Virginia Business Litigation Lawyer Blog

Access Designs, Inc., a company that manufactures TubcuT®, a product that alters regular bathtubs to convert them into walk-in showers, has filed a trademark-infringement suit against The BathWorks Company in federal district court in Charlottesville, Virginia. According to the allegations of the Complaint, two former representatives of Access Designs, Greg and Ellen Murphy, formed BathWorks in Rhode Island and began selling a product similar to TubcuT® and marketing it under the name "Tubcut" or "Tubcuts", creating a likelihood of confusion in the marketplace with respect to the origin of the customized bathtubs.

The suit is based on the provisions of the Lanham Act that govern trademark infringement and unfair competition, 15 U.S.C. §§ 1114 and 1125(a). To win on both allegations, Access Designs must prove three things: (1) that its mark is valid, (2) that The BathWorks Company's use of the mark is unauthorized, and (3) that BathWorks' use of the mark is likely to cause customers to be confused.

Access Designs has a little bit of a head start in that TubcuT® is registered with the Patent and Trademark Office, as registered marks carry a presumption of validity. The key issue in the case is likely to be whether BathWorks is using a mark that is likely to cause confusion among consumers as to the source of the parties' respective products. To determine the likelihood of consumer confusion, courts generally consider factors such as (1) the strength of plaintiff's mark; (2) the relatedness or "proximity" of the parties' goods or services; (3) similarity of the parties' marks; (4) evidence of actual confusion; (5) marketing channels used; (6) the degree of care likely to be exercised by purchasers; (7) the defendant's intent in selecting the mark; and (8) the likelihood of expansion of product lines.

Whether or not Access Designs can prove its allegations at trial remains to be seen.

The Internet has been a boon to business. It brought local economies into the global market, cut down on communications costs, and made accessible information that was once only available through painstaking research. That is not to say, however, that the technology has not had its drawbacks. Towards the end of the 1990's, peer-to-peer file sharing websites became a haven for piracy of software, music, and movies. At first, those perpetrating these crimes were only a small segment of society, but gradually the practice became more widely accepted and piracy became prevalent in nearly every demographic. Various industries took notice and scrambled to fight back. Many are familiar with the Recording Industry Association of America's (RIAA) resort to the courts to sue and force settlements with those who share music over the Internet. While the RIAA pioneered this strategy, many companies are now following suit by filing suit. One such case was filed recently by Saregama India, Ltd., the biggest recording company in India, in the United States District Court for the Eastern District of Virginia.

Saregama discovered that many of its songs, popular both in India and among the Indian population in the United States, are being made available as ringtones on a website called Dishant.com. Saregama alleges that Dishant.com and its owners, Dishant Shah and Meeta Shah, violated Saregama's copyrights because they never bought the rights to these songs nor received approval from Saregama to share the songs as ringtones. Further, Saregama claims that Dishant.com displayed Saregama logos next to the titles of the songs, which would be a trademark violation.

Under the Copyright Act, the right to distribute copies of copyrighted work, or to prepare derivative works based on the copyrighted work, belongs solely to the copyright owner. Under the Act, if Saregama can prove that the materials provided by Dishant.com are identical to or substantially identical to any property owned by Saregama, and that Dishant.com provided those materials without permission, then Saregama's burden will be met. The consequences for a copyright violation can be substantial. If Saregama prevails, it may be entitled to recover any profits Dishant.com made from the use of the songs (or statutory damages up to $150,000 if the infringement was willful), plus reimbursement of its attorneys' fees.

The trademark aspect of Saregama's suit is based on the Lanham Act, the primary source of federal trademark law in the United States. The use of another's trademark in connection with the sale of a product constitutes infringement if it is likely to cause consumer confusion as to the source of the product or as to the sponsorship or approval of the product. In deciding whether consumers are likely to be confused, courts will typically look to a number of factors, including: (1) the strength of the mark; (2) the proximity of the goods; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the similarity of marketing channels used; (6) the degree of caution exercised by the typical purchaser; and (7) the defendant's intent. Trademark violations can be costly as well. Under 15 U.S.C. 1117(a), a successful plaintiff may be entitled to defendant's profits, damages sustained by the plaintiff, and reimbursement of the costs of the action (including reasonable attorneys' fees in "exceptional cases"). Damages may be trebled upon showing of bad faith.

If you own rights to a trademark or copyright that is being infringed by another, don't wait for an industry trade group to bring legal action on your behalf. Consult an intellectual property attorney and find out whether action is needed to protect your business assets.

"Once You Know, You Newegg." That is the slogan and registered trademark of Newegg, a popular online retailer of consumer electronics and high-tech products. Department-store chain Kohl's recently began using a similar tagline: "The More You Know, the More You Kohl's." On May 14th, Newegg filed a trademark-infringement lawsuit in California seeking to enjoin further use of the similar slogan.

A combination of words used in commerce as a slogan is protectable as a trademark if used to identify and distinguish the source of products or services. Use of a registered slogan by others can be prohibited if there is a likelihood of confusion among the consuming public. Newegg's action essentially claims that Newegg has a property interest in the "Once You Know, You Newegg" slogan, which it built up at great expense, and that the slogan has become associated in the minds of consumers with "an unsurpassed shopping experience, rapid delivery, and stellar customer service." According to the lawsuit, Kohl's, having full knowledge of Newegg's trademarks and intending to siphon off some of the goodwill associated therewith, began using a deceptively similar slogan in a manner likely to cause direct financial harm to Newegg.

As with most trademark and unfair competition cases, the big question is going to be whether Newegg can prove a likelihood of confusion. Among the more questionable allegations of the lawsuit are those claiming that Kohl's "attempted to increase traffic to their website by diverting users looking for Newegg's website" and that confused Newegg customers "visit Kohl's website believing it to be Newegg's website." As suggested by the trademarked slogan itself, Newegg believes its customers are intelligent and savvy -- that is why they shop at Newegg. Are these the same people who are going to wind up at Kohl's website when looking for Newegg, and who are going believe, once they have landed at Kohl's site, that they have indeed found Newegg? What kind of customer wouldn't include the term "Newegg" in an online search for Newegg?

Another weakness is the prominent use of the respective companies' primary marks embedded within the slogans, greatly lessening the likelihood of confusion. In other words, while "the more you know" is undoubtedly similar to "once you know," once you reach the operative word in the slogan (Newegg or Kohl's), it's difficult to remain confused about the identity of the retailer.

Still, Newegg may have a legitimate complaint in that consumers may erroneously assume, due to the similarity of the slogans, that Newegg and Kohl's have formed an affiliation. While primarily known for its electronics, Newegg has been branching out and expanding its offerings to household products such as those found in department stores like Kohl's. Newegg's strongest claim, in my view, is not for infringement but for trademark dilution, a theory that would entitle Newegg to an injunction if Kohl's new slogan would blur or tarnish the strength of Newegg's famous slogan. For dilution claims, actual or likely confusion is not required.

 

Back in 1992, a group of Native American activists challenged the validity of the Washington Redskins trademarks on the ground the trademarks were impermissibly disparaging towards their ethnic group.  After scoring early victories before the Patent and Trademark Office and the Trademark Trial and Appeal Board (TTAB), resulting in a temporary cancellation of the marks (which deprived Pro Football of the ability to go after infringers), the U.S. District Court for the District of Columbia sided with the Washington Redskins about six years ago.  The rationale had nothing to do with whether the term "Redskins" is disparaging to Native Americans, but with the equitable defense of "laches."  The Court of Appeals reversed that ruling due to a faulty application of that defense, but the District Court again ruled in favor of Pro Football (the owner of the Redskins trademarks) last year.  The matter was again appealed.  This time, however, the Court of Appeals affirmed the District Court, solidifying the Redskins' victory and the validity of the marks.   

"Laches" is a doctrine which, like a statute of limitations, serves as a defense to legal proceedings when the plaintiff has waited too long before bringing the claim.  It applies where there is (1) lack of diligence by the party against whom the defense is asserted; and (2) prejudice (i.e., harm) to the party asserting the defense.  

The first time the question was presented to the District Court, it applied the laches defense because the TTAB proceeding was not brought until 25 years after the marks were first registered.  The Court of Appeals reversed that ruling because the defense is intended to apply where there has been unjustified delay by a particular person.  One of the plaintiffs was only a year old when the Redskins trademark was first registered.  So on remand, the District Court focused only on whether that particular individual, Mateo Romero, delayed in asserting his rights, beginning the analysis with the date of his eighteenth birthday (the legal age of majority).  From that perspective, the alleged delay was not 25 years but less than 8.

Still, the District Court found that Mr. Romero should not have waited nearly eight years before asserting that the term "Redskins" is disparaging towards Native Americans and that the delay caused prejudice to Pro Football.  In particular, the court reasoned, former Redskins president Edward Bennett Williams had met with various Native American leaders at or around the time the marks were registered (which is the relevant time for determining whether a mark is disparaging towards racial or ethnic groups) to ascertain and consider their views.  He passed away prior to the TTAB proceeding.  Had Mr. Romero made his complaint earlier, Mr. Williams might have been available to testify regarding his knowledge of 1967 attitudes towards the Redskins name.  

The second major reason for the district court's rejection of the trademark challenge was the fact that Pro Football had stepped up its merchandising efforts in recent years, making a huge investment to protect its trademarks.  Had Mr. Romero not "slumbered on his rights," as the equity saying goes, Pro Football likely would not have made these expenditures.

The Court of Appeals, while observing that Mr. Romero's legal position was "not without merit," deferred to the district court's holding, finding no abuse of discretion.  

Is this the end of the saga?  According to Philip J. Mause, one of the activists' attorneys, they are still considering whether to appeal.  

Maryland-based Marriage Savers, Inc., a non-profit marriage counseling service and operator of www.marriagesavers.com, has filed a trademark action in the Eastern District of Virginia against Lovepath International, Inc., another marriage counseling organization, which allegedly has been conducting business using the confusingly similar domain name marriagesaver.com.  As of this writing, www.marriagesaver.com has been taken down.

According to the complaint, Marriage Savers owns the federally registered trademark "MARRIAGE SAVERS" and has used the mark since the early 1990's in connection with a wide variety of products and services, including writing printed materials and publications in the field of marriage, conducting workshops and seminars to community leaders, and offering counseling to couples.  

Lovepath, according to the suit, also offers seminars, books, and online resources geared to marriage counseling and markets them using the name "Marriage Saver."  Marriage Savers contends that Joe Beam, Lovepath's founder and president, is not only familiar with Marriage Savers and its trademarks but has actually been a speaker at its conferences.  

Marriage Savers filed the lawsuit on April 20, 2009, and brings claims of trademark infringement, false designation of origin and false advertising, cybersquatting, and related common-law claims.  It is asking the court to award an injunction to stop the infringing activity and prevent future infringment, to order the destruction of any infringing materials, to order that Lovepath transfer its domain names to Marriage Savers, and to award compensatory, statutory, and punitive damages.

While regrettable that these marriage-counseling services can't seem to exist together in blissful harmony, the case looks like a strong one.  Under 15 U.S.C. § 1114(1), trademark infringement exists where (1) the mark is distinctive and has been used in commerce; (2) the plaintiff is the legal or equitable owner of the mark; and (3) the defendant is using a similar mark which is likely to cause confusion among consumers as to the source of the goods and services.  While one might think Lovepath could escape liability by arguing the MARRIAGE SAVERS mark lacks "distinctiveness," in this particular case, the mark was registered over five years ago and has been used continuously ever since, resulting in "incontestable" status under 15 U.S.C. § 1065.  Once a mark becomes incontestable, it may no longer be attacked for lack of distinctiveness.

On Monday, the company that owns Gatorade (a Pepsi subsidiary) filed suit against Coca-Cola and Energy Brands, accusing them of false advertising and other unfair competition in connection with its two-week advertising campaign for Coke's Powerade ION4 sports drink.

In the advertising campaign, Powerade (which continues to be marketed as "the complete sports drink") was claimed to be superior to Gatorade (identified, by comparison, as an "incomplete" sports drink) due to Powerade's inclusion of trace amounts of two electrolytes, calcium and magnesium.  According to the lawsuit, no evidence exists to suggest that the addition of these two minerals--especially in such tiny quantities--provides any nutritional or physiological benefits.  Pepsi says Coke isn't playing fair when it displays a photo of a Gatorade bottle lopped in half alongside the slogan, "Don't settle for an incomplete sports drink."  In legal terms, it claims Coke is guilty of "false advertising, trademark dilution, deceptive acts and practices, injury to business reputation and unfair competition."

The Lanham Act, on which all of Pepsi's claims are based in various forms, prohibits misleading advertisements.  Specifically, Section 43(a) of the Lanham Act, found at 15 U.S.C.A. § 1125, makes a defendant liable for false advertising where all of the following conditions are met: (1) the defendant made a misrepresentation in commercial advertising or promotion concerning goods, services, or commercial activities; (2) the misrepresentation actually deceived or tended to deceive its recipients; (3) the misrepresentation was likely to influence purchasing decisions; (4) the misrepresentation injured or was likely to injure the plaintiff; and (5) the misrepresentation was made in commerce.

As the trial moves forward, the key issues are going to be whether the statements in Coke's advertising were actually false and whether labeling Gatorade an "incomplete sports drink" tends to deceive consumers and/or influence purchasing decisions. 

Apparently there are still some people who think they are being clever by registering domain names confusingly similar to trademarks or domains used by existing companies, hoping to capitalize on the confusion.  And what better target than Citibank, a giant company with an easily misspelled name!  Judge Hilton of the Eastern District of Virginia, who is well versed in intellectual property issues, decided to teach a lesson to such a schemer in the case of Citigroup, Inc. v. Shui, Civil Action No. 08-0727, on February 24, 2009.

The Defendant, Chen Bao Shui, thought it would be a good idea to register CITYBANK.ORG and use it to market financial services.  When visitors would go to his site, they would see links to, among other things, "Citibank Student" and "Citibank Visa."  Clicking on such an option would not take the visitor to Citigroup, of course, but to another citybank.org page or to a third-party vendor who would pay the Defendant for each click-through.  In other words, the Defendant's plan was to earn money by confusing customers into believing they were dealing with Citigroup when they were dealing with an unrelated, unaffiliated entity.

This is exactly the sort of activity prohibited by the Anticybersquatting Consumer Protection Act, found at 15 U.S.C. 1125(d) (the "ACPA").  A violation of the ACPA exists where (1) a defendant has a "bad-faith intent" to profit from using the domain name; and (2) the domain name at issue is identical or confusingly similar to the plaintiff's distinctive or famous trademark.

Judge Hilton had no trouble finding that Mr. Shui (or is it Mr. Chen?) violated the ACPA.  Granting summary judgment for Citigroup, he found that there was no genuine dispute as to any material fact and that Citigroup was entitled to judgment as a matter of law (i.e., without having to conduct a trial).  Because it was such a clear case, the court awarded $100,000 in statutory damages, plus reimbursement of attorneys' fees.

Trademark owners take note: whether or not you participate in Google's Adwords program to advertise your business, your competitors may be using your trademark as a keyword in promoting their competing business.  Google not only allows this potentially infringing practice, it encourages it!  The company actively and openly sells competitors' trademarks to advertisers seeking to divert potential customers to the advertisers' websites.

It remains to be seen, however, how long the courts will permit this practice to continue.  On April 3, 2009, a federal appeals court sitting in New York decided to allow a case to go forward in which a computer-repair company called Rescuecom sued Google for trademark infringement.  The case is Rescuecom Corp. v. Google, Inc., Case No. 06-4881 (2d Cir.).

The complaint involves two of Google's programs used in Internet advertising: AdWords and Keyword Suggestion Tool.  With AdWords, advertisers purchase keywords relevant to their business.  When a purchased keyword is used in a Google search, the advertiser's ad and link appear on the search results page, either in the right margin or in a horizontal band immediately above the relevance-based (i.e., non-sponsored) search results.  The Keyword Suggestion Tool recommends keywords to advertisers.  Among its recommendations might be the trademark owned by the advertiser's competitor.

According to Rescuecom, certain of its competitors took the advice of Google's Keyword Suggestion Tool and purchased the Rescuecom trademark as a keyword for use in the AdWords program.  The result, it claims, is that a Google search for "Rescuecom" would result in its competitors' advertisements appearing on the results page in a manner that might cause the searcher to mistakenly believe the competitor's product or service was sponsored by, endorsed by, or otherwise affiliated with Rescuecom.

The trial court had thrown out the case, accepting Google's argument that inclusion of a trademark in an internal computer directory did not constitute a "use in commerce" within the meaning of Section 45 of the Lanham Act.  The Court of Appeals for the Second Circuit, however, vacated the trial court's ruling and ordered that the case be permitted to proceed, finding that the practice of displaying, offering for sale, and selling Rescuecom's trademark to its competitors qualifies as a "use in commerce" within the meaning of the trademark statute.

The Court was careful to point out, however, that it had "no idea" whether Google violated the Lanham Act.  (As I often advise my clients, proving trademark infringement requires more than merely use of another's trademark in commerce; the Act requires unauthorized use in a manner "likely to cause confusion...as to the origin, sponsorship, or approval" of goods or services. See 15 U.S.C. 1125(a)).  What the court did hold is that Rescuecom should be permitted an opportunity to prove its allegations in court.

A trademark is a type of intellectual property that generally consists of a distinctive sign or indicator used to identify the originating source of the products associated with the trademark, so that consumers can distinguish the trademark owner's products from those originating from other sources.  Section 45 of the Trademark Act defines the term "trademark" as "any word, name, symbol, or device, or any combination thereof-

(1) used by a person, or

(2) which a person has a bona fide intention to use in commerce and applies to register on the principal register...,

to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown."  See 15 U.S.C. §1127.  An example of a "word" mark would be TOSHIBA.  There are also design marks, like Nike's instantly recognizable Swoosh.  Even a sound can constitute a trademark (for example, NBC's "ding, dong, ding" chimes).  If you own a trademark, no one else can use it if their use would confuse consumers.  Trademarks are identified in commerce by the symbols ™ (indicating that the trademark has not been registered) and ® (for registered trademarks). 

While registration of trademarks is not required, owners of registered trademarks may commence legal proceedings for trademark infringement to prevent the unauthorized use of that trademark. Unregistered trademarks, known as "common law" trademarks, may also be enforced in court, but generally only within the geographical area within which it has been used or will be used.  A federally registered trademark, on the other hand, provides nationwide protection.  

The term "trademark" technically only applies when the product identified by the mark is a good.  When the mark is applied to identify a service, it is known as a "service mark."  Another similar term is "trade dress," which applies to a product's total image and overall appearance. 

Unlike patents, another form of intellectual property, trademarks can be renewed forever as long as they continue to be used in commerce.