Gibbons Law Alert
A group of brand owners has filed another complaint against eleven Alibaba and Taobao entities for claims including direct and contributory trademark counterfeiting and violations of the RICO statute. At issue is when and to what extent a service provider can be held liable for alleged trademark counterfeiting taking place on an online platform.
Registrations of non-traditional trademarks are uncommon, and often discussed only among legal scholars and in academic papers. A recent Wall Street Journal article, however, called attention to a growing trend in trademark law: registration of scents and fragrances. The article describes the efforts of CESI Chemical, Inc., a producer of solvents for the fracking industry, which filed an application to register the orange scent imbued in its chemical additives for its hydraulic fracturing fluid.
In Sanrio, Inc. v. Ronnie Home Textile Inc., the U.S. District Court for the Central District of California recently refused to stay a civil case pending completion of a parallel criminal counterfeiting investigation. In Sanrio, the plaintiffs sued a corporation and two alleged principals for trademark infringement and other claims. The case was filed after law enforcement seized allegedly counterfeit goods offered for sale by the defendants and related evidence. The defendants argued that the civil case should be stayed because the seizure left them without means to substantively defend themselves. They further argued that allowing the civil case to go forward would implicate the individual defendants’ Fifth Amendment rights, though criminal charges had not been brought against them.
In a 7-2 split decision issued on March 24, 2015, the U.S. Supreme Court held that Trademark Trial and Appeal Board (“TTAB”) rulings may have preclusive effects in subsequent federal district court litigation. The Court ruled that so long as the elements of issue preclusion are met, it is irrelevant that the TTAB is not an Article III court.
Judge Preska of the United States District Court for the Southern District of New York recently awarded attorneys’ fees, damages, and prejudgment interest on damages, but not fees to defendants, in a trademark counterfeiting case. In Prince of Peace Enterprises, Inc. v. Top Quality Food Market, LLC, Judge Preska adopted in part a report and recommendation of Magistrate Judge Maas, ending an eight-year litigation surrounding ex parte seizures of herbal supplements which took place in 2007.
Fitbit and Fitbug are makers of activity trackers, which are wearable tracking devices that connect to the internet and provide users with feedback about their fitness, quality of sleep, and other personal metrics. Fitbug’s U.S. trademark rights to FITBUG date back to 2004, when the British device maker filed an intent to use application with the United States Patent and Trademark Office, which registered in 2009. Fitbug began selling its products in United States commerce since at least as early as 2005. Fitbit, on the other hand, filed a trademark application for FITBIT in August 2008 and announced its product launch the following month. However, Fitbit did not begin shipping its products using the trademark FITBIT until September 2009.
The U.S. Supreme Court does not get to tackle trademark law issues very often. The decision in Hana Financial, Inc. v. Hana Bank, (No. 13-1211; January 21, 2015) is the first pronouncement of the highest Court on trademark matters in more than a decade, and it deals with the issue known as tacking. Trademarks often experience changes in appearance and overall look in the course of many years. These changes can take various forms, such as a modification in lettering style, a rearrangement in the order of words, the dropping of a background design, or the addition of new stylized elements. The tacking doctrine allows a party to claim the earlier priority date of an old mark for a new trademark, if the later involves slight changes over the prior version. The U.S. Supreme Court’s decision in Hana Financial addresses narrowly the question as to whether tacking is a matter of law reserved to a judge, or a matter of fact decided by a jury.
Industry-specific trade shows offer manufacturers the opportunity to market their products and keep tabs on trends in their industry. However, these shows also provide an opportunity for manufacturers to identify counterfeit models of its products offered on the market. Bond Manufacturing (“Bond”), which produces outdoor heating units, arrived at the 2013 National Hardware Show in Las Vegas and discovered counterfeit versions of its products being exhibited at a nearby booth. Bond’s president was assisting with setting up the company’s booth when he noticed goods bearing Bond’s trademark at an exhibition booth operated by Bond’s previous business partner, Xiamen Hwaart Composite Material. The counterfeit goods included various products, including patio heaters, fire pits, and fireplaces. Combating counterfeiters is part of the daily routine for manufacturers like Bond, but identifying the sources of counterfeit products is typically challenging in the age of Internet commerce as counterfeiters are rarely bold enough to market their ersatz products out in the open in the light of day, particularly when the counterfeiter is your former business partner.
The Court of Appeals for the Third Circuit recently decided that the U.S. Supreme Court’s April decision on attorneys’ fees in a patent case, Octane Fitness, LLC v. Icon Health & Fitness, Inc., should also be applied in trademark cases under the Lanham Act. See Fair Wind Sailing, Inc. v. Dempster, Nos. 13-3305 & 14-1572 (3d Cir. Sept. 4, 2014). Defendant Dempster had successfully moved to dismiss the action under Rule 12(b)(6) of the Federal Rules of Civil Procedure and was awarded its attorneys’ fees under § 35(a) of the Lanham Act and the Virgin Islands Code. Plaintiff Fair Wind Sailing appealed the fee award. The Third Circuit ultimately vacated the District Court’s fee award and remanded, instructing the court below to utilize an inquiry consistent with the Supreme Court’s decision in Octane Fitness.
On August 14, 2014, Pro-Football, Inc. (“Pro-Football”) appealed the Trademark Trial and Appeal Board’s (“TTAB”) June 18, 2014 decision to cancel its registrations for six REDSKIN-formative trademarks. As we previously reported, the TTAB’s 2-1 decision found that those trademarks were not entitled to be registered on the basis that a “substantial composite of Native Americans found the term REDSKINS to be disparaging in connection with [the football team’s] services” during the time period when registration was sought.