Streamlined path to reversal in trademark case – UPDATED

Streamline Production Systems v. Streamline Manufacturing involved trademark litigation between businesses with similar names. The Fifth Circuit affirmed theury’s findings about the distinctiveness of the plaintiff’s mark and the likelihood of confusion, observing that the various factors did not all point the same way but “there is not a complete absence of evidence” to support what the jury found. The court reversed on remedy, however, finding that the “reasonable royalty” damages went beyond the scope of the infringement, and that the award of unjust enrichment was not supported by evidence of lost profits or willful action by the defendant. No. 16-20046 (revised April 14, 2017).

A failure to Communicat-R

Litigation about the intellectual property rights to the name “Communicat-R” (here, applied to a specialized type of whiteboard) led to a jury trial. The Fifth Circuit affirmed, finding no abuse of discretion in this instruction: “Trademarks can be abandoned through non-use. A trademark is abandoned if it is proven by a preponderance of the evidence, that (1) the use of trademark was discontinued; and (2) an intent not to resume such use.” The Court rejected a request for additional language about “excusable nonuse,” finding that it would either be redundant or not entirely accurate in the context of this case. The Court also rejected sufficiency challenges to liability and damages, illustrating the operation of the federal standard for the grant of a new trial. Vetter v. McAtee, No. 15-20575 (March 1, 2017).

Have gun will intervene.

g36Michael Swoboda sued Continental Enterprises, claiming that it conducted an investigation into alleged trademark infringement led to his wrongful discharge. He sought the production of documents that Continental alleged were protected as work product. The district court allowed the discovery and denied the intervention by Heckler & Koch, the gunmaker whose rights about the G36 submachine gun (above) were at issue and had retained Continental.

The Fifth Circuit reversed, holding: “Continental’s work product privilege argument was overruled because Continental is a company that engages in investigative work, and the district court concluded that the discovery that Swoboda sought was produced in Continental’s ordinary course of business, i.e., in the course of a Continental investigation. HK is a gun manufacturer. Investigations are not a part of HK’s ordinary course of business. Some of the discovery that Swoboda sought was, from HK’s perspective, prepared in anticipation of litigation. We have held that an applicant-intervenor should be allowed to intervene when it ‘has a defense not available to the present defendant.’ HK has a defense unavailable to Continental, and it should have been allowed to present that defense in the district court.” Swoboda v. Manders, No. 16-30074 (Oct. 31, 2016, unpublished).

Whiskey river, take my trade dress —

regular_purple_cr_bag_1In trademark and trade dress litigation betexas crown with bag2tween Diageo, the maker of Crown Royal (left) and Mexcor, who makes Texas Crown Club (right), Diageo stipulated that “Mexcor did not infringe its marks until Mexcor sold its very first Texas Crown Club bottle in a bag bearing the Texas Crown Club logo” during the fourth quarter of 2011. Despite this concession, the Fifth Circuit concluded that Mexcor was not entitled to judgment on related issues when it “failed to urge that these counterclaims be presented to the jury after the district court denied its motions for JMOL.” The Court went on to remand the permanent injunction against Mexcor for revisoin, noting that the injunctoin could not extend to a type of bag that Mexcor had established its legal entitledment to use, and observing as to the last, “catch-all” provision of the injunction: “We are hesitant to approve such open-ended language, particularly because in other contexts this court whiskeyhas held that such ‘obey the law’ injunction orders are not permitted.” Diageo North America, Inc. v. Mexcor, Inc., No 15-20630 (Sept. 2, 2016, unpublished). (The opinon also notes TexasBarToday_TopTen_Badge_VectorGraphicthe distinction between “whisky” (distilled in Scotland) and “whiskey” (distilled in the U.S. or Ireland), although none of these countries are the source of the liquor in this case, which the parties spelled “whisky.”)

Band brand banned — UPDATED.

emerald cityEmerald City Management, d/b/a the band “Downtown Fever,” won a preliminary injunction against another band with the same name.  The Fifth Circuit affirmed, noting the importance of “los[ing] control over the mark’s reputation and goodwill” in establishing irreparable injury, and citing evidence of the plaintiff’s history with the band name, the defendant’s plans to play in the same area, and the defendant’s marketing using that name.  Emerald City Management LLC v. Kahn, No. 14-40856 (Dec. 11, 2015, unpublished) (citing Paulsson Geophysical Servs., Inc. v. Sigmar, 529 F.3d 303 (5th Cir. 2008)).  (In a later skirmish among these parties, the Court reversed a later preliminary injunction about the use of a Facebook page: “neither shutting down a Facebook account nor blocking administrator access to a Facebook account constitutes ‘use in commerce’ of a trademark.”  Emerald City Management LLC v. Kahn, No. 15-40446 (March 8, 2016, unpublished)).

Passive voice

voalogoRobert Namer had a Louisiana business that used the name “Voice of America,” and encountered intellectual property trouble with the Voice of America information service operated by the U.S. Government.   (Incidentally, I recommend some study of the VOA’s “Simple English” programming, which uses a 1,500-word vocabulary, for anyone interested in straightforward writing.)  Namer lost at trial and challenged the VOA’s audience survey on appeal.  The Fifth Circuit affirmed: “It was appropriate for [the VOA’s expert] to survey potential consumers of TexasBarToday_TopTen_Badge_SmallNamer’s website to determine if they might be confused into believing they were viewing the website of the government-run VOA (and 19.1% of them were confused.)”  The Court also rejected a laches argument because Namer did not show prejudice; “[c]ontinued routine use of the website during the time when the Board allegedly sat on its rights is all that Namer has established.”  Namer v. Voice of America, No. 14-31353 (Oct. 26, 2015, unpublished).  The opinion helpfully summarizes recent Circuit authority on both the survey and laches issues.

No trade dress infringement, no advertising injury coverage

test-clip-art-cpa-school-testTwo test preparation services sued each other.  The plaintiff sought coverage for a counterclaim under a policy that covered “injury arising out of . . . infringing upon another’s copyright, trade dress or slogan in your advertisement” (in other words, “trade dress” but not “trademark” claims).  .” (emphasis added). Even under the generous standards for determining the duty to defend, the counterclaim’s allegations did not trigger coverage: “The central focus in this coverage dispute, however, is not on the confusion, but on what allegedly is causing the confusion. The alleged confusion in this case stems from the use of a similar service mark (“Testmasters”), and the false
representation that TES offers a similar service (live LSAT courses offered nationwide). None of the allegations possibly states a claim for confusingly similar trade dress.”  Test Masters Educational Services, Inc. v. State Farm Lloyds, No. 14-20473 (June 29, 2015).

Noncompete Nonenforceable.

An architectural firm sued a former employee and a competitor.  The Fifth Circuit affirmed judgment for the defendants in Hunn v. Dan Wilson Homes, No. 13-11297 (June 15, 2015).  As to the firm’s claim for breach of fiduciary duty, the Fifth Circuit found no error in the district court’s finding that “the plans in the AutoCAD files were the same as the physical copies of the plans that [had] already been disseminated by [Plaintiff]” to various homeowners.  A noncompete claim failed for lack of an express promise related to confidential information.  Other claims based on copyright, the Lanham Act, contract, and the Computer Fraud and Abuse Act failed for similar proof problems.  Particularly as to the elements of a noncompete claim under Texas law, the opinion provides a practical summary of potential claims related to an employee’s departure, as well as several commonly-litigated factual issues related to those claims.

Every dog has its day.

Only in New Orleans.  During Mardi Gras, a form of folk art takes discarded beads and twists them into a dog shape, also known as a “bead dog.”  A seller of king cakes obtained a trademark for its mascot based on that image (below left), and sued a jewelrymaker who sold necklaces and earrings that also drew upon that image (below right).

haydel dog

The Fifth Circuit affirmed summary judgment for the nola dogjewelrymaker, reasoning:

1.  The bakery’s “Mardi Gras Bead Dog” mark was descriptive of its products;

2.  The mark was not inherently distinctive, and thus may be protected only if it had acquired secondary meaning;

3.  Under the applicable seven-factor test, the bakery failed to establish that the mark had acquired secondary meaning; and .

4.  While a dog itself cannot be copyrighted, its distinctive collar could potentially be, but on this record the Court concluded that no reasonable juror could find the collars to be “substantially similar in protectable expression.”

Other related state law claims were also dismissed.  Nola Spice Designs, LLC v. Haydel Enterprises, Inc., No. 13-30918 (April 8, 2015).

No undue prejudice = no acquiescence in use of trademark

pennzoilPennzoil has several well-known trademarks for its motor oil products.  It sued Miller Oil, which operates a quick-stop oil change facility in Houston, for infringing those marks.  Miller defended on the ground that after its original contract with Pennzoil lapsed in 2003, Pennzoil’s dealings with Miller amounted to an acquiescence in Miller’s use of the marks.  The district court agreed but the Fifth Circuit reversed.  Pennzoil-Quaker State Co. v. Miller Oil & Gas Operations, No.  13-20558 (Feb. 23, 2015).

The Court thoroughly reviewed its own, and other Circuits’, approaches to the elements of the acquiescence defense, as well as the relationship of that defense to laches.  The Court concluded that an element of the defense was undue prejudice to the defendant from the plaintiff’s conduct, which usually involves “some form of ‘business building.'” Here, the defendant’s expenses associated with removing Pennzoil’s marks did not imagesatisfy that requirement, because they would not be related to business expansion.  While the defendant’s claim about a “loss of identity” from removing Pennzoil’s marks could qualify, on this record: “Miller Oil does not proffer evidence of, for example, changes in its customer base, higher profits, or new business opportunities it was able to exploit because of the re-brand.”  Accordingly, Miller Oil did not meet its burden of proof.

“I want to say one word to you. Just one word. . . . Plastics.”

plasticsEastman Chemical, the manufacturer of a plastic resin used in water bottles and food containers, successfully sued Plastipure under the Lanham Act, alleging that Plastipure falsely advertised that Eastman’s resin contained a dangerous and unhealthy additive. Eastman Chemical Co. v. Plastipure, Inc., No. 13-51087 (Dec. 22, 2014). Relying on ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490 (2d Cir. 2013), Plastipure argued that “commercial statements relating to live scientific controversies should be treated as opinions for Lanham Act purposes.”  The Fifth Circuit disagreed, noting that Plastipure made these statements in commercial ads rather than scientific literature, and observing: “Otherwise, the Lanham Act would hardly ever be enforceable — ‘many, if not most, products may be tied to public concerns with the environment, energy, economic policy, or individual health and safety.'”  The Court also rejected challenges to the jury instructions and to the sufficiency of the evidence as to falsity.

Stone Cold Trademark Infringement

wrestlingpicWorld Wrestling Entertainment sought ex parte seizure and temporary restraining orders, against unnamed defendants selling fake WWE merchandise at live events, under the Trademark Counterfeiting Act.  The district judge denied relief, noting concerns about WWE’s ability to prove a likelihood of success against an unknown defendant.  The Fifth Circuit (who reviewed the case because the district court certified the matter for interlocutory appeal) took a different view, noting: “WWE does not license third parties to sell merchandise at live events . . . The resulting confined universe of authorized sellers of WWE merchandise necessarily ‘identifies’ any non-WWE seller as a counterfeiter.”  The opinion also observed that “the very nature of the ‘fly-by-night’ imagebootlegging industry” involves “counterfeiters who, upon detection and notice of suit, disappear without a trace and hide or destroy evidence, only to reappear later at the next WWE event down the road.”  World Wrestling Entertainment, Inc. v. Unidentified Parties, No. 14-30489 (Nov. 4, 2014).

Markholder must join trademark infringement suit

In Escamilla v. M2 Technology, the individual owner of a business sued to enforce the “M2” trademark owned by his business.  No. 12-41183 (July 16, 2013, unpublished).  The Fifth Circuit affirmed the dismissal of the claim for failure to join a necessary party, as the individual did not join his company as a party plaintiff, thus exposing the defendant to potential repetitive future litigation.  (This decision appears to have been rooted in avoiding the cost of having counsel appear for the company.)  The Court rejected the individual’s argument that a future suit would be barred by claim preclusion, noting the clear separation in Delaware corporate law between a business entity and its shareholders.

How to keep a preliminary injunction on appeal in a trade secrets case

The Fifth Circuit affirmed a preliminary injunction about pharmaceutical development in Daniels Health Sciences v. Vascular Health Sciences.  No. 12-20599 (March 5, 2013). The opinion offers a practical road map for basic issues in trade secret litigation.  As to likelihood of success on the merits, the Court found adequate findings about damage, specific confidential information, a trade secret arising from a “compilation,” and a confidential relationship between the parties.  As to irreparable injury, the Court found sufficient findings about reputational injury that was not speculative.  While it found no abuse of discretion in the district court’s weighing of public and private interest factors, it did see a “close question” about the overall scope of the injunction in light of the conduct at issue and the defendant’s business plans and suggested that the district court “try to narrow the scope of its injunction on remand.”

Trademarked fraternity paddles

Paddle Tramps Manufacturing made wooden paddles with the emblems of several fraternities, a group of 32 fraternities sued to enjoin it for trademark infringement and unfair competition, and the company defended with unclean hands and laches.  Abraham v. Alpha Chi Omega, No. 12-10525 (revised Feb. 7, 2013).  The district court entered partial injunctive relief after a jury trial found for the company on the defenses.  The Fifth Circuit affirmed the instructions given, finding that the appellant’s arguments about unclean hands conflated elements of trademark liability with elements of the defense and that the laches instruction fairly handled the concept of “progressive encroachment.”   The Court also found sufficient evidence to support the “undue prejudice” element of laches, although calling it a “close question,” and found that the district court properly balanced the equities — especially injury to the alleged infringer — in crafting the injunction.  The opinion discusses and distinguishes other cases denying relief in related situations.  Professor Rebecca Tushnet further analyzes the case on her intellectual property blog.

First Amendment challenge survives to regulation of “texasworkerscomplaw.com”

In Gibson v. Texas Department of Insurance, a state regulator sought to prohibit an attorney from using the domain: “texasworkerscomplaw.com.”  No. 11-11136 (Oct. 30, 2012). Even assuming the domain name was only commercial speech, the Fifth Circuit reasoned that Texas failed to show that the name was inherently deceptive, and also “made no serious attempt to justify” its regulation as an effort to “prevent misuse of the DWC’s names and symbols.”  Id. at 9-10.  The Court thus reversed and remanded for consideration of the “misuse” issue and to allow Gibson to show that the domain was “ordinary, communicative speech, and not merely . . . commercial speech.”  Its analysis reviewed several cases about trademark issues in the domain name context.  Id. at 8 & n.1.