Unfair Competition – Attorney Evan Brown

December 18, 2024 Trademarks, Unfair Competition

When does a neighborhood name become a trademark?

neighborhood trademark
Stephanie Reveron sued multiple companies, including Zumiez, New Balance, Amazon, Etsy, Zazzle, and Redbubble, for trademark infringement. Plaintiff claimed that her trademarks, such as LES NYC and LOWER EAST SIDE were being improperly used on clothing and other products. She argued that defendants’ use of these marks created consumer confusion and amounted to unfair competition.

Defendants moved to dismiss the claims. They argued that their use of the words “Lower East Side,” “LES,” and similar phrases was protected under the “fair use” doctrine of trademark law. Specifically, defendants claimed they were using these terms descriptively to refer to the well-known geographic location in New York City, not as trademarks to identify the source of the goods.

The court dismissed certain claims but let others proceed. For certain defendants, such as New Balance, Etsy (partially), and Zazzle, the court found that the use of “Lower East Side” and similar terms clearly referred to the neighborhood, not to plaintiff’s brand. This use was descriptive, in line with the fair use defense, and did not infringe plaintiff’s rights. For others, such as Amazon and Redbubble, the court found that the use of the phrases—especially when stylized or prominently displayed—could plausibly be interpreted as trademarks, making dismissal inappropriate at this stage.

Why did the court reach this decision?

The court considered the fair use defense, which allows the use of trademark-protected words in a descriptive sense if done in good faith. The court reasoned that the phrases “Lower East Side” and “LES” are commonly understood as referring to the geographic location—a neighborhood in New York City. For most defendants, this descriptive use was clear, especially when the words appeared alongside other terms or images referencing the neighborhood. The court also noted that fair use often turns on context: when words appear on a product without clear descriptive meaning, the line between fair use and trademark infringement becomes less certain.

For defendants such as Amazon and Redbubble, the court found that more analysis was needed. In some cases, the terms “LES” or “Lower East Side” were stylized or prominently displayed in a way that might suggest they were being used as a brand identifier rather than in a purely descriptive sense. As a result, the court allowed those claims to move forward.

In short:

The court dismissed claims against most defendants because their use of the words “Lower East Side” and “LES” was descriptive and protected under the fair use defense. However, for some defendants, such as Amazon and Redbubble, the court allowed the claims to proceed because the use of the phrases could plausibly be seen as a trademark rather than a description of a location.

Three reasons why this case matters:

Clarifies Fair Use: The case highlights how courts apply the fair use defense when trademarks overlap with descriptive geographic terms.
E-Commerce Accountability: It raises questions about the role of online platforms, such as Amazon and Etsy, when third-party sellers offer potentially infringing products.
Balancing Trademark Rights: The case underscores the challenge of balancing trademark protections with the public’s right to use common words, such as neighborhood names, in a descriptive way

Reveron v. Zumiez, Inc. et al., 2024 WL 5131627 (S.D.N.Y. Dec. 17, 2024)

December 10, 2024 Defamation, Unfair Competition

Alex Jones gets partial win in Connecticut lawsuit over unfair trade practices

Erica Lafferty, William Sherlach, and other family members of victims of the Sandy Hook Elementary School shooting sued Alex Jones, Free Speech Systems, LLC, and related entities. Plaintiffs sought damages for defamation, invasion of privacy, emotional distress, and violations of the Connecticut Unfair Trade Practices Act (CUTPA). Plaintiffs argued that defendants’ conspiracy theories about the Sandy Hook shooting violated CUTPA because defendants spread lies to attract audiences and sell products such as dietary supplements and survival gear. Plaintiffs asked the court to hold defendants liable for using false statements as a deceptive trade practice tied to their business interests.

The trial court ruling

The trial court sided with plaintiffs and allowed the CUTPA claim to proceed. It found that defendants’ false statements about the shooting being a hoax were tied to the sale of products advertised on their media platforms. According to the lower court, defendants’ spreading of falsehoods to increase product sales qualified as an unfair trade practice under CUTPA. The jury awarded plaintiffs substantial damages, including compensation for the CUTPA violation.

The appellate court reversal

Defendants appealed, and the appellate court reversed the trial court’s ruling on the CUTPA claim. The appellate court concluded that defendants’ defamatory statements were not directly tied to the sale of goods or services in a way that CUTPA covers. While defendants monetized their platforms, the court reasoned that the alleged lies about Sandy Hook were not themselves commercial conduct. The court ruled that the connection between the false statements and product sales was too weak to support a CUTPA violation. As a result, the appellate court directed the trial court to adjust the judgment by removing the damages associated with the CUTPA claim.

Three Reasons Why This Case Matters:

It’s Sensational: Anything involving Alex Jones and the Sandy Hook Massacre are attention-getting.
Protects Defamation Framework: By separating defamation from trade practices, the court preserved traditional tort remedies for harmful speech without expanding CUTPA.
Addresses Modern Media Monetization: The case underscores how courts assess financial gain from speech in an era of monetized platforms.

Lafferty v. Jones, — A.3d —, 2024 WL 5036021 (App. Ct. Conn. December 10, 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)

Online retailer’s use of photo of products it did not sell was not an unfair or deceptive act

Defendant online guitar retailer used on its website a photo of premium guitar necks – products that the online retailer did not sell. Plaintiff – the purveyor of the premium guitars found in the photo – sued defendant under the New Hampshire consumer protection act which makes unfair or deceptive acts in trade or commerce unlawful. The case went to trial. The court found in favor of defendant.

website photo deceptive practices

The court found three of plaintiff’s key witnesses not credible. Each of them had some sort of personal relationship with the plaintiff that in the court’s view tainted their testimony. One of them testified in a questionable way – he testified remotely via videoconferencing software and was “clearly reading from notes or a script during his direct examination.” And “[r]ather than looking directly into the camera when he answered questions, he consistently fixed his gaze on the left portion of his computer screen each time he began his answer.”

The photo played a minor part in defendant’s website. It was relatively small in comparison to the rest of the material in which it appeared. It took up approximately a third of an online document’s width and was not much bigger than a thumbnail-sized image. The image quality was low – the guitar necks were blurry and it was difficult to tell whether anything was written on the them, such as a logo.

The court found that plaintiff failed to prove that consumers would have understood defendant’s use of the photo to assert an affiliation between defendant and plaintiff. In the court’s mind, even if defendant had proven the assertion of an affiliation, plaintiff failed to prove that defendant acted with the intent required for the applicable statutory violation.

D’Pergo Custom Guitars, Inc. v. Sweetwater Sound, Inc., 2021 WL 3038640 (D.N.H., July 19, 2021)

November 19, 2018 Copyright, Unfair Competition

Web scraping case fails under Dastar

Plaintiff sued defendant claiming that defendant wrongfully scraped sales listings from plaintiff’s website and copied those listings on defendant’s own website. It brought the following claims:

Violation of the Copyright Act’s prohibitions against distributing false copyright management information (“CMI”) (17 U.S.C. §1202(a)), and removing or altering CMI (Id., §1202(b)); and
Violation of the Lanham Act for reverse passing off and false endorsement.

Defendant moved to dismiss for failure to state a claim upon which relief could be granted. The court granted the motion.

CMI claim

The court dismissed the claim asserting distribution of false CMI because plaintiff alleged that the false CMI was a blanket copyright notice found on defendant’s website’s terms of use, and not on the pages where the copied content was displayed.

It also dismissed plaintiff’s claim for removal of CMI because it found that the allegations concerning the CMI allegedly removed – a copyright notice found at the bottom of the pages of plaintiff’s website – covered the pages of the website itself, not the particular listings that were allegedly copied without the CMI. It held that:

To violate the DMCA, the false CMI must be “conveyed in connection” with the work. General copyright notices are not “conveyed” with the work, and thus do not violate the DMCA. [See GC2 Inc. v. Int’l Game Tech. PLC, 255 F. Supp. 3d 812, 821 (N.D. Ill. 2017)] (“Courts, however, have generally required more than a boilerplate terms of use notice near a copyrighted work in order to find a party liable for distributing false CMI”); Pers. Keepsakes, Inc. v. Personalizationmall.com, Inc., 2012 WL 414803, at *7 (N.D. Ill. Feb. 8, 2012) (“[A]s a matter of law, if a general copyright notice appears on an entirely different webpage than the work at issue, then that CMI is not ‘conveyed’ with the work and no claim will lie under the DMCA.”)

Lanham Act claim

On the Lanham Act claim, the court found that plaintiff failed to allege that it had a protectible mark that was being used in a manner that was likely to cause confusion among consumers.

The court also applied the 2003 Supreme Court case of Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) to find that plaintiff’s Lanham Act claim failed. In Dastar, the Supreme Court concluded that “false designation of origin” as it is used in the Lanham Act attaches to the producer of tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. In this case, the defendant created the final product (website listings), albeit using the plaintiff’s content (just like in Dastar). Because plaintiff was not the source of the product (the duplicated listings), it did not have a claim under the Lanham Act.

Alan Ross Machinery Corp. v. Machinio Corporation, 2018 WL 6018603 (N.D.Ill. November 16, 2018)

November 9, 2017 Section 230

Anti-malware provider immune under CDA for calling competitor’s product a security threat

kills_bugs

Plaintiff anti-malware software provider sued defendant – who also provides software that protects internet users from malware, adware etc. – bringing claims for false advertising under the Section 43(a) of Lanham Act, as well as other business torts. Plaintiff claimed that defendant wrongfully revised its software’s criteria to identify plaintiff’s software as a security threat when, according to plaintiff, its software is “legitimate” and posed no threat to users’ computers.

Defendant moved to dismiss the complaint for failure to state a claim upon which relief may be granted. It argued that the provisions of the Communications Decency Act at Section 230(c)(2) immunized it from plaintiff’s claims.

Section 230(c)(2) reads as follows:

No provider or user of an interactive computer service shall be held liable on account of—

(A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected; or

(B) any action taken to enable or make available to information content providers or others the technical means to restrict access to material described in [paragraph (A)].

Specifically, defendant argued that the provision of its software using the criteria it selected was an action taken to make available to others the technical means to restrict access to malware, which is objectionable material.

The court agreed with defendant’s argument that the facts of this case were “indistinguishable” from the Ninth Circuit’s opinion in in Zango, Inc. v. Kaspersky, 568 F.3d 1169 (9th Cir. 2009), in which the court found that Section 230 immunity applied in the anti-malware context.

Here, plaintiff had argued that immunity should not apply because malware is not within the scope of “objectionable” material that it is okay to seek to filter in accordance with 230(c)(2)(B). Under plaintiff’s theory, malware is “not remotely related to the content categories enumerated” in Section 230(c)(2)(A), which (B) refers to. In other words, the objectionableness of malware is of a different nature than the objectionableness of material that is obscene, lewd, lascivious, filthy, excessively violent, harassing. The court rejected this argument on the basis that the determination of whether something is objectionable is up to the provider’s discretion. Since defendant found plaintiff’s software “objectionable” in accordance with its own judgment, the software qualifies as “objectionable” under the statute.

Plaintiff also argued that immunity should not apply because defendant’s actions taken to warn of plaintiff’s software were not taken in good faith. But the court applied the plain meaning of the statute to reject this argument – the good faith requirement only applies to conduct under Section 230(c)(2)(A), not (c)(2)(B).

Finally, plaintiff had argued that immunity should not apply with respect to its Lanham Act claim because of Section 230(e)(2), which provides that “nothing in [Section 230] shall be construed to limit or expand any law pertaining to intellectual property.” The court rejected this argument because although the claim was brought under the Lanham Act, which includes provisions concerning trademark infringement (which clearly relates to intellectual property), the nature of the Lanham Act claim here was for unfair competition, which is not considered to be an intellectual property claim.

Enigma Software Group v. Malwarebytes Inc., 2017 WL 5153698 (N.D. Cal., November 7, 2017)

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.

October 30, 2017 Contracts, Unfair Competition

Court reinstates SCO’s misappropriation claim against IBM in long-running lawsuit

For almost a decade and a half, SCO and IBM have been fighting over their collaboration gone wrong concerning the development of a new version of UNIX for Intel processors. The case has garnered much attention, including from the open source community. You can read the backstory here on the Wikipedia page for the dispute. The case has been on appeal to the Tenth Circuit, which released its opinion on October 30. The decision was a mixed ruling – the court affirmed summary judgment in favor of IBM on most of the issues, but ruled in favor of SCO on one important claim – misappropriation.

SCO sued IBM for the tort of misappropriation (a form of unfair competition) arising from IBM’s alleged use in its own product of source code that SCO had contributed to the joint efforts to develop the new UNIX version. The district court granted IBM’s motion for summary judgment on the misappropriation claim, holding that such a claim was barred under New York law’s “independent tort doctrine”. SCO sought review with the Tenth Circuit Court of Appeals. The court reversed and remanded the case on the misappropriation claim.

This doctrine provides that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated. This separate duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract.

In this case, the court held that while IBM and SCO may not have had a formal partnership or joint venture as a matter of law, they surely enjoyed a business relationship in which each reposed a degree of trust and confidence in the other. In such a situation, there exists a duty not to take a business collaborator’s property in bad faith and without its consent in order to compete against that owner’s use of the same property.

SCO v. IBM, — F.3d —, 2017 WL 4872572 (10th Cir., October 30, 2017)

No copyright protection for two word phrase

In a final pretrial order, plaintiff stated that “to this day [defendant] persists in using [plaintiff’s] copyrighted ‘usurpassed performance’ language on its packages.” Defendant filed a motion in limine (a motion to exclude evidence) to preclude plaintiff from introducing evidence or putting on testimony that would infer or suggest the phrase “unsurpassed performance” has been registered as a copyright.

The court granted the motion.

Under the Copyright Act, “[w]ords and short phrases such as names, titles, and slogans” are not subject to copyright. 37 C.F.R. § 202.1(a). The court looked to a number of cases in which short phrases had been denied copyright protection. For example, other courts had held that “Where Words Come Alive,” “Earth Protector,” “Chipper,” and “Retail Plus” were not copyrightable material.

One wonders whether plaintiff was really trying to assert some form of unfair competition or trademark infringement. The notion is worth entertaining for but a brief moment, till one realizes that laudatory phrases such as “unsurpassed performance” find no protection under trademark law either.

Predator International, Inc. v. Gamo Outdoor USA, Inc., 2014 WL 321069 (D.Colo. January 29, 2014)

June 11, 2011 Electronic Discovery, Trademarks, Unfair Competition

Court allows discovery of competitor’s keyword purchases

Scooter Store, Inc. v. Spinlife.com, LLC, 2011 WL 2160462 (S.D. Ohio June 1, 2011)

The Scooter Store and a related company sued a competitor for trademark infringement and other causes of action for unfair competition based in part on the competitor’s purchase of keywords such as “scooter store” and “your scooter store” to trigger sponsored advertisements on the web. Defendant moved for summary judgment and also moved for a protective order that would prevent it from having to turn over information to plaintiffs concerning defendant’s purchase of the keywords. The court denied the motion for protective order.

Defendant argued that it should not have to turn over the information because plaintiffs’ trademark claims based on those keywords were without merit, as the words are generic terms for the goods and services plaintiffs provide. Defendant also asserted a need to protect the commercially sensitive nature of information about its keyword purchases.

The court rejected defendant’s arguments, ordering that the discovery be allowed. It held that “whether or not [p]laintiffs’ claims involving these terms survive summary judgment [] has no bearing on whether the discovery [p]laintiffs seek is relevant, particularly viewed in light of a party’s broad rights to discovery under Rule 26.” As for protecting the sensitivity of the information, the court found that such interests could be protected through the process of designating the information confidential, and handled accordingly by the receiving party.