March Trademark Bulletin

SDNY District Court Rejects Laurel Road’s Trade Dress Suit Against CommonBond

On August 27, 2018, Laurel Road Bank sued competitor CommonBond, Inc. over the latter’s display of an advertisement for its student loan financing services, alleging that CommonBond’s advertisement infringed and diluted the trade dress of Laurel Road’s advertisements of its own student loan refinancing services. Laurel Road described its trade as consisting of:

1.    a color palette with a dark background;

2.    a statement in large, light-colored, sans serif font at the top of the advertisement;

3.    a “hierarchal” typography with smaller, sans serif font under the large typeface sentence;

4.    center or left-side alignment; and

5.    a colored line under a sub-set of words in the large typeface sentences. 

Laurel Road sought a preliminary injunction against CommonBond’s continued use of similar elements in its advertisements.

On March 5, 2019, a district court for the Southern District of New York dismissed Laurel Road’s trade dress infringement claim, dubbing Laurel Road’s trade dress as “generic,” defined “at a high level of generality,” and “composed exclusively of commonly used elements, which have all been used in combination previously.” Because the district court found that Laurel Road’s trade dress was likely generic, it did not analyze whether its trade dress had acquired secondary meaning. The district court also found that Laurel Road’s trade dress is functional, “consist[ing] of features useful to advertising or educating consumers about the product.”

A copy of the district court’s opinion can be found here.

McDonalds appeals EU decision to cancel Big Mac trademark

McDonalds has filed a notice of appeal before the European Union Intellectual Property Office (“EUIPO”), which recently issued a ruling cancelling the trademark for its Big Mac burger. McDonalds has yet to submit the grounds for its appeal. After the trademark was challenged by Supermac, an Irish fast-food chain, the Cancellation Division of the EUIPO ruled earlier this year that McDonalds had not proven genuine use of its trademark. EUIPO is expected to take at least one year to decide the appeal. This delays Supermac’s own trademark application, which will not be approved until the dispute is resolved. McDonald’s representatives have said that they are confident the decision will be overturned by the EUIPO Board of Appeals. Nonetheless, if the EUIPO Board of Appeals rules against McDonalds, such decision can be appealed all the way to reach the European Union highest court in Luxembourg.

Competing Cannabis Companies Battle Over “Harvest” Trademark

In January 2019, California-based cannabis company, Harvest, filed a claim in California State Court to prevent an Arizona-based cannabis company of the same name from expanding its services into California. In their complaint, California-based Harvest cited the June 2018 state registration of their Harvest mark for medicinal and adult-use cannabis dispensary services, and stated that it opened its first Bay Area location in 2016. Meanwhile, the Arizona-based Harvest claims that it has the right to use the mark in California because it secured federal registrations for the name and logo in association with “retail pharmacy services in the field of botanical medicines” in 2017, and because it has been doing business and marketing in California as early as 2012. California-based Harvest claims that Arizona-based Harvest’s federal registrations are not valid because the company misled the USPTO when it did not disclose the true nature of the company’s business on the trademark applications. Further, in 2017, Arizona-based Harvest opposed California-based Harvest’s federal trademark application for “medical cannabis resources, namely, providing information pertaining to the benefits of medicinal use of cannabis” claiming that the company copied its name and circular logo after its president visited Arizona’s facilities in 2014 to discuss possibly doing business together. Most recently, on March 8, Judge Richard B. Ulmer Jr. denied California-based Harvest’s motion for preliminary injunction finding that it did not prove a likelihood of success on the merits. This case is pending in the Superior Court of California.

Fridge Filter Company Liable to Whirlpool for $5.8M for Willful Trademark Infringement

On March 13, a jury in the Western District of North Carolina found that Filters Fast LLC willfully infringed on Whirlpool’s trademarks when it used Whirlpool’s brand names such as KitchenAid and Maytag to sell replacement filters for the company’s refrigerators. Jurors awarded Whirlpool $5.8M based on Whirlpool’s complaint filed in October 2017 – rejecting Filters Fast’s argument that it had not used the Whirlpool marks to “pass off” generic filters as Whirlpool products, but to communicate to consumers that “certain generic filters work with Whirlpool products”, and that this use constitutes classic nominative fair use. Whirlpool countered Filters Fast’s argument and claimed that it “intentionally used Whirlpool's marks to gain an unfair advantage, confusing customers into purchasing nongenuine filters.” Whirlpool argued that these “deceptive and misleading practices would not qualify under a nominative fair use test…” and that a nominative fair use “by definition is a use that does not create confusion about the source of the defendant’s product.” Whirlpool claimed that Filters Fast’s use of the marks to indicate that a non-Whirlpool filter was compatible with a Whirlpool product was done to intentionally create confusion as to the brand of the filter. The verdict must be approved by Judge Frank D. Whitney, after which Filters Fast may appeal.

Court Blocks Unconstitutional Government Seizure of Mongols Motorcycle Club Trademark

On February 28th, a Federal judge in California refused to enforce a jury’s decision to strip the Mongols Nation motorcycle club (“Mongols”) of its trademarked logo. The club had previously been convicted of racketeering and conspiracy to commit racketeering in December of 2018. Then a month later, on January 11th, the same jury determined that the Mongols should forfeit their infamous logo after the prosecution argued that the trademarked logo was crucial to the group’s identity and that there was a direct connection between the logo and the groups criminal activity. In the third phase of trial, U.S. District Court Judge David O. Carter was to decide how the forfeiture would be carried out. However, in this most recent decision, Judge Carter has declined to strip the Mongols of their logo, finding that doing so would overstep the constitutional protections embedded in the First Amendment right to free expression and the Eighth Amendment’s ban on excessive penalties.

Judge Carter writes in his decision that "the forfeiture of the rights associated with a symbol that has been in continuous use by an organization since 1969 is unjustified and grossly disproportionate to this offense. To hold otherwise sets a dangerous precedent that enables the Government to target the associative symbols of organizations it chooses to prosecute for RICO conspiracy." The decision culminates a decade long pursuit of the Mongols criminal enterprise by prosecutors after nearly 80 members were charged in 2008 for racketeering offenses.

The case is filed in the Central District Court of California and is captioned USA V. Mongol Nation, an Unincorporated Association, case number 2:13-cr-00106. Click here to be directed to the related Order. Click here to be redirected to the related ABA Journal article.

Williams-Sonoma, Amazon Gearing Up for Trademark War

On December 14, 2018, Williams Sonoma Inc. (“WSI”) filed a complaint asking for damages and injunctive relief against Amazon.com Inc. (“Amazon”) in the U.S. District Court for the Northern District of California. WSI alleges that the internet sales titan is trading upon WSI’s goodwill and infringing intellectual property by advertising its products on its website as “by Williams-Sonoma” and “fulfilled by Amazon.” WSI alleges that this is detrimental to its brand and that there are large amount of customer complaints on Amazon’s website. According to WSI, the reasons for these complaints are purportedly damaged Amazon merchandise and prices higher than those of WSI.

Amazon requested that U.S. Magistrate Judge Elizabeth Laporte dismiss WSI’s complaint arguing that this falls under the first-sale doctrine, which states that buyers of branded products can lawfully resell them so long as they are not materially changed. According to Amazon, Amazon’s advertisements “simply state the truth: that Williams-Sonoma products are available through Amazon’s website.” To this, WSI argues that Amazon is not selling WSI products but rather has engaged in prototypical counterfeiting by creating what would appear to be a WSI profile on Amazon thereby “misleading customers into believing they are dealing with WSI or an authorized WSI dealer.”

WSI and Amazon will appear before Judge Elizabeth Laporte on April 2nd.

The case is captioned Williams-Sonoma, Inc., v. Amazon.Com, Inc., 3:18-cv-07548 (N.D. Cal.).

UPS wins injunction against cannabis delivery companies regarding their trademark infringement

The District Court for the Central District of California recently granted United Parcel Services (UPS)’s request for a preliminary injunction against a group of California-based marijuana delivery businesses using word and logo marks similar to UPS’ well-known shield logo to sell cannabis-related products. In its pleading, UPS asserted federal trademark infringement, trademark dilution, false designation of origin, false advertising, unfair business practice and requested injunctive relief.

The court found that (1) UPS was likely to prevail on the merits of its claim; (2) the balance of hardship tipped in UPS’ favor; (3) absent a preliminary injunction UPS would be likely to suffer irreparable injury; and (4) the requested relief was in public interest. Pursuant to the court’s order, the named defendants are barred from using a copy or colorable imitation of the UPS marks, representing directly or indirectly that they are associated with UPS, taking any action likely to dilute or tarnish the quality of the UPS marks (by selling cannabis related products), and otherwise infringing UPS marks or competing unfairly with UPS.

Jury awarded Variety Stores, Inc. $95.5 million in the Walmart Trademark infringement case

On February 12, 2019 a federal jury in North Carolina found that Walmart had willfully infringed Variety Stores, Inc.’s “BACKYARD” trademarks and awarded Variety $95.5 million in damages.

Variety argued that it owns a federal trademark registration for “THE BACKYARD” and had established common law rights in the marks “THE BACKYARD”, “BACKYARD” and “BACKYARD BBQ” (“BACKYARD marks”) in connection with outdoor products including grills and grilling accessories. Since 1993, Variety has been selling its products in 16 states and in the District of Columbia.

In August 2011, Walmart filed an intent-to-use trademark application in the U.S. Patent and Trademark Office (USPTO) for “BACKYARD GRILL” in connection with grills and accessories. Variety filed an opposition in the USPTO’s Trademark Trial an Appeal Board (“TTAB”). The opposition was suspended in 2014 when Variety filed a suit in the Eastern District of North Carolina, alleging that Walmart had infringed Variety’s BACKYARD marks by selling BACKYARD GRILL products. The Court granted a partial summary judgement in Variety’s favor and found Walmart liable for trademark infringement. In 2016, the District Court ordered Walmart to disgorge $32.5 million in profits, plus attorney’s fees and costs. On appeal, the Fourth Circuit reversed the decision, vacating the damages award and remanded the case for trial.

The trial court ultimately found Walmart liable for willful infringement of the BACKYARD mark and awarded Variety $95.5 million damages, of which $45.5 million was as “reasonable royalty” and $50 million disgorgement of Walmart’s profits. While these remedies are provided by the Lanham Act, the allocation of a “reasonable royalty” is not a common remedy in trademark infringement cases where damages are usually only based on disgorgement of profits. In view thereof, Walmart is likely to appeal the jury’s decision.

Instagram and Facebook are facing many trademark violations

Facebook, which owns Instagram, recently filed a complaint in the Northern District of California against a number of Chinese companies purportedly selling fake Instagram and Facebook accounts, likes and followers.

Facebook is asking for $100,000 damages in connection with trademark infringement, terms of services violation and cybersquatting.

Instagram recently created a system allowing users to report instances of trademark infringement. The complaints are reviewed by a team specialized in trademark and intellectual property matters which determines their relevance. If the complaint is considered legitimate by the team, Instagram transfers the account to the rightful owner of the trademark.

In order to capitalize on this process and obtain high-value Instagram accounts, scammers register trademarks with their local governmental authority in the name of the social media handle they seek to acquire, and provide that information along with their complaint to the social media platform.

Facebook’s pleading seeks to prevent such practices from occurring on its platforms.