Tag: trademark

September 29, 2024 Contracts, Cybersquatting, Licensing, Trademarks

Counterfeit lubricant case gets preliminary injunction based on defendant’s slick conduct

A German-based lubricant manufacturer sued a U.S.-based distributor, alleging that the distributor produced and sold counterfeit versions of its products with branding that closely resembled plaintiff’s trademarks. Plaintiff brought claims for trademark infringement, cybersquatting, unfair competition, and other related violations, moving for a preliminary injunction against defendant, which the court granted.

The parties initiated a business relationship in 2019, but they never formalized a distribution agreement. Although plaintiff sent a draft agreement outlining trademark rights and restrictions, it was never executed. Plaintiff asserted that the relationship involved a limited license for defendant to distribute plaintiff’s authentic products, but defendant registered a “GP” mark in the U.S. without plaintiff’s consent. According to plaintiff, this was an unauthorized move, and defendant falsely represented itself as the mark’s legitimate owner.

Plaintiff further alleged that defendant continued to produce and sell lubricants with packaging mimicking plaintiff’s design, misleading consumers into believing they were purchasing legitimate products. Defendant also registered several domain names closely resembling plaintiff’s, which were used to display content imitating plaintiff’s branding and operations.

The court found plaintiff’s evidence of irreparable harm and likelihood of success on the merits compelling, issuing an injunction to stop defendant’s operations and prevent further distribution of the alleged counterfeit goods.

General Petroleum GmbH v. Stanley Oil & Lubricants, Inc., 2024 WL 4143535 (E.D.N.Y., September 11, 2024).

April 2, 2024 Cybersquatting, Trademarks, Unfair Competition

Redirecting URL was unlawful but did not cause damages

url redirect trademark

In the months leading up to the FDA shutting down plaintiff’s business, one of the co-owners of the business left and set up a competing enterprise. For a few weeks, the former co-owner set plaintiff’s domain name to forward to the new company’s website.

Plaintiff sued and the court held that redirecting the URL was a violation of the Lanham Act (the federal law relating to trademarks and unfair competition). But plaintiff was not entitled to any damages because it failed to show that the redirection caused any lost sales. During that time, 133 users who tried to access plaintiff’s website were redirected to the new company’s website, and of those 133 visitors, only two submitted inquiries and neither customer who submitted an inquiry placed an order.

ABH Nature’s Products, Inc. v. Supplement Manufacturing Partner, Inc., 2024 WL 13452228 (E.D.N.Y., March 29, 2024)

See also:

 

April 1, 2024 Cybersquatting, Litigation, Trademarks

Can the owner of a company be personally liable for what the company does?

personally liable

One of the major benefits of forming a corporation or limited liability company is the shield from personal liability the business entity provides to its owners. But that shield does not protect against all of the company’s officers’ conduct.

In a recent trademark infringement case in federal court in California, a court evaluated whether a company’s officer could face liability for trademark infringement and cybersquatting. Plaintiff sued the company and the owner individually, asserting that that the owner should be personally liable because he controlled and was involved in all significant corporate decisions regarding the alleged infringement.

Citing to Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058 (9th Cir. 2016), the court observed that a corporate officer can be personally liable when he or she is the “guiding spirit” behind the wrongful conduct, or the “central figure” in the challenged corporate activity.

In this case, the court declined to dismiss the individual defendant from the lawsuit. With respect to the alleged trademark infringement and cybersquatting, the court focused on the fact that the individual defendant:

  • was the founder and central figure of the company,
  • personally participated in all major business strategy, branding and marketing decisions and actions,
  • ran the company from his home,
  • was the only officer of the company and was simultaneously the CEO, CFO and Secretary,
  • promoted the company’s brand from his personal social media account, and
  • directly negotiated with the plaintiff’s founder to see whether the parties could “find a more peaceful resolution.”

Simply stated, the individual defendant was not merely a board member that “final say,” but was substantially involved in every aspect of the conduct of the business giving rise to the alleged intellectual property infringement.

Playground AI LLC v. Mighty Computing, Inc. et al., 2024 WL 1123214 (N.D. Cal., March 14, 2024)

See also: 

February 20, 2024 Trademarks

Peloton did not infringe trademark rights of fitness app maker

Plaintiff used the mark BIKE+ in connection with a fitness tracking app and obtained a federal registration for the mark. It sued defendant Peloton for trademark infringement over Peloton’s adoption and use of the mark PELOTON BIKE+. Defendant moved for summary judgment arguing, among other things, that there was no likelihood of confusion. The court granted defendant’s motion for summary judgment.

Sitting in the Ninth Circuit, the court embarked on an analysis under AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) to assess the likelihood of consumer confusion. It considered several factors, including the strength of the mark, the similarity of the products, marketing channels used, and the intent behind the choice of mark, among others. The court determined that plaintiff’s BIKE+ mark, being descriptive of the app’s functionality to enhance biking experiences, did not possess the inherent distinctiveness that warrants a broad scope of protection. This was compounded by the existence of similar marks in the app marketplace, further reducing the strength of plaintiff’s mark.

The court then looked to the relatedness of the goods offered by both parties, the similarity of the marks in appearance, sound, and meaning, and the absence of evidence of actual consumer confusion. Despite the complementary nature of the defendant’s physical product and the plaintiff’s app, and some similarities in the marks, the lack of actual confusion evidence, along with divergent marketing channels and the sophistication of the consumers, weighed against the likelihood of confusion. The defendant’s intent in selecting its mark did not suggest a deliberate attempt to create confusion, further diminishing the plaintiff’s stance.

Ultimately, the court concluded that the descriptive nature of the plaintiff’s mark, the lack of significant commercial strength, and the minimal impact of relatively recent development activity made confusion unlikely. Defendant’s commercial prominence and extensive marketing efforts did not overshadow the plaintiff’s app to a degree that would cause confusion among consumers. Given all the circumstances and the specific context of each factor considered, the court found confusion to be possible but not probable, leading to the grant of summary judgment in favor of defendant.

World Champ Tech LLC v. Peloton Interactive, Inc., 2024 WL 665181 (N.D. California, February 16, 2024)

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January 4, 2024 Copyright, DMCA, Trademarks, Unfair Competition

cPanel gets injunction to shut down sophisticated counterfeiting enterprise

The purveyor of cPanel – the well-known hosting automation software – has successfully obtained an injunction against an overseas enterprise accused of engaging in an elaborate scheme to sell unauthorized access to the cPanel software. A federal court in Oregon has issued a wide-ranging injunction against the defendants’ unauthorized activities.

The sophistication of defendants’ actions

Plaintiff’s evidence showed that defendants – under the brand “Licenseman” – changed the cPanel software in several ways. Defendants allegedly made it so that any requests for licensing or technical help from cPanel went to Licenseman’s servers instead. The modified software hid messages about trial licenses expiring and would delete itself if cPanel’s tech team tried to access a server with this altered software. The changes involved “wrapped binaries” in the software, which tricked the system into using licenses meant for other cPanel systems. This meant many people could use the same cPanel license illegally.

cPanel’s legal claims

cPanel sued for:

  • copyright infringement;
  • the trafficking of circumvention devices in violation of the DMCA, 17 U.S.C. § 1201(a)(2);
  • trademark infringement and unfair competition under 15 U.S.C. § 1114, 1125(a);
  • trademark counterfeiting under 15 U.S.C. § 1114; and
  • cybersquatting under ACPA, 15 U.S.C. § 1125(d).

cPanel asked the court to enter a preliminary injunction to stop the unlawful activity. The court granted the motion. In reaching its decision, it found that plaintiff was likely to succeed on all five of its claims, in light of the overwhelming evidence indicating that defendants were behind the actions of the Licenseman entity.

The court’s decision

On the copyright infringement claim, the court found that plaintiffs had shown ownership of the allegedly infringed material by presenting evidence of its registered copyright claims. Plaintiffs presented evidence that defendants had infringed on plaintiff’s exclusive right to prepare derivative works of the software by altering cPanel software to permit access via illicit licenses.

As for the DMCA circumvention claim, the court found that defendants sold re-engineered, illicit cPanel licenses that, as advertised, manipulated the binary of the cPanel software so that people could use the cPanel software without purchasing a subscription from plaintiff. And defendants trafficked—that is, sold—such licenses via their websites. Thus, every element of DMCA trafficking liability had been met.

Concerning trademark infringement and unfair competition, the court likewise found that plaintiff had established a likelihood of success on the merits of its claims. Plaintiff submitted evidence that it owns a registration for the CPANEL mark, which served as prima facie evidence of exclusive rights to use the mark. And defendant’s actions were “highly” likely to confuse customers. The fact that illicit license users had sought plaintiff’s customer service suggested that users had actually been confused and not exercised a great deal of care in pursuing cPanel licenses.

Finding that plaintiff had shown likelihood of success on its counterfeiting claim, the court noted that plaintiff’s CPANEL mark identifies computer software facilitating the management and configuration of internet web servers, and defendants were using that exact mark to sell illicit licenses to plaintiff’s software.

Finally, on the cybersquatting claim, the court found plaintiffs to be likely to succeed on the merits where the disputed domain names incorporated the CPANEL mark and were used to sell infringing items “which itself prove[d] bad faith.”

Because plaintiff also showed irreparable harm from the alleged activity, that defendants’ loss of business if enjoined was not an unfair tipping of the equities, and that the public interest would benefit from the prohibition of the alleged conduct, the court granted the injunction.

cPanel, LLC v. Asli, 2024 WL 35674 (D.Or. January 3, 2024)

NB: Great work on the case by Venkat and team.

December 28, 2023 Copyright, Trademarks

Online platforms will have to answer for sales of alleged counterfeit products

 

A federal court in New York has denied the motion to dismiss filed by Chinese online platforms Alibaba and AliExpress in a lawsuit brought by a toymaker alleging that these companies’ merchant customers were engaged in contributory trademark and copyright infringement through the online sale of counterfeit products.

Background of the Case

Plaintiff toymaker accused the Alibaba defendants of facilitating the sale of counterfeit products on their platforms. The lawsuit stemmed from the activities of around 90 e-commerce merchants who were reportedly using the platforms to sell to sell fake goods.

The Court’s Rationale

The court’s decision to deny the motion to dismiss turned on several allegations that suggest the Alibaba defendants played a more complicit role than that of a passive service provider. These allegations included:

  1. Specific Awareness of Infringement: The Alibaba defendants were allegedly well-informed about the infringing activities of several merchants, including some named in the lawsuit. The Alibaba defendants should have known of these instances from orders in six separate lawsuits against sellers on the platforms.
  2. Continued Proliferation of Infringing Listings: Despite this awareness, the platforms reportedly allowed the continued presence and proliferation of infringing listings. This included listings from merchants already flagged under Alibaba’s “three-strike policy” for repeat offenders.
  3. Promotion of Infringing Listings: Plaintiff alleged the Alibaba defendants actively promoted infringing listings. The Alibaba defendants reportedly granted “Gold Supplier” and “Verified” statuses to infringing merchants, sold related keywords, and even promoted these listings through Google and promotional emails.
  4. Financial Gains from Infringements: Crucially, plaintiff argued that the Alibaba defendants financially benefited from these activities by attracting more customers, encouraging merchants to purchase additional services, and earning commissions on transactions involving counterfeit goods.

DMCA Safe Harbor Provisions Not Applicable

The court rejected the Alibaba defendants’ argument that safe harbor provisions under the Digital Millennium Copyright Act (DMCA) applied at this stage of the litigation. The DMCA safe harbor is typically an affirmative defense to liability, and for it to apply at the motion to dismiss stage, such defense must be evident on the face of the complaint. The court found that in this case, it was not.

Implications of the Ruling

This decision is relevant to purveyors of online products who face the persistent challenges of online enforcement of intellectual property rights. Remedies against overseas companies in situations such as this are often elusive. The case provides a roadmap of sorts concerning the types of facts that must be asserted to support a claim against an online provider in the position of the Alibaba defendants.

Kelly Toys Holdings, LLC v. 19885566 Store et al., 2023 WL 8936307 (S.D.N.Y. December 27, 2023)

December 20, 2022 Trademarks

Does tagging the wrong account in an Instagram post show actual confusion in trademark litigation?

In a recent trademark infringement case, the court considered whether Instagram users tagging photos of one product with the account of another company’s product was evidence of actual confusion. In this case, the court found that it was not evidence of actual confusion.

Plaintiff makes premium tequila sold in bottles and defendant makes inexpensive tequila-soda product sold in cans. Plaintiff sued defendant for trademark infringement and sought a preliminary injunction against defendant. To support its assertion that it was likely to succeed on the merits of the case, plaintiff argued there was actual confusion among the consuming public. For example, on Instagram, at least 30 people had tagged photos of plaintiff’s products with defendant’s account.

The court found that in these circumstances, particularly where a marketing survey also showed less than 10% of people were confused by the defendant’s mark, that the incorrect tagging did not show actual confusion.

Though the bar for showing actual confusion is low, the court noted that a showing of confusion requires more than a “fleeting mix-up of names” and that confusion must be caused by the trademark used and must “sway” consumer purchase.

In this case, the court found that defendant’s evidence regarding mistaken Instagram tags did not establish a likelihood of trademark confusion that would result in purchase decisions based on the mistaken belief that the defendant’s tequila-soda product was affiliated with the plaintiff. At best, in the court’s view, the plaintiff’s evidence demonstrated a “fleeting mix-up of names,” which was not evidence of actual confusion.

The court likened this case to the recent case of Reply All Corp. v. Gimlet Media, LLC, 843 F. App’x 392 (2d Cir. 2021), wherein “instances of general mistake or inadvertence—without more—[did] not suggest that those potential consumers in any way confused [plaintiff’s] and [defendant’s] products, let alone that there was confusion that could lead to a diversion of sales, damage to goodwill, or loss of control over reputation.”

Casa Tradición S.A. de C.V. v. Casa Azul Spirits, LLC, 2022 WL 17811396 (S.D. Texas, December 19, 2022)

November 14, 2022 Blockchain, Trademarks

Meta prevails in trademark infringement litigation over its logo

In the case of Dfinity Foundation v. Meta Platforms, Inc., the court considered whether the new logo that Meta adopted after its 2021 rebranding infringed upon Dfinity’s trademark. In the infringement litigation that Dfinity brought over the issue, Meta moved to dismiss. The court granted the motion.

Dfinity operates the Internet Computer – a public blockchain network that seeks to provide developers and entrepreneurs with a public compute platform for building websites, enterprise systems and internet services within an open environment. Key to Dfinity’s efforts are “dapps” or decentralized applications. In 2021, the United States Patent and Trademark Office granted Dfinity a registration for the following mark:dfinity

When Meta rebranded in 2021, Mark Zuckerberg indicated, among other things, that the company would work with creators and developers in a decentralized fashion. In connection with the rebranding, Meta adopted and sought registration of this logo:meta logo

Dfinity sued in federal court in California alleging, among other things, trademark infringement. It alleged that the similarities between the marks, coupled with the related services and customer bases, will cause confusion because “consumers will mistakenly believe that Meta and its services … are connected with, sponsored by, affiliated with, or related to Dfinity and the Internet Computer.”

Meta moved to dismiss. In granting the motion to dismiss, the court found that confusion between Meta’s logo and Dfinity’s logo was unlikely as a matter of law.

Similarity of the marks

Employing the “sight, sound, and meaning” test, the court found the marks were dissimilar: Dfinity’s shape was a traditional infinity sign, with the lines crossing at the horizontal and vertical midpoint, rendered in a precise multicolor format that Dfinity instructs users of the logo not to alter. In the court’s view, the Meta logo looks different – while it includes two loops and bears some resemblance to an infinity sign, the lines cross above the vertical midpoint and the two loops are squished into vertical oblong shapes. Meta did not claim color as a feature of its mark.

Relatedness of services

On the question of whether the services provided under the two marks were similar, the court remained neutral. It noted that Dfinity has targeted  developers interested in using blockchain to “build websites, enterprise systems and internet services within an open environment.” At the same time, “Meta targets everyone, including developers, some of whom presumably are interested in building their products within, or at least compatible with, such an ‘open environment.'” Meta argued that its products are antithetical to that vision, and there is no indication that it is interested in expanding into the realm occupied by Dfinity and the Internet Computer.  But the court found that given Meta’s metamorphosis over the last few years, such a move is not implausible on the pleadings, particularly in light of Zuckerberg’s statement at the launch of the Meta brand.

Sophistication of users

The court then evaluated the types of users that would encounter the Dfinity and Meta logos, and whether, given their level of sophistication, confusion would be likely. The court found that because of the high level of sophistication, it is less likely one would be confused: “That these sophisticated people, immersed in the intricacies of the tech world, would be duped by a logo, particularly one that is not similar in key respects . . . borders on implausible.”

Actual confusion

Next the court considered whether purported instances of actual confusion weighed in favor of Dfinity. In this situation, Dfinity had provided six tweets that purported to show that users were confused. But the court disagreed. First, it noted that because the tweets were in reply to a Dfinity tweet, they did not express how the users would experience an encounter with the mark “organically”. And second, the court found that the content of the tweets indicated the users actually knew the difference between the two enterprises.

Marketing channels

Having found that the parties’ services were not “totally unrelated” at this stage, the court also found that the parties’ marketing channels were similar, but that this factor did not weigh as heavily as the others previously discussed.

Meta’s intent

Though Dfinity alleged “willful and wonton disregard of Dfinity’s established and superior rights” in its trademark, it did not provide evidence of that. And given that the court found the marks to be dissimilar, the court also found that Meta’s intent did not support a finding of likelihood of confusion.

Dfinity Foundation v. Meta Platforms, Inc., 2022 WL 16857036 (N.D. California, November 10, 2022)

See also: Court throws out Facebook’s lawsuit against Teachbook.com

 

October 21, 2019 Trademarks

Cost of domain name was relevant in establishing secondary meaning of trademark

In a trademark dispute between two companies in the real estate space, the court was called upon – at the summary judgment stage – to determine if there was a triable issue as to whether plaintiff’s STOCKDALE mark was not merely descriptive but instead had acquired distinctiveness.

Defendants had argued that plaintiff’s case failed because plaintiff did not have a protectable mark. Plaintiff countered that its STOCKDALE mark, which it had used for 30 years and which the court found was primarily merely a surname, had acquired distinctiveness. Guided by the principles in the case of Viacom Int’l v. IJR Capital Investments, LLC, 891 F.3d 178 (5th Cir. 2018) (the Krusty Krab case), the court examined, concerning plaintiff’s mark:

  • length and manner of use of the mark or trade dress,
  • volume of sales,
  • amount and manner of advertising,
  • nature of use of the mark or trade dress in newspapers and magazines,
  • consumer-survey evidence,
  • direct consumer testimony, and
  • the defendant’s intent in copying the [mark].

It determined that there was a genuine issue of material fact as to whether the mark was protectable as one that had acquired distinctiveness. Interestingly, the plaintiff had not kept track of its advertising expenditures, but did introduce evidence that it had paid more than $50,000 to acquire the domain name stockdale(.)com. The court found that information relevant to inquiry.

Stockdale Investment Group, Inc. v. Stockdale Capital Partners, LLC, No. 18-2949, 2019 WL 5191526 (S.D. Tex., October 15, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

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