything. Indeed, such back-end boilerplate provides no basis for “confusion between the two companies’ products.”

Sophistication: The Hangover court noted that “moviegoers are sophisticated enough to know that the mere presence of a brand name in a film, especially one that is briefly and intermittently shown, does not indicate that the brand sponsored the movie.” Here, “[t]here is no reason to believe that video game players are any less astute.”

Trade dress claims: Same thing, “[g]iven the improbability of confusion between a vehicle and a video game—or, in the case of the contested toys, between a plastic figurine and a full-blown military machine.”

Unfair competition/false designation of origin. Same thing. “The only thing remotely close to a ‘false designation’ is the legalese buried inside several games’ user guides,” which wasn’t enough.

Lanham Act false advertising: There were no literally or impliedly false statements.  NY false advertising: same. Also, AMC didn’t show injury.

Federal and NY dilution: NY dilution is “essentially the same” as federal dilution, and without evidence of the quality of Activision’s games, AMC failed to show tarnishing or blurring. If any dilution did occur, it would be “tolerated in the interest of maintaining broad opportunities for expression.” [Also in the interest of obeying the federal statute’s requirements and exemptions, but here I won’t quibble.]

Rogers continues to collapse into transformativeness in the Ninth Circuit: dog toy edition

VIP Products LLC v. Jack Daniel’s Properties, Inc., No. 18-16012 (9th Cir. Mar. 21, 2020)

VIP Products sells the “Bad Spaniels Silly Squeaker” dog toy, which resembles a bottle of Jack Daniel’s Old No. 7 Black Label Tennessee Whiskey, but has light-hearted, dog-related alterations. For example, the name “Jack Daniel’s” is replaced with “Bad Spaniels,” “Old No. 7” with “Old No. 2,” and alcohol content descriptions with “43% POO BY VOL.” and “100% SMELLY.”

Jack Daniel’s sued for trademark infringement and dilution, and the district court enjoined the toy. The court of appeals found that the trade dress was nonfunctional and distinctive, but the dog toy was an expressive work entitled to First Amendment protection, so the district court decision was reversed and remanded for Rogers treatment.

VIP’s purported goal in creating Silly Squeakers was to “reflect” “on the humanization of the dog in our lives,” and to comment on “corporations [that] take themselves very seriously.” While the Jack Daniel’s label says, “Old No. 7 Brand Tennessee Sour Mash Whiskey;” the label on the Bad Spaniels toy instead has the phrase “the Old No. 2, on your Tennessee Carpet.” A tag states that the “product is not affiliated with Jack Daniel Distillery.”

The nominative fair use defense failed because VIP didn’t use the mark itself, but rather a changed version with “significant differences.” E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1099 (9th Cir. 2008).

However, Rogers v. Grimaldi applied. Like greeting cards, “the Bad Spaniels dog toy, although surely not the equivalent of the Mona Lisa, is an expressive work.” It used “word play to alter the serious phrase that appears on a Jack Daniel’s bottle— ‘Old No. 7 Brand’— with a silly message— ‘The Old No. 2.’” In an attempt to distinguish the old Dr. Seuss case, the court says that book made “no effort to create a transformative work with ‘new expression, meaning, or message,’” while Bad Spaniels “comments humorously on precisely those elements that Jack Daniels seeks to enforce here.” [Note how Rogers is slowly collapsing into transformativeness in the Ninth Circuit—continuing Gordon v. Drape Creative.]

Vacated and remanded for Rogers analysis; although the district court is supposed to consider both prongs, it’s hard to see how it could find a lack of artistic relevance, and even after Gordon, the finding of transformativeness (and the fact that Jack Daniel’s doesn’t make parody dog toys) seems to dictate the result on explicit misleadingness.

Dilution: this is “noncommercial” speech—it does more than propose a commercial transaction—so there can be no dilution by tarnishment. The court phrases it in a weird way: “Although VIP used JDPI’s trade dress and bottle design to sell Bad Spaniels, they were also used to convey a humorous message.” Of course plenty of ads convey a humorous message; the issue here is that the dog toy is the product being sold, as opposed to being an ad for a separate product. That’s what makes it noncommercial speech, not the fact that it was humorous.

I guess it’s a better opinion than that in the Hummer/Activision case, which also reaches the right result with grimace-worthy reasoning?

They chose unwisely: court blows another hole in Rogers by refusing to say that explicit means explicit

Chooseco LLC v. Netflix, Inc., No. 2:19-cv-08 (D. Vt. Feb. 11, 2020)

Explicit doesn’t mean explicit in yet another sign of the pressure the Rogers test is under.  Chooseco sued Netflix for infringement (etc.) of its rights in Choose Your Own Adventure in the dialogue (!!) of its film Black Mirror: Bandersnatch.

Chooseco’s registration covers various types of media including books and movies. Netflix’s Bandersnatch “is an interactive film that employs a branching narrative technique allowing its viewers to make choices that affect the ‘plot and ending of the film.’” You know there’s a problem when the opinion says “[t]he pivotal scene at issue in this litigation occurs near the beginning of the film.”  The main character is trying to develop his own videogame based on a book also called Bandersnatch. His father remarks that Jerome F. Davies, the author of the fictitious book in the film, must not be a very good writer because Butler keeps “flicking backwards and forwards.” The character responds: “No, it’s a ‘Choose Your Own Adventure’ book. You decide what your character does.” “Of note, the subtitles for the film couch the phrase in quotation marks and capitalize the first letter of each word,” allegedly provided by Netflix.

The complaint alleged that Netflix promoted Bandersnatch with a similar trade dress as that used by CHOOSE YOUR OWN ADVENTURE books in multiple marketing campaigns. Chooseco is claiming the “rounded double frame” as a trade dress. (Its exemplar seems to have a problem in that most of those look like foreign, not US versions, on which you couldn’t base a US trademark claim, but good news for Chooseco: the court doesn’t care.)

Thus, the complaint alleges, Netflix created a website for Tuckersoft, the fictional videogame company where the main character developed his videogame, displaying multiple fictional videogame covers that have a “double rounded border element,” a few of which also appear in the film itself.

Netflix also allegedly used images of the videogame covers while promoting Bandersnatch in the United Kingdom, and used the cover for the Bandersnatch videogame as one of a few thumbnails for the film on its website.

Chooseco argued that Bandersnatch wasn’t a purely artistic work, but was also a data collecting device for Netflix, and that “Netflix may have sold product placement opportunities as a form of advertisement, which would also suggest the film is not purely artistic.” This argument, at least, fails. You get to sell art for money and it’s still art.  Furthermore, the use had artistic relevance. “Choose Your Own Adventure” had artistic relevance “because it connects the narrative techniques used by the book, the videogame, and the film itself.” It was also relevant because the viewer’s control over the protagonist “parallel[ed] the ways technology controls modern day life,” so the reference “anchors the fractalized interactive narrative structure that comprises the film’s overarching theme.” And further, “the mental imagery associated with the book series promotes the retro, 1980s aesthetic Bandersnatch seeks to elicit.” Chooseco suggested alternative phrases that Netflix could have used, but that’s not the right analysis.

So, was the use explicitly misleading? The court proceeds to reinterpret “explicitly” to mean not explicitly, quoting subsequent cases that don’t apply Rogers that say that the relevant question is whether the use “‘induces members of the public to believe [the work] was prepared or otherwise authorized’ by the plaintiff.” Louis Vuitton, 868 F. Supp. 2d at 179 (quoting Twin Peaks Prods., Inc v. Publ’ns Int’l Ltd., 996 F.2d 1366, 1379 (2d Cir. 1993)) (a title v. title and thus a non-Rogers case, because in the Second Circuit Rogers doesn’t apply to title v. title claims; the court also quotes Cliffs Notes, Inc. v. Bantam Doubleplay Dell Publ’g. Group, Inc., 886 F.2d 490, 495 (2d Cir. 1989), another non-Rogers title v. title case).  

Then the court says that likely confusion must be “particularly compelling” to outweigh the First Amendment interests at stake, and that “the deception or confusion must be relatively obvious and express, not subtle or implied” (quoting McCarthy, and then the odious Gordon v. Drape Creative, Inc., 909 F.3d 257 (9th Cir. 2018)). The court acknowledges that, “[n]ot surprisingly, in most cases in which a disputed mark was used in the content rather than the title of an expressive work . . . the results favored the alleged infringer, on the basis that the use was not explicitly misleading.” Michael A. Rosenhouse, Annotation, Protection of Artistic Expression from Lanham Act Claims Under Rogers v.

Grimaldi, 875 F.2d 994 (2d Cir. 1989), 22 A.L.R. Fed. 3d Art. 4 (2017).

Nonetheless, Netflix doesn’t win its motion to dismiss, because Chooseco “sufficiently alleged that consumers associate its mark with interactive books and that the mark covers other forms of interactive media, including films.” The protagonist in Bandersnatch “explicitly” stated that the fictitious book at the center of the film’s plot was “a Choose Your Own Adventure” book.  [That’s not the same thing as explicitly, extradiegetically stating there’s a connection with the film—the court considers the Fortres Grand case to be almost on all fours, but there Catwoman “explicitly” says that the program she’s after is called “Clean Slate.”]  Also, the book, the videogame, and the film itself “all employ the same type of interactivity as Chooseco’s products.” The similarity between the parties’ products increases the likelihood of consumer confusion. [Citing Gordon v. Drape, so you can see the kind of damage it’s doing.]  And Bandersnatch “was set in an era when Chooseco’s books were popular—potentially amplifying the association between the film and Chooseco in the minds of consumers.”  And Netflix allegedly used a similar trade dress for the film and its promotion; though the court didn’t think this was “particularly strong,” it “adds to a context which may create confusion.” How any of this is “explicit” is left as an exercise for the reader. Implied or contextual confusion is not explicit falsehood.

The court decided to allow discovery.  Question: Discovery about what?  What evidence is relevant to whether the film is “explicitly” misleading about its connection with Chooseco?

Unsurprisingly, Netflix’s descriptive fair use defense was also not amenable to a motion to dismiss. Here, the character in Bandersnatch held up a book and stated, “it’s a ‘Choose Your Own Adventure Book.’”  “The physical characteristics and context of the use demonstrate that it is at least plausible Netflix used the term to attract public attention by associating the film with Chooseco’s book series.” There were allegations that Netflix knew of the mark and used the mark to market for a different program until Chooseco sent a cease and desist letter. That could support “a reasonable inference that Netflix intended to trade on the good will of Chooseco’s brand,” as could intentional copying of “aspects” [protectable aspects?] of Chooseco’s trade dress.  And Netflix could have used numerous other phrases to describe the fictitious book’s interactive narrative technique, making bad faith plausible.

That holding makes sense, given the doctrine.  But worse is to come.  Netflix argued, quite correctly, that dilution requires (1) that the defendant use the term as a mark for its own goods or services, and (2) commercial speech, which the film is not. The court rejects both arguments.

The court quoted the federal definition of dilution by tarnishment as an “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark,” but didn’t explain why Netflix was plausibly using the term as a mark, as opposed to using it to label the book in the film. Netflix correctly pointed out that “[t]he Second Circuit does not recognize an action for dilution where the defendant uses the plaintiff’s mark not to denote the defendant’s good or services, but rather to identify goods or services as those of the plaintiff,” but the court thought that didn’t apply here because Netflix used the mark to refer to a fictitious book.  But the important part here is the first half: it wasn’t using Choose Your Own Adventure to brand its own goods or services; it was using it as part of a fictional work.  The implication—and it is not a good one—is that if, in my work of fiction, my character disparages a Choose Your Own Adventure book that doesn’t actually exist, I may have tarnished the CYOA mark. This is defamation without any of the limits on defamation that the First Amendment has imposed. Nonetheless, the court found that “Netflix’s use of Chooseco’s mark implicates the core purposes of the anti-dilution provision” (citing Hormel, which is not a federal dilution case and which has been treated as superseded by federal dilution law, see Tiffany v. eBay).  

Netflix then, correctly, pointed out that “the Lanham Act expressly exempts dilution claims based on a ‘noncommercial use of a mark’ of the type at issue here.” Despite the fact that in discussing Rogers the court correctly noted that profit-motivated speech is often noncommercial and Bandersnatch is noncommercial speech, the court still stated that “Netflix’s use of Chooseco’s mark may qualify as commercial speech” (emphasis added), which is not the test. And it so reasoned because Chooseco’s complaint alleged that “Netflix’s motivations in including its mark in the film were purely economic,” that Chooseco’s product is popular, and that Netflix used “elements” [protectable elements?] of Chooseco’s trade dress in promotion and marketing.  More discovery!

"use in a TM way" just creates another fact issue in the 6th circuit

Ford Motor Co. v. InterMotive, Inc., No. 17-CV-11584-TGB, 2019 WL 4746811 (E.D. Mich. Sept. 30, 2019)

Ford sued InterMotive for trademark infringement, false designation of origin, trademark dilution, cancelation of trademark registration, and declaratory judgment for using Ford’s trademarks in various InterMotive ads; defendants counterclaimed for a bunch of things including misappropriation of trade secrets and trademark infringement based on Ford’s launch of a competing product of the same name:

In 2011 and early 2012, Ford and InterMotive explored a potential business relationship wherein InterMotive would design an “Upfitter Interface Module” (“UIM”) for Ford to use on its vehicles. The UIM, as described in the record, is a product that allows its user to modify a vehicle for special applications such as in the police, fire, and utility truck market. For example, it can program a truck to flash a light if exceeds 65 miles per hour, or program a police vehicle to automatically lock its doors unless certain conditions are met.

Ford alleged that its relationship with InterMotive ended in May 2012; it announced a different design from a different vendor in 2016.  In June 2013, InterMotive and Ford executed a licensing agreement governing the Police Surveillance Mode Module, which Ford argued (and InterMotive disputed) was an express agreement not to use Ford’s marks, regardless of Ford’s alleged acquiescence to InterMotive’s use throughout 2012.

Along with the trade secret claims, InterMotive argued that Ford began using the name “Upfitter Interface Module” with full knowledge of InterMotive’s use of the same name to market its product. After the announcement, InterMotive applied to register UPFITTER INTERFACE MODULE, but it was placed on the Supplemental Register.

The dispute over this triggered Ford’s own trademark claims. First, InterMotive allegedly used the distinctive “Ford Oval” mark on the “splash screen” of InterMotive’s UIM software, in a UIM brochure for Ford, and in a promotional and training video on InterMotive’s website under the heading “The Ford Competitive Advantage.” They also allegedly used the Ford Oval and “Go Further” trademarks in a video on InterMotive’s website describing the “Ford Police Interceptor Surveillance Mode.” InterMotive argued that its uses showed that InterMotive is the source of the UIM product, as evidenced, e.g., by InterMotive’s logo, phone number and web address printed on the bottom of the brochure for prospective buyers, and merely showed that the product operates on Ford vehicles.  (After Ford objected, the oval mark was removed from the splash screen but a Ford mark remained.)

In August 2016, InterMotive’s engineering manager reviewed Ford’s recently-released user manual for the Ford UIM, stating that the user manual “is pretty much a knock off of [InterMotive’s], with different screen layouts”; Ford argued that its UIM was thus not a “blatant copy” of InterMotive’s UIM.

The court found that there was a question of fact whether InterMotive used Ford’s marks “in a trademark way,” which is a predicate question in the Sixth Circuit. 

First, the court noted that on the splash screen, Ford’s mark appeared between the logos of Ram, Chevrolet, GMC and GM below the heading “InterMotive UIM.” InterMotive also argued that the “splash screen” only appears after the customer has downloaded InterMotive’s UIM from the InterMotive website by clicking on an InterMotive software icon—none of which display Ford marks. Ford argued “post-sale” or “marketplace” confusion, but didn’t explain how this would happen.

Second, Ford challenged use of the Ford Oval and “Go Further” trademarks in a video on InterMotive’s website describing the “Ford Police Interceptor Surveillance Mode.” InterMotive responded that it merely posted a link to the video on its website, but Ford hosted (and continued to host) the video on YouTube. Ford just argued that it didn’t authorize InterMotive to use the marks.

Third, Ford argued that InterMotive used the Ford Oval trademark in a UIM brochure for Ford created on July 23, 2013. The heading of the brochure states: “Ford Upfitter Interface Module” followed by the Ford Oval mark below it. InterMotive points to its use of its logo, phone number and web address printed on the bottom of the brochure for prospective buyers. InterMotive argued that “Ford knew about the brochure and actually used it” at trade shows or otherwise and InterMotive used it to demonstrate how InterMotive’s UIM supported Ford vehicles.

Fourth, there was a “Ford Competitive Advantage” video, which InterMotive argued was designed with Ford when they were actively working together; InterMotive’s witness said that Ford provided a high-resolution image of the Ford Oval mark for use in the video and InterMotive argued that the overall video made clear it was from InterMotive.

Ford argued that these uses create a “presumption of confusion” because InterMotive used a “precise replica” of Ford’s marks and because InterMotive’s product competed directly with Ford’s product. But that didn’t matter if there was non-trademark use. Also, the allegedly infringing uses were all from 2012-13—up to four years before Ford had a competing product.

Despite this very favorable description taken straight from the court’s opinion, there’s still a genuine issue of material fact on whether InterMotive only used Ford marks to show that its UIM was compatible with Ford vehicles, which suggests something about the utility of many TM defenses. A jury could accept that “the relationship between Ford and InterMotive ended well before the advertisements were produced and the advertisements give the incorrect impression that Ford, not InterMotive, is either the source of InterMotive’s UIM or otherwise endorses the UIM.” Whether Ford really did provide a high-resolution photo of the Ford Oval mark for InterMotive to use in the “Competitive Advantage” video, whether Ford used and played the video at trade shows, whether Ford welcomed and encouraged the production of the brochure so that InterMotive could inform Ford at trade shows that its UIM was optimized for Ford vehicles, and whether Ford gave InterMotive previous approval to use the Ford Oval mark on InterMotive’s “splash screen” were all issues of fact.  [Query: if all this is true, should InterMotive get its fees?]

Also: why are these facts relevant to whether it was non-trademark use, as opposed to a defense of consent? The court said that “[i]f Ford knew that InterMotive was using its marks to advertise InterMotive’s products’ functionality on Ford vehicles, then Ford—in effect—concedes the … threshold inquiry by saying that InterMotive was not using Ford’s marks to show that Ford was the creator of the UIM.”  But even if Ford contests the threshold inquiry, shouldn’t we ask if there really is a question of fact posed by these uses?  And what Ford “knew” is highly unlikely to have been framed by Ford at the time as an issue of non-TM use, as opposed to “an ok thing a partner is doing”; when they were working together, it wasn’t false to suggest they were working together.  So figuring out what Ford thought isn’t really that helpful in identifying a non-TM use.

Anyway, Ford’s agreements with InterMotive didn’t prohibit InterMotive from using the marks (again, super unclear why that would matter to whether the use was infringing, as opposed to a breach of contract).

There was also, sigh, an issue of fact on trademark dilution, because non-trademark use can’t dilute. There was a genuine issue of material fact on whether InterMotive used Ford marks “only to describe some aspect of the [InterMotive UIM] product.”

As for InterMotive’s claim based on “upfitter interface module,” the PTO characterized the term as “(at best) highly descriptive,” but that examiner statement “does not constitute a finding by the Patent and Trademark Office.” Though Ford argued that the term was generic, a jury could find otherwise. The PTO considered a number of “web page screen captures” showing that the term “upfitter” was being used in a “highly descriptive” way by Dodge, Ram, and Ford. “But a number of those examples are efforts by Ford to market its ‘Ford upfitter interface module,’ which is the subject of InterMotive’s trademark infringement claim.” And, alleged direct, intentional copying of InterMotive’s mark was “strong evidence” of secondary meaning. “InterMotive also presents Ford-affiliated publications where InterMotive advertised its Upfitter Interface Module, demonstrating that it was a brand that Ford associated with InterMotive.”  [Or demonstrating that InterMotive made an upfitter interface module?]

Also, there was an email from a Ford employee who worked on developing Ford’s UIM, which stated that the term “Upfitter Interface Module” was already being used by an existing supplier and recommended changing Ford’s UIM name to one of three suggestions: Programmable Upfitter Interface Module (PUIM),19 Programmable Interface Module (PIM), or Programable Upfitter Module (PUM). The existence of three alternative ways to refer to the product was, InterMotive argued, evidence that “Upfitter Interface Module” wasn’t generic or highly descriptive. This argument has a decidedly mixed record in the courts—there are lots of ways to describe restaurants and hotels, but that doesn’t make “house” or “inn” protectable; there can be multiple generic names for a thing.  But that’s a fact issue here.

InterMotive also provided possible evidence of confusion: “at a 2016 trade show, Ford dealers and trade show personnel were confused over whether Ford’s product came from InterMotive—as prior tradeshows demonstrated that InterMotive was marketing an Upfitter Interface Module that was optimized for Ford vehicles.” [But did that confusion come from the name or the terminated partnership?]

InterMotive also challenged two claims in Ford’s ads as false advertising.  In a promotional video titled “Ford Programmable Upfitter Interface Module ‘Critical’ to Industry,” available on YouTube, a Ford representative states: “Ford is the only product that is actually programmable in these upfitter interface modules.” InterMotive alleged that it did too. Ford argued that this claim was puffery, but it’s a specific claim.  Ford also argued that the statement was immaterial and de minimis, given the video had been viewed less than 300 times at the time Ford’s motion for summary judgment was filed. InterMotive’s witness declared that this wasn’t small “because the work truck market is not very big” and “a single viewer could make the decision to buy thousands of vehicles.” Moreover, the views count didn’t include people at a trade show who viewed the video when it was played; trade shows are an important market for InterMotive. In addition, InterMotive argued that programmability was material because a product that is not programmable “has much less use to the customer.” There were genuine fact issues on materiality.

The second alleged false advertisement came from Ford’s “What You Get” brochure: “[U]nlike aftermarket upfitter modules currently on the market, [Ford’s UIM] is warranted by Ford and will not interrupt the Computer Area Network (CAN).” In a classic caveat emptor argument, Ford contended that its statement was true if taken as conjunctive (it’s the only one that is both warranted by Ford and also won’t interrupt the CAN). Without ruling on this bad argument, the court found that InterMotive hadn’t shown materiality/travel in interstate commerce.