Category Archives: Trademarks

Trademark infringement and false designation claims not subject to heightened pleading standard

Court also foreshadows that if all they’re talking about is metatags, there won’t be much of a case.

Indiaweekly.com, LLC v. Nehaflix.com, Inc., 2009 WL 189867 (D. Conn. January 27, 2009)

In moving to dismiss claims brought against it for trademark infringement and false designation of origin under 15 U.S.C. Secs. 1114(1) and 1125(a), Indiaweekly.com, LLC claimed that the counterplaintiff Nehaflix.com had failed to allege sufficient facts to meet the standard of Fed. R. Civ. P. 9(b). That rule requires that “[i]n alleging fraud . . . a party must state with particularity the circumstances constituting fraud . . . .”

Bollywood mudflap

The U.S. District Court for the District of Connecticut rejected Indiaweekly.com’s assertion that such claims were subject to Rule 9′s heightened pleading standard. Nehaflix.com’s allegations that Indiaweekly.com placed Nehaflix’s trademark on Indiaweekly.com to draw in search traffic survived the motion to dismiss. It was plausible that potential Nehaflix customers, when searching for the term “Nehaflix” would, upon being directed to another site containing the term and selling competing goods, conclude that the two businesses were related when in fact they were not.

It is important to note that the court assumed for the sake of the motion to dismiss that the allegations that the Nehaflix mark “appeared” on Indiaweekly.com meant that the mark was visible when viewing the site and not merely in metatags. The court nodded to S&L Vitamins v. Australian Gold, Inc., 521 F.Supp.2d 188 (E.D.N.Y. 2007), which held that mere metatag use was not “use in commerce” for purposes of the Lanham Act.

Photo courtesy Flickr user Meanest Indian under this Creative Commons license.

Verizon obtains damages, injunction against regsitrar under ACPA

[This is a guest post by contributor Brian Beckham]

Plaintiff Verizon California, Inc. (Verizon) recently obtained a default judgment in the U.S. District Court for the Northern District of California, San Jose Division, in its favor against Defendant, the registrar OnlineNIC, Inc. (press release).

Despite repeated attempts, Verizon was not able to serve notice on OnlineNIC; the court ultimately approved Verizon’s application to serve process with the California Secretary of State. OnlineNIC was alleged to have engaged in the bad faith registration of 663 identical or confusingly similar domain names incorporating one of Verizon’s family of marks (e.g., <bestverizon.net>, <myprepaidverizon.com>, <verizonflios.com>, <vzwactivate.com>, etc.) inter alia, in violation of the ACPA. Verizon’s unchallenged, well-pleaded allegations were accepted by the court as true; OnlineNIC’s liability was thus established.

In addition to OnlineNIC’s default, significantly, the court noted that OnlineNIC had refused to alter its behavior (presumably after a cease & desist letter) and had purposefully attempted to avoid detection (e.g., by providing false contact information). However, given the default, the court was reluctant to impose the full statutory damages provided for under the ACPA ($100,000 per infringement), but imposed damages of $50,000 per violation (totaling $33.15 million). It remains to be seen whether Verizon will successfully collect, nonetheless, Verizon obtained a transfer order in its favor for all of the 663 infringing domain names. OnlineNIC (including any related entity) was further enjoined from directly or indirectly (i) registering, trafficking in or using any domain name that is identical or confusingly similar to the Verizon marks and (ii) assisting, aiding or abetting any other person or business entity in engaging in or performing and of the said activities.

This injunction seems to leaves open the question of whether the seemingly common registrar practice of actively suggesting alternate domain names available for registration (e.g., those that add alphanumerical strings, e.g., <new____4u.com>, <buy____.net>, <your____.org>, <my____pro.com>, <best____.com>, etc.) would be covered by the “assisting, aiding or abetting” language in the injunction.

Case is: 2008 U.S. Dist. LEXIS 104516

Disclaimer in trademark registration sinks UDRP action

Ideation Unlimited, Inc. v. Dan Myers, Case No. D2008-1441 (WIPO November 12, 2008).

A trademark owner who notices that someone else has registered a domain name incorporating the owner’s mark can file an arbitration action under the Uniform Domain Name Dispute Resolution Policy (UDRP for short). This often serves as a quicker and less expensive alternative to pursuing the cybersquatter in court.

To be successful under the UDRP, the “Complainant” has to show all of the following three elements:

(a) the registered domain name is identical or confusingly similar to a trade mark or service mark in which the Complainant has rights; and

(b) the “Respondent” has no rights or legitimate interests in respect of the disputed domain name; and

(c) the disputed domain name has been registered and is being used in bad faith.

Ideation Unlimited, Inc. uses a logo with the word PRESCRIPTION COSMETICS. It has a United States and United Kingdom registrations for this logo. But in the U.S. registration the term “prescription cosmetics” is disclaimed. (Trademark applicants are required to “disclaim” any exclusive rights to use terms within their marks that are generic or merely describe the products.”) In the U.K. registration the word “prescription” is disclaimed.

The panel concluded that “[i]f the Complainant has willingly disclaimed any trade mark rights in the entire term ‘Prescription Cosmetics’, it cannot and should not claim to have trade mark rights in that term by virtue of its . . . registration.”

But what about common law rights, you ask? After all, one can support a UDRP action even without a trademark registration. The panel noted as follows:

Of course, it is not necessary for the Complainant to establish registered trade mark rights – it would be sufficient for the purposes of these proceedings under the Policy for the Complainant to demonstrate common law trade mark rights in the term PRESCRIPTION COSMETICS. However in the Complaint, the Complainant relies heavily on the three device marks, and provides little evidence of common law rights or reputation.

The decision underscores the importance of keeping trademark registrations up to date. Presumably, the mark in question here could have acquired distinctiveness by now (it’s been in use since the mid-70′s) so the disclaimer probably isn’t necessary anymore. And the decision also shows the importance of submitting evidence (at least a declaration) showing what common law or unregistered rights the complainant has.

Results of Internet searches helpful in earthworm trademark case

Cascade Mfg. Sales, Inc. v. Providnet Co. Trust, 2008 WL 4889716 (W.D. Wash. November 12, 2008)

Cascade Manufacturing makes and sells composting bins in which earthworms “enhance and accelerate the composting process.” Cascade owns a federal trademark registration for WORM FACTORY. It sued its competitor Providnet Co. for trademark infringement over Providnet’s use of the mark GUSANITO WORM FACTORY. Cascade moved for a preliminary injunction against Providnet’s use of its “worm factory” mark. The court granted the motion.

Worms enhance and accelerate composting

Worms enhance and accelerate composting

One of Providnet’s arguments against the injunction was that “worm factory” is a generic term for the types of products being sold under the respective marks. To refute this contention, Cascade introduced evidence of Internet searches supporting its claim that the products at issue are referred to as “worm bins,” and that “worm factory” refers to Cascade’s particular product. The court found this evidence to be instructive.

Earthworm picture courtesy Flickr user Rick Harris under this Creative Commons license. Redistributed here under the same license.

Court allows U.S. lawsuit over video posted on Mexican website

Rapper 50 Cent’s Lanham Act claim against Cancun night club survives motion to dismiss

Jackson v. Grupo Industrial Hotelero, S.A., No. 07-22046, 2008 WL 4648999 (S.D. Fla. October 20, 2008)

Defendant owns Coco Bongo, a popular Cancun nightclub. Coco Bongo allegedly used rapper 50 Cent‘s likeness as well as one of his registered trademarks in some Spring Break 2007 video advertisements posted to the web. 50 Cent sued under the Lanham Act in federal court here in the United States alleging trademark infringement as false designation of origin.

Coco Bongo moved to dismiss, arguing a lack of subject matter jurisdiction. It contended that the alleged acts occurred outside of the United States, thus an extraterritorial application of the Lanham Act would violate Supreme Court and Eleventh Circuit authority. The court denied the motion.

The fact that the offending advertisements were on the web was key to the court’s finding that the court had subject matter jurisdiction. 50 Cent was seeking enforcement of his United States trademark rights in the United States. Although the Coco Bongo website was located in Mexico, and even though the website and its advertisements might be viewable by numerous other countries, it was the availability of the allegedly infringing advertisement within the United States that gave rise to an alleged violation of the Lanham Act.

See also Rogers v. Wright for analysis of the extraterritorial application of the Lanham Act.

Court enjoins transfer of trademarks associated with domain name booty

1st Technology v. Bodog Entertainment Group, S.A., No. 08-0872, (W.D. Wash. September 30, 2008).

After plaintiff 1st Technology won a $46 million default judgment against defendant BEGSA, 1st Technology began its collection efforts by seeking to obtain possession of thousands of BEGSA domain names registered through the Washington-state based registrar eNom. A state court ordered the domain names transferred to a receiver, but the judge, unsure of the degree of the state court’s jurisdiction, did not transfer the ownership of the corresponding federally-registered trademarks associated with the domain names.

Thereafter, BEGSA purported to assign the trademarks to various subsidiaries and related entities. 1st Technology filed a federal lawsuit against BEGSA and these other entities, asking the court to set aside the later transfers as fraudulent conveyances. 1st Technology sought a preliminary injunction to prevent further transfer of the trademarks, and to prevent defendants from using the trademarks in connection with online gambling.

The court granted the motion inasmuch as it sought prevention of further transfer. But it denied the motion as to the use in connection with online gambling.

BEGSA argued, among other things, that the court could not order the forced sale of the trademarks and their goodwill, and that federal trademark law preempted the state fraudulent conveyance law under which 1st Technology sought relief. The court rejected both of these arguments, citing to Seventh Circuit authority providing that the “assertion that a trademark is not subject to an involuntary judicial sale is incorrect.” Adams Apple Distrib. Co. v. Papeleras Reunidas, S.A., 773 F.2d 925, 931 (7th Cir. 1985). On the preemption question, the court noted the absence of any authority cited by BEGSA providing for preemption, and looked to the language of 15 U.S.C. §1119, which gives the court broad authority to affect the federal trademark register.

In denying injunctive relief against the use of the trademarks in connection with online gambling, the court concluded that at such an early stage in the litigation, it was not prepared to distinguish which conduct on the part of the defendants was illegal or legal. Of significant importance was the likelihood of harm to both parties if the trademarks could not be used in the way they traditionally had (that is, for online gambling). Defendants argued that “disjoining the marks from their most commonly known use hopelessly dilutes them and destroys their value – to anyone.”

He was a trademark owner, she was a competitor, he would take her to court over keyword advertising.

In a lawsuit filed recently, Plaintiff Rosetta Stone Ltd. claimed that Defendants Rocket Languages Ltd. et al. infringed Rosetta Stone’s trademarks and engaged in unfair competition. The Plaintiff provides foreign language educational software under the registered mark: Rosetta Stone, and is probably most famous for their clever “farmboy supermodel” ads.

Rosetta Stone claims that the Defendants and their affiliates (competitors of Rosetta Stone) use the Rosetta Stone mark as a keyword in Google and Yahoo! targeted / keyword advertising. Thus, Rosetta Stone contends that “when a consumer [searches for a variation of] ‘ROSETTA STONE’, he is confronted with a list of advertisements from Defendants that either directly offer Rocket Languages products or purport to offer information and reviews of various foreign language software products [, and that the Rosetta Stone mark appears] in the header and text of the resulting sponsored links”. Rosetta Stone also alleges that the Defendants have tarnished the Rosetta Stone mark by running advertisements which state, inter alia, “Rosetta Spanish A Scam?” or “Read These Reviews Before Buying Rosetta Spanish!” Rosetta Stone also alleges that “comparison reviews” of the Defendants are biased and fail to disclose their true source. Finally, Rosetta Stone contends that several hyperlinks on affiliate sites appear to link users with Rosetta Stone, but in fact, link users to Defendants products.

Rosetta Stone alleges that if these actions are permitted to continue, significant monetary and trademark goodwill damages will occur. Rosetta Stone is asking the Court to enjoin the Defendants, inter alia, from using the Rosetta Stone mark in its advertising. Additionally, Rosetta Stone seeks a Court Order that the Defendants remove the Rosetta Stone mark from their keyword advertising.

Given several recent rulings, blogged here, the Court may enter an injunction in favor of Rosetta Stone, though this case may present some interesting comparative advertising questions.

No initial interest confusion in metatag and sponsored listing case

Designer Skin, LLC v. S & L Vitamins, Inc., No. 05-3699, 2008 WL 2116646 (D. Ariz. May 20, 2008)

It’s always a bit nerve wracking to write about decisions when I know that counsel of record is probably going to be reading the post. That’s the situation with the recent Designer Skin v. S & L Vitamins case. Law blogger Ron Coleman (whom I consider a friend though we’ve never met) is defense counsel in the case, and he has been a longtime supporter of Internet Cases with encouragement back when I started in 2005, and with frequent links to here from his blog Likelihood of Confusion.

Ron’s good reputation is in apparent proportion to his lawyering skills, as his client S & L Vitamins was largely victorious in summary judgment proceedings in a trademark infringement matter before the U.S. District Court in Arizona. The case exemplifies a modern issue concerning the use of trademarks on the Internet.

Plaintiff Designer Skin sells indoor tanning products. Designer Skin is pretty selective about who it allows to resell its goods. Defendant S & L Vitamins – a web-based reseller – is not on Designer Skin’s list of permitted resellers. But S & L sells the products anyway. And it gets traffic to its website in part by using Designer Skin’s trademark in metatags, in page HTML, and as a keyword to trigger sponsored search results.

Designer Skin sued S & L asserting a number of causes of action, including trademark infringement. The parties cross moved for summary judgment. One main issue was whether S & L’s conduct resulted in “initial interest confusion” a la Brookfield Comm. Inc. v. West Coast Entertainment Group, 174 F.3d 1036 (9th Cir. 1999). The court ruled in favor of S & L, holding that Designer Skin’s arguments for initial interest confusion failed as a matter of law.

The court ascertained that Designer Skin was arguing initial interest confusion based on (1) S & L’s use of Designer Skin’s marks in metatags, HTML and as keywords, (2) higher placed search results (presumably because of the metatags and use of the mark in HTML), and (3) the appearance of Designer Skin’s marks on S & L’s web pages.

The first argument – said the court – misstated the law. The mere fact that S & L used the marks in this way was not enough for initial interest confusion. Missing was the notion of “bait and switch”. The court emphasized that “[d]eception . . . is essential to a finding of initial interest confusion.” When web users clicked on links to S & L’s pages which indicated Designer Skin products were being sold, they were taken to pages which, not deceivingly, sold Designer Skin products.

The second argument for initial interest confusion failed essentially because it wasn’t plausible. Even if Designer Skin had presented evidence (which the court found it hadn’t) that S & L was showing up higher in search results for “Designer Skin,” only “the naive few” would be deceived. And fooling any less than an appreciable number of users would not be enough for the claim to survive.

As for the third argument, the court found it impossible for initial interest confusion to arise based on what appeared on the site. A searcher could not be tricked into initially visiting a site by the look of the site itself – by that time he or she would already be there.

In short, the court held that because there was no deception on the part of S & L, there could be no initial interest confusion. S & L was using Designer Skin’s marks to truthfully inform searchers what they could find at the S & L site – authentic Designer Skin products.

A look at some keyword cases and a PPC class action suit

Court orders use of “negative keywords”

Orion Bancorp, Inc. v. Orion Residential Finance, LLC, No. 07-1753, 2008 WL 816794 (M.D. Fla., March 25, 2008)

Plaintiff Orion Bancorp, Inc. is a bank operating under the ORION name and registered trademark since 2002. Defendant Orion Residential Finance, LLC provides financial and real estate related services, and used the term “Orion” in interstate advertising and in the domain name “orionresidentialfinance.com” without Orion Bancorp’s authorization or consent.

The court entered an agreed permanent injunction, ordering Orion Residential Finance to refrain from any and all use of the term “Orion”. The defendant was prohibited from purchasing the word “Orion” as a keyword to trigger sponsored advertising. Moreover, it was required to activate “Orion” as a “negative keyword” (specifically preventing Orion Residential Finance’s ads from appearing when one searches using the terms “Orion”).

N.D. Cal.: Competitor’s trademark as keyword causes initial interest confusion

Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).

Plaintiff Storus Corporation (“Storus”) sued Defendants Aroa Marketing, Inc. (“Aroa”) and Skymall, Inc. (“Skymall”) for trademark infringement based on the defendants’ use of Storus’ mark “Smart Money Clip” to trigger sponsored listings. Storus sells its patented Smart Money Clip, and Aroa sold competing products under its Steinhausen mark which were marketed as the “Smart Money Clip”. Aroa tried unsuccessfully to argue that Storus’ mark was a descriptive term not entitled to protection (but offered no evidence of lack of secondary meaning, i.e., it did not prove consumers do not think of Storus when they see the Smart Money Clip mark).

The Court found that Aroa’s use of Storus’ mark in the sponsored ad caused initial interest confusion. In 11 months, the ad was displayed 36,164 times in response to a search for “smart money clip,” resulting in 1,374 clicks on Aroa’s ad. The court found that the marks were identical, were used on the same type of product, and were marketed via the Internet. (Even though Aroa’s mark appeared in the ad, Storus’ mark appeared first, was larger, and was underlined).

11th Circuit: Competitor’s Trademark as Keyword Likely to Cause Confusion

North American Medical Corp. v. Axiom Worldwide, Inc., 2008 WL 918411 (11th Cir. April 7, 2008)

Eric Goldman has a thorough report on his Technology & Marketing Law Blog of a case where the defendant’s use of the plaintiff’s ACCU-SPINA and IDD THERAPY trademarks in metatags constituted use in commerce, and thus trademark infringement where a Google search listed the defendant as the second most relevant organic search result (below the plaintiff). In a footnote, the court did hint that if the defendant’s website included an explicit comparative advertisement, things might have come out differently.

Possible Class Action Suit against Google and PPC Groups

Finally, Sarah Bird reports on SEOmoz.org that a class action trademark and ACPA lawsuit against Google and other domain parking agencies will move ahead. (Goolge’s adsense program contributes to the pay-per-click links on “parked”, i.e., recently acquired, or tasted domain names). The Plaintiff’s are seeking to hold them liable for these PPC links which may offer competing goods. Though for Google’s part, it notes on its FAQ that it is not responsible for the domain names on which its adsense ads appear, it seems disingenuous to suggest that their algorithms are not behind the PPC links that appear. Google’s method for trademark owners to object to sponsored links places the burden for policing this practice on mark owners.

Former band members’ use of service mark is not so Chic

Rogers v. Wright, No. 04-1149, 2008 WL 857761 (S.D.N.Y. March 31, 2008)

The U.S. District Court for the Southern District of New York has issued a permanent injunction restricting the use of the service mark CHIC in connection with musical performances by two former members of the musical group of the same name.

Plaintiff Rogers (founder of the music group Chic) claimed that Defendants Wright and Martin (former Chic singers) infringed his rights in the service mark CHIC for music and vocal entertainment services. Rogers formed the group in 1977 and obtained service mark registrations for the band name in 1982 and 2004.

Chic

Wright and Martin, who previously performed on Chic albums and in live televised performances, had been performing in the U.S. and abroad since 2003. At various times, and without permission, they operated a Web site at www.ladiesofchic.com, and billed themselves as “First Ladies of Chic”, “Chic”, “The Original Ladies of Chic”, “Chic: Live!”, and “Les Chic”. They were billed by one venue as “original artists singing all the original hits.”

The court first found that Rogers had valid rights in the CHIC mark — regardless of whether those rights arose from the 1982 or 2004 registrations or from common law rights. The court then found a likelihood of confusion between Rogers’s mark and Wright and Martin’s use of the same using the 8-factor Polaroid test.

Specifically, the court found: (1) the CHIC mark was “at least moderately strong” in that it had created a tendency in the minds of consumers to associate it with Rogers’s band; (2) the defendants’ uses of the Chic mark (as noted above) were “sufficiently similar” to cause confusion; (3) the parties competed directly in the same market; (4) an analysis under “bridging-the-gap” was not required because of the third factor; (5) there was some evidence of actual confusion; (6) the defendants intended to take advantage of the plaintiff’s reputation and good will in adopting their various uses of his mark; (7) there was little evidence of the quality of defendant’s product; and, (8) similarly, there was little evidence of the sophistication of the relevant consumer group, i.e., concert attendees or promoters. Taking all of these factors together, the court found “little difficulty” in finding Defendants’ use of Plaintiff’s mark was likely to cause confusion.

The court was not persuaded by the defendants’ attempted fair use defense. The defendants had certainly used CHIC as a mark (and not, for example, mere comparative advertising or other descriptive purposes – see, e.g., Playboy Enters., Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002). Moreover, the defendants’ promotional materials used the CHIC mark in a prominent manner. The court was similarly unpersuaded by the defendant’s argument that the Lanham Act did not apply to acts outside of the U.S.