David Lilenfeld Blog The intellectual property blog of David Lilenfeld

30Jan/170

Strength of a Trademark in an Infringement Action

In this blog post, David Lilenfeld breaks down the fourth factor in the likelihood of confusion analysis, which is the strength of the plaintiff's trademark.

4.  Strength of Clearly Canadian’s mark

David Lilenfeld Clearly Canadian

Clearly Canadian

(David M. Lilenfeld: here are the traditional considerations when analyzing the strength of a trademark). “The more likely a mark is to be remembered and associated in the public mind with the mark’s owner, the greater protection the mark is accorded by trademark laws.” GoTo.com, Inc., 202 F.3d at 1207. The “‘strength’ of the trademark is evaluated in terms its conceptual strength and commercial strength.” Id. “Marks can be conceptually classified along a spectrum of increasing inherent distinctiveness.” Id. “From weakest to strongest, marks are categorized as generic, descriptive, suggestive, and arbitrary or fanciful.” Id. For purposes of this motion, the court concludes that a jury could reasonably find that the Clearly Canadian trademark is either descriptive or suggestive. Entrepreneur Media, 279 F.3d at 1141-42 (“Descriptive marks define qualities or characteristics of a product in a straightforward way that requires no exercise of the imagination to be understood. A suggestive mark is one for which a consumer must use imagination or any type of multistage reasoning to understand the mark’s significance, the mark does not describe the product’s features, but suggests them.”).

“Although a suggestive or descriptive mark is inherently a weak mark (David M.. Lilenfeld: weak, but still protectable), it may be strengthened by such factors as extensive advertising, length of exclusive use, [and] public recognition.” Id. Clearly Food claims that its mark enjoys substantial public recognition to this day. (Resp. at 16.) In support of that claim, Clearly Food provides evidence that the Clearly Canadian mark has been in use since 1989 (Ledden Decl. Ex. 6 (“2014 Marketing Pres.”); that CC Beverage sold millions of dollars worth of Clearly Canadian beverages yearly through 2007 (although sales dwindled substantially after 1992) (id.); that Clearly Canadian’s Facebook page has received over 35,000 “Likes” by members of the public (Screenshot (Dkt. # 57-6)); and that in November 2014, a daily Internet comedy show with in excess of one million subscribers discussed the Clearly Canadian beverages for four-and-a-half minutes (see Resp. at 13 (citing the Good Mythical MORE YouTube Channel.

A jury could reasonably find that this evidence of public recognition so strengthens the mark as to tip this factor in favor of finding a likelihood of confusion.7  See Entrepreneur Media, Inc, 279 F.3d at 1141-42 (finding that monthly sales of half a million products could strengthen a descriptive mark such that the factor weighed in favor of likely confusion). However, this evidence is by no means overwhelming; a jury could also reasonably find that the mark remained weak. Therefore, the court concludes that, for summary judgment purposes, this factor weighs only slightly in Clearly Food’s favor.

Here, Clearly Food contends—but provides no evidence showing—that the Clearly Canadian mark is incontestable. (Resp. at 2.) The incontestable status of a mark serves as conclusive proof that the mark has secondary meaning.  Entrepreneur Media, Inc., 279 F.3d at 1142, n.3. Therefore, an incontestable mark cannot be challenged as invalid on the basis that the mark is descriptive and has not acquired secondary meaning.  Id. If the Clearly Canadian mark is incontestable, Top Shelf’s arguments that the mark is not entitled to protection because it is descriptive must fail.  (See Mot. at 24.) The incontestable status, however, does not require a finding that the mark is strong for infringement purposes.  Entrepreneur Media, Inc., 279 F.3d at 1142, n.3. Therefore, the relative strength or weakness of an incontestable mark is still relevant to the likelihood of confusion analysis.  Id.

31May/160

HAMMER for Skateboard Gear Confusingly Similar with HAMMER Jackets & Hats

The USPTO refused to register the trademark HAMMER for “Skateboarding clothing, headwear and footwear, namely, beanies; belts; footwear; hats; jackets and socks; pants; shirts; sweatshirts; [and] t-shirts” on the grounds that the trademark is likely to cause confusion under Section 2 (d) of the Trademark Act, 15 U.S.C. § 1052 (d) with the registered trademark HAMMER & Design for jackets and hats. Applicant asserted that the registrant’s goods are specific to the sport of bowling and furthermore that they are associated with the professional skateboarder, Jim Greco.

The Board conducted a likelihood of confusion analysis focusing on the similarities between the trademarks and the relatedness of the goods. The test used in In re E.I. du Pont de Nemours & C0., 476 F.2d 1357, 177 USPQ 563, 567 (CCPA 1973) evaluates not whether the trademarks can be distinguished in a side-by-side comparison, but rather whether as a whole their commercial impressions are so similar that confusion is likely. The Board found the trademarks to be quite similar visually because they share a similar commercial impression and are phonetically identical.

Then the Board determined whether the degree of relatedness rises to the level that would mistakenly lead consumers to believe the goods come from the same source. The applicant’s goods, which include jackets and hats, overlap with the goods already registered; and even narrowing the applicant’s goods to skateboarding clothes they still fall within the scope of the registered goods. Applicant argued that its focus on skateboarding differentiates its goods from those of the registration, which are bowling clothes. The Board rejected this argument because there are no limitations in the registration so the goods are presumed to travel in all normal channels of trade to all customers. Accordingly, the Board found the goods and trade channels overlap, which lead to a likelihood of confusion.

Finally, applicant asserted the clothing industry has many HAMMER trademarks. Therefore, applicant’s trademark should be permitted to join the industry. Applicant cited five third-party registrations but nevertheless the Board found these five registered trademarks contain other matter that distinguishes them from the cited trademark. Applicant’s trademark does not include any of this other matter. The Board found this du Pont factor to be neutral because these five third-party registrations do not establish confusion among consumers.

In light of the similarity of the trademarks and the overlap and relatedness of the goods and overlapping trade channels, the Board finds in favor of likelihood of confusion. Therefore, the Board affirmed the refusal to register applicant’s trademark under Section 2 (d).

 

13Feb/160

Kendall Jenner Sues for Unauthorized Use of Her Likeness

Without her permission, skincare product company Cutera appears to have used the likeness of well-known television personality and fashion model Kendall Jenner for commercial gain. There is not enough ointment in the world to get Cutera out of this one. Jenner filed a lawsuit in the Central District of California asserts claims for infringement of the KENDALL JENNER trademark, False Association or End

Kendall Jenner

Kendall Jenner's image used by Cutera

orsement under the Lanham Act and violation of Right of Publicity under California law. California has some of the most beneficial laws for celebrities to employ to protect their image and likeness. Looks like Cutera has an uphill battle here.

8Feb/160

Nike Sues Skechers for Trademark Infringement

Nike is suing Skechers for patent infringement arising under Patent Laws of the United States, 35 U.S.C. § 101 et seq because Skechers copied sneaker designs from Nike. In the lawsuit, Nike claims Skechers is selling sneakers that infringe on eight Nike design patents issued to the company. The Burst, Flex Appeal and Flex Advantage are the alleged patented designs owned by Nike that Skechers used without Nike’s permission. Without Nike’s authorization, Skechers made, used, sold, and imported sneakers having designs that violate the Nike patents. This lawsuit precipitates less than four months after Adidas sued Skechers for trademark infringement.

Nike's design

Nike's design

Skecher's allegedly trademark infringing shoe

Skecher's allegedly infringing version

On January 4th in Oregon’s U.S. District Court, Nike claimed Skechers used designs that were too similar to Nike’s shoes for the Burst, Women’s Flex Appeal, Men’s Flex Advantage, Girl’s Skech Appeal and Boy’s Flex Advantage Shoes. Nike owns the exclusive rights in the ornamental designs of the named sneakers. Thus, it has the right to sue and recover for past, present and future infringement of each of the Nike patented sneaker designs from the date each patent duly and legally was issued to Nike. The company is asking for a permanent injunction to prevent Skechers from further manufacturing shoes with the infringing designs. Nike is also seeking damages from the sale of Skechers’ shoes. Nike has and will continue to suffer irreparable harm by Skechers’ infringement of the Nike patents.

The spokeswoman for Skechers, Jennifer Gray, has said that no court date has been set for this case. Skechers has declined to comment further on the matter. It is worthy to note, this is the second lawsuit Nike has filed against Skechers. In 2014, the Nike-owned brand, Converse said its Chuck Taylor design was infringed upon by Skechers. In 2015, the Skechers stock was up 150% surpassing top brands such as Nike and Adidas. Skechers argues it created its own niche in the sneaker industry. Instead of targeting professional athletes like LeBron James or James Harden, Skechers sought to target pop singers like Demi Lovato or Meghan Trainor as endorsers. Furthermore, the Skechers sneakers focused on style and comfort as opposed to athletic performance, which was Nike and Adidas goal.

Even though the brands used different model names, the overall appearance of the designs of the Nike patents and the designs of the Skecher’s infringing shoes are substantially similar. It would appear that these designs are likely to cause confusion to ordinary consumers.

1Feb/160

“Consumer degree of care” — another likelihood of confusion factor

Here we move on to the seventh factor in the likelihood of confusion (based on the 9th Circuit's view).  How much care do consumers pay when purchasing the respective products of the parties?

7.  Consumer degree of care

“In analyzing the degree of care that a consumer might exercise in purchasing the parties' goods, the question is whether a ‘reasonably prudent consumer’ would take the time to distinguish between the two product lines. Surfvivor Media, Inc., 406 F.3d at 634. “[T]he standard used by the courts is the typical buyer exercising ordinary caution.

[W]hen the goods are expensive, the buyer can be expected to exercise greater care in his purchases . . . .”  Network Automation, Inc., 638 F.3d at 1152.  Again, the parties present conflicting evidence as to the degree of care consumers of their products are likely to exercise. Top Shelf’s expert opines that kombucha is a “niche product” and that the price point of Clearly Kombucha is high enough, relative to other bottled beverages, to foster a relatively greater degree of care among consumers. (See Silverman Rep. ¶¶ 55-56.) Top Shelf’s founder testifies that its clients are particularly health-conscious, and therefore are more discerning when choosing bottled beverages. (Cargle Decl. ¶ 20.) On the other hand, Clearly Canadian points to evidence showing that Top Shelf’s beverages have been sold at a variety of price points, ranging on the low end from $1.50 to $3.00. (See Supp. Resp. at 12-13).

“With respect to small, inexpensive goods . . . the consumer is likely to exercise very little care.” Surfvivor Media, Inc, 406 F.3d at 634; see also CytoSport, Inc. v. Vital Pharm., Inc., 617 F. Supp. 2d 1051, 1076 (E.D. Cal. 2009) (finding a low degree of care with respect to bottled drinks costing between $3.00 and $5.00). A jury reviewing the parties’ evidence could reasonably find that consumers purchasing Clearly Canadian and Clearly Kombucha beverages exercise a low degree of care. Therefore, for the purposes of summary judgment, this factor weighs in Clearly Food’s favor.

30Jan/160

“Clearly Canadian” — Fraud on Trademark Office Analysis

In this blog post, David Lilenfeld breaks down the fraud section of the "Clearly Canadian" trademark infringement opinion. Defendant, Top Shelf, alleged that Plaintiff committed fraud on the Trademark Office, and therefore Plaintiff's trademark registration is not valid.  As discussed below, the Court rules that this is a jury question.

D.         Fraud

Top Shelf contends that Clearly Canadian’s trademark registration should be cancelled for fraud. (Mot. at 12-14.) A party who believes it has been harmed by a trademark’s registration may seek the cancellation of that trademark’s registration on certain specified grounds, including that the trademark was obtained by the commission of fraud on the United States Patent and Trademark Office (“Trademark Office”).  U.S.C. § 1064; see also 15 U.S.C. § 1119 (David Lilenfeld: This is a Cancellation Proceeding). “In any action involving a registered mark the court may . . . order the cancelation of registrations . . . .”). “When a trademark’s registration is cancelled, its owner is no longer entitled to the rights that flow from federal registration, including the presumption that the mark is valid.” Hokto Kinoko Co. v. Concord Farms, Inc., 738 F.3d 1085, 1097 (9th Cir. 2013)

(David Lilenfeld: here are the prima facie elements of a fraud claim) To succeed on a claim for cancellation based on fraud, Top Shelf “must adduce  evidence of (1) a false representation regarding a material fact; (2) the registrant’s  knowledge or belief that the representation is false; (3) the registrant’s intent to induce reliance upon the misrepresentation; (4) actual, reasonable reliance on the misrepresentation; and (5) damages proximately caused by that reliance.” Id. (citing Robi v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th Cir. 1990)). (David Lilenfeld: A false representation in the original trademark application or an affidavit accompanying a renewal application may be grounds for cancellation if all five requirements are met. Id. Top Shelf, however, “bears a heavy burden of demonstrating that a trademark should be cancelled.” Id.see also Robi, 918 F.2d at 1444).

Top Shelf bases its fraud claim on the declaration by Clearly Food’s Chief Executive Officer, Robert Kahn, that accompanied the June 28, 2012, application to  renew the Clearly Canadian trademark. (See Mot. at 12-14.) (David Lilenfeld: As required by Section 8 of the Lanham Act, Mr. Kahn declared that the Clearly Canadian trademark “is in use in commerce on or in connection with the goods and/or services identified above, as evidenced by the attached specimen(s) showing the mark as used in commerce.”) (Request Ex. F (“Renewal”).) Mr. Kahn attached as a specimen a photograph of an empty plastic bottle of Clearly Canadian peach-flavored sparkling water. (See id.) This beverage had been purchased in Michigan in 2011 by an affiliate of Mr. Khan. (Khan Dep. 58:5-60:25.)

For the same reasons discussed in the preceding section, the court finds that questions of fact preclude a finding as to whether the Clearly Canadian trademark was in fact in use in commerce as of June 2012. See supra § III.C. Because Top Shelf cannot prove the first element—namely, that Mr. Kahn’s declaration contained a false representation regarding a material fact—summary judgment is inappropriate on this claim. See Celotex, 477 U.S. at 324. (David Lilenfeld: The Court isn't convinced yet).

Even assuming that the statement that the Clearly Canadian trademark was in use in commerce in June 2012 was false, Top Shelf fails to establish the second and third elements of fraud. “Deception must be willful to constitute fraud.” In re Bose Corp., 580  F.3d 1240, 1243 (Fed. Cir. 2009); see also Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 996 (9th Cir. 2001) (holding that a trademark owner “can only be adjudicated to have filed a fraudulent [incontestability affidavit] if he acted with scienter”). (David Lilenfeld: again, a high burden for defendant to reach).

Mr. Kahn testified in deposition that, although he knew Clearly Food itself was not manufacturing  (David Lilenfeld: federally registered trademarks remain in force for 10 years; between the 9th and 10th year of registration, an owner must file a renewal application under Section 9 of the Lanham Act, which must be accompanied by a Section 8 declaration that the mark is in use in commerce.  See 15 U.S.C. §§ 1058) plastic bottles of Clearly Canadian beverages at the time he signed the declaration, he believed that the Clearly Canadian product was still being sold by third parties in commerce through 2011 (as shown by his affiliate’s then-recent purchase of the specimen bottle), and understood that such sales were sufficient to satisfy the Section 8 standard of use in commerce. (Khan Dep. 23:25-24:7; 61:1-25; 69:13-72:13.) As such, there are questions of fact as to whether Mr. Kahn knew the trademark was not being used in commerce as required by Section 8 and intended to mislead the Trademark Office as to that fact. (David Lilenfeld: sounds like the deposition of Mr. Kahn is in order). See In re Bose Corp., 580 F.3d at 1246 (finding that the registrant did not commit fraud when it filed a combined Section 8 and Section 9 affidavit stating that the trademark was in use in commerce where the registrant erroneously believed that the repairing of damaged previously sold goods and returning the repaired goods to the customers constituted use in commerce).

Top Shelf puts forth evidence suggesting that Mr. Kahn understood that Clearly Canadian itself needed to use the trademark in commerce in 2012 in order to avoid abandonment. (See, e.g. 10/2/12 Khan Email; 3/15/12 Khan Email; 12/22/11 Khan Email; Khan Dep. at 51:20-52:6.) The court, however, is not permitted to weigh the evidence or make credibility determinations at this stage. See Reeves, 530 U.S. at 150. (David Lilenfeld: the jury is supposed to decide questions of fact while the court decides questions of law).  Although deceptive intent may be inferred from indirect and circumstantial evidence, see In re Bose Corp., 580 F.3d at 1246, the court cannot say that a jury considering Top Shelf’s evidence could only reasonably find a willful intent to deceive. See Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 996 (9th Cir. 2001) (finding that the defendants “did not even meet their initial burden in moving for summary judgment” because they “did not present any evidence of the affiant’s state of mind, including whether he acted in bad faith or with knowledge”). At trial, a jury may well find that Top Shelf has carried its “heavy burden” to show fraud. See Hokto Kinoko Co., 738 F.3d at 1097. (David Lilenfeld: there would need to be a number of helpful facts developed for Top Shelf to carry this burden). At this  juncture, however, the court finds that summary judgment is inappropriate. See Celotex,477 U.S. at 324; Hokto Kinoko Co., 738 F.3d at 1097 (declining to cancel a trademark for fraud where the challenger “adduced no evidence that [the registrant] knew of the misstatement . . . or intended to defraud the [Trademark Office]”).

 

30Jan/160

“Clearly Canadian” Trademark Opinion (part 2.) – trademark abandonment

In this post, David Lilenfeld continues to break down the court's opinion in trademark infringement case pitting CLEARLY CANADIAN v. CLEARLY KOMBUCHA.  This posts relates to the Court's opinion with respect to defendant's argument that plaintiff abandoned its CLEARLY CANADIAN trademark.

C.        Abandonment

(David Lilenfeld: a rare discussion on trademark abandonment). “To prove abandonment of a mark as a defense to a claim of trademark infringement, a defendant must show that there was: ‘(1) discontinuance of trademark use and (2) intent not to resume such use.’”Wells Fargo & Co. v. ABD Ins. & Fin. Servs., Inc., 758 F.3d 1069, 1072 (9th Cir. 2014), as amended (Mar. 11, 2014) (quoting  Electro Source, LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 935 (9th Cir. 2006)); see also 15 U.S.C. § 1127(1). Non-use for three consecutive years constitutes prima facie evidence of abandonment. Herb Reed Enterprises, LLC v. Fla. Entm’t Mgmt., Inc., 736 F.3d 1239, 1247-48 (9th Cir. 2013); 15 U.S.C. § 1127(1). (David Lilenfeld: critical point here, since the term of non-use by plaintiff appears to be three years (2012-2015)). In the Ninth Circuit, non-use for three consecutive years creates only a rebuttal presumption of abandonment—it does not shift the burden of proof to the trademark owner. Abdul-Jabbar v. Gen. Motors Corp., 85 F.3d 407, 411 (9th Cir. 1996). A trademark owner can rebut the presumption of abandonment by showing valid reasons (David Lilenfeld: showing valid reason won't be hard here (bankruptcy)) for non-use or lack of intent to abandon the mark. Id.

“The standard for non-use is high.” Herb Reed Enterprises, LLC, 736 F.3d at 1247-48. “Non-use requires ‘complete cessation or discontinuance of trademark use.’” (quoting Electro Source, LLC, 458 F.3d at 936). The phrase “trademark use” means use that “includes placement on goods sold or transported in commerce; is bona fide; is made in the ordinary course of trade; and is not made merely to reserve a right in a mark.”1  Electro Source, LLC, 458 F.3d at 936 (quoting 15 U.S.C. § 1127). Even a “single instance of use is sufficient against a claim of abandonment of a mark if such use is made in good faith.” Wells Fargo & Co., 758 F.3d at 1072 (quoting Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 1970)).  (David Lilenfeld: the bar to prove trademark abandonment is set high, but Top Shelf might still prevail on lack of likelihood of confusion).

Evaluating whether a use is in “the ordinary course of trade” is “often an intensely factual undertaking.” Electro Source, LLC, 458 F.3d at 940. Courts must consider the “totality of the circumstances” to determine if genuine, albeit limited usage of the mark occurred “in the ordinary course of trade.” Id.Wells Fargo & Co., 758 F.3d at 1072.

(David Lilenfeld: Relevant factors include the “genuineness and commercial character of the activity, the determination of whether the mark was sufficiently public to identify or distinguish the marked [products] in an appropriate segment of the public mind as those of the holder of the mark, the scope of the [trademark] activity relative to what would be a commercially reasonable attempt to market the service [or product], the degree of ongoing activity of the holder to conduct the business using the mark, [and] the amount of business transacted.”)

Although “bona fide” is not defined in Section 1127, the Ninth Circuit has noted that “Black’s Law Dictionary provides two similar definitions for ‘bona fide’: ‘1. Made in good faith; without fraud or deceit. 2. Sincere; genuine.’” Electro Source, LLC, 458 F.3d at 936 (quoting Black’s Law Dictionary at 186 (8th ed. 2004)). The Ninth Circuit has also noted that “the term ‘bona fide’ in common parlance means ‘made or carried out in good faith; sincere.’”  Id. (quoting The American Heritage College Dictionary 158 (3d. ed. 2000)).

Because abandonment of a trademark is “in the nature of forfeiture, [it] must be strictly proved.” FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509, 515 (9th Cir. 2010).  (David Lilenfeld: again, setting the bar highly for Top Shelf). The Ninth Circuit has not determined whether this high standard of proof requires“clear and convincing” evidence or a “preponderance of the evidence.” Id.see Grocery Outlet Inc. v. Albertson’s Inc., 497 F.3d 949, 954 (9th Cir. 2007) (separate concurrences disagreeing as to the applicable standard of proof). The court need not decide which standard of proof applies here because, viewing the evidence in the light most favorable  to Clearly Food, Top Shelf fails to carry its burden under either standard.(David Lilenfeld: the court bangs the gavel on Top Shelf's trademark abandonment argument). See Freecycle Sunnyvale, 626 F.3d at 515 (declining to decide which standard applied to a motion for summary judgment);Electro Source, LLC, 458 F.3d at 936 (same).

a.  Relevant facts (David Lilenfeld: facts pertinent to trademark abandonment ruling).

Top Shelf contends that the Clearly Canadian mark is presumptively abandoned because “there is no genuine dispute of material fact that there has not been any bona fide use of [the Clearly Canadian trademark] from 2008 to the present day.” (Mot. at 17.)

The relevant facts, taken in the light most favorable to Clearly Canadian, Reeves, 530 U.S. at 150, are as follows. CC Beverage’s last full-scale production run of beverages bearing the Clearly Canadian trademark occurred sometime in 2009. (Ledden Decl. Ex. 8 (“6/3/14 Khan Email”); Ledden Decl. Ex. 9 (“12/22/11 Khan Email”).) On September 4, 2009, Clearly shipped 432 cases of Clearly Canadian 20-ounce bottles to Paw Paw Wine Distributors (“Paw Paw”) in Michigan. (Bogen Decl. (Dkt. # 55) ¶ 5, Attach. A.) In turn, Paw Paw sold Clearly Canadian 20-ounce and 14-ounce beverages to retailers from 2009 through 2011. (Id. Attachs. B, C.) In an August 2009 transaction, GrayCo Sales Limited (“Grayco”), a beverages distributor in Ontario, Canada, sold approximately $225,000 worth of Clearly Canadian product to the retailer Big Lots. (Colley Dep. at 23:6-15; 24:19-25:3.)

Intrastate Distributors, Inc. (“Intrastate”), a beverage wholesale and manufacturing company located in Michigan, bottled Clearly Canadian product during 2011 and 2012.  (Dabish Decl. ¶¶ 2-3.) Graham Colley, the president of Grayco, maintained a trade booth at the Canadian National Exhibition in 2010 and 2011 featuring Clearly Canadian products. (2012 Bus. Plan. at 32-33 (“3/30/12 Colley Letter”).)  (David Lilenfeld: here the last use date by plaintiff was 2012).

(David Lilenfeld: court probably could have started fact discussion here since all that really matters at this point is plaintiff's date of last use of the trademark). In March, 2012, Graham Colley, the president of Grayco, negotiated a license with Clearly Food to sell Clearly Canadian beverages. (Colley Dep. at 32:22-33:1; 45:7-9; 47:15-23.) Under the license, Grayco was required to pay Clearly Food a royalty for  each case of product sold. (Id. at 46:10-47:8.) In 2012, Intrastate filled approximately 1,800 12-pack cases of 11-ounce bottles with Clearly Canadian product. (Dabish Decl. ¶ 5.) On August 14, 2012, Instrastate sold 1,872 cases of Clearly Canadian beverages (in raspberry and black cherry flavors) to Grayco. (Id. ¶¶ 5-6, Attachs. A, B.) The order totaled approximately $10,000.00, and was shipped to Grayco in Ontario, Canada, on August 15, 2012. (Id.; Colley Dep. at 33:15-18).) Grayco displayed and sold Clearly Canadian beverages during the 2012 Canadian National Exhibition. (3/30/12 Colley Letter.) This fair, which runs from mid-August to Labor Day, typically receives over 1.5 million attendees. (Id.) In October, 2012, Grayco sold 720 cases of Clearly Canadian beverages to an online retailer called  Beverages Direct, and transported the product to Beverages Direct in the United States. (Colley Dep. at 39:343:9; 66:11-24; 79:15-79; Khan Dep. at 79:21-80:6 (referencing a Grayco invoice dated October 23, 2012, to Beverages Direct).) In turn, Beverages Direct sold the Clearly Canadian product exclusively to retail purchasers located in the United States. (Colley Dep. at 91:6-92:4.)

In the summer of 2013, Intrastate sold another approximately $10,000.00 worth of Clearly Canadian product to Grayco. (Id. at 32:22-2; 67:1-17.) Grayco again sold several pallets worth of the beverage to Beverages Direct, and reserved the balance for the 2013 Canadian National Exhibition. (Id. at 67:1-17.)  (David Lilenfeld: so plaintiff's trademark continues in 2013 . . . different than the 2012 facts above).

Since then, Clearly Food’s 2014 online pre-sales campaign has generated over 10,000 orders, resulting in over 27,000 cases of product due to be shipped in 2015. (2d Khan Decl. ¶ 4.) Over 90% of those transactions are with customers in the United States.

Clearly Food has also received eight “full truckload” orders from seven different beverage distributors. (Id. ¶ 5.) As a result, Clearly Food will ship over 30,000 bottles of Clearly Canadian product in 2015. (David Lilenfeld: so we have only a two year or less period of non-use -- not going to be long enough to win for defendant). (Id.see also Billick Decl. Ex. N (invoices for the purchase orders).) Clearly Canadian will be sold directly to consumers at grocery stores  within those distributors’ networks. (2d Khan Decl. ¶ 5.)  Clearly Food has deployed various online, social media, and other marketing campaigns. (Khan Dep. at 46:12-19; 91:15-92:2; 95:8-15.)

b.  Application

Contrary to Top Shelf’s contention, Clearly Food’s evidence, viewed as a whole, shows that intermittent, yet appreciable commercial sales of Clearly Canadian beverages occurred from 2009 through the present. The court concludes that a jury considering this evidence could reasonably find that those sales are sufficient to preclude a finding that use of the trademark was discontinued. See Electro Source, LLC, 458 F.3d at 939  “Good faith nominal or limited commercial sales of trademarked goods are sufficient . . . to avoid abandonment[] where the circumstances legitimately explained the paucity of the sales.”) Specifically, a jury could find that the scope of trademark and business activity in which CC Beverage and Clearly Food engaged from 2009 to the present were commercially reasonable given the situation: namely, a brand transfer, during bankruptcy proceedings, by a declining business to a start-up company seeking to revitalize the brand. See Electro Source, LLC, 458 F.3d at 939 (finding no abandonment because a struggling business’s efforts to exhaust its remaining inventory prior to dissolution constituted “core trademark activities that necessarily contemplate trading upon the goodwill of the mark”). (David Lilenfeld: Even a “single instance of use is sufficient against a claim of abandonment of a mark if such use is made in good faith,” Wells Fargo & Co., 758 F.3d at 1072). Clearly Food puts forth evidence of multiple uses arguably made in good faith. Although Top Shelf adduces evidence suggesting that the sales made immediately after Clearly Food acquired the trademark were made solely for the purpose of preserving the mark, the court may not weigh the evidence on summary judgment. See Reeves, 530 U.S. at 150; (Ledden Decl. Ex. 4 (“10/2/12 Khan Email”), Ex. 5 (“3/15/12 Khan Email”), Ex. 9 (“12/22/11 Khan Email”); Khan Dep. at 51:20-52:6.) As such, when evidence of all Clearly Canadian sales between 2009 and the present is taken into account, summary judgment on the issue of non-use is inappropriate.  (David Lilenfeld: the court makes this analysis look even, suggesting it was not even a close call).

In its reply brief, Top Shelf contends for the first time that sales to third-party retailers or distributors do not constitute use in commerce within the meaning of the Lanham Act because such sales are not uses by or for the benefit of the trademark owner.  (Reply (Dkt. # 102) at 4-5.) Top Shelf bases its argument on two twenty-year-old opinions by the Trademark Trial and Appeal Board (“TTAB”) that stated: “A party cannot defend against a claim of abandonment by relying on some residual goodwill generated through post-abandonment sales of the product by distributors or retailers.” Parfums Nautee Ltd., 22 U.S.P.Q.2d 1306 (P.T.O. Jan. 15, 1992); (David Lilenfeld: Societe Des Produits Marnier Lapostolle, 10 U.S.P.Q.2d 1241, at *4 n.5 (P.T.O. Feb. 10, 1989) (finding a presumption of abandonment when the last shipment of trademarked products to the United States occurred more than three years prior, despite the fact that retailers continued to sell the product thereafter)).

Top Shelf does not explain how these TTAB rulings fit into Ninth Circuit jurisprudence regarding abandonment.2  (See Reply.) More importantly, in the court is aware of only one district court in this circuit that has followed those rulings.  See Zamacona v. Ayvar, No. CV0702767ABCFMOX, 2009 WL 279073, at *2 (C.D. Cal. Feb. 3, 2009); but see Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1189 (5th Cir. 1980) (finding no abandonment) (David Lilenfeld: this argument came too late).

Clearly Food has not had an opportunity to respond to Top Shelf’s newly raised argument, and because, as explained below, consideration of the argument would not change the outcome of this motion, the court declines to decide the issue at this time. See Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996) (stating that a court should not consider new issues or evidence submitted in a reply brief without giving the opposing party an opportunity to respond).

Even if the court agreed that Clearly Food could not rely on sales by unaffiliated retailers or distributors, summary judgment on the abandonment claim would not be appropriate. (David Lilenfeld: agreed -- use in commerce is use in commerce, whether by the trademark owner or a third-party). It is undisputed that Clearly Canadian beverages were sold in the United States by or on behalf of Clearly Canadian to Paw Paw in September 2009, and to Beverages Direct in October 2012. (See Bogen Decl. ¶ 5, Attach. A; Colley Dep. at 39:3-43:9; 66:11-24; 79:15-79: Khan Dep. at 79:21-80:6.); Star-Kist Foods, Inc. v. P.J. Rhodes & Co., 769 F.2d 1393, 1396 (9th Cir. 1985); 15 U.S.C. §1127.

22Jan/160

Reasons to Conduct a Proper Trademark Search

Why do we recommend a trademark clearance search?  I hear that question fairly often.

As trademark attorneys, we are asked that question often.  Here is our answer, at least a summary of our answer.

The United States trademark laws are based upon the “first to use” – in other words, whoever uses the trademark first for particular goods or services, generally speaking, has the best rights to that trademark for those goods or services.

You don’t want to knowingly (this includes the “should have known” standard) infringe on someone’s trademark. This can result in possibly having to pay damages such as: (1) disgorgement of profits; (2) damages caused by the infringement, which can be trebled; (3) costs of bringing the lawsuit; (4) attorney’s fees; and (5) destruction of inventory.

A trademark owner can use your failure to search as a willful attempt to “blind yourself” to readily available information.

Searching prior to applying for registration may help you identify potential obstacles to registration, such as those encountered by a similar trademark. You can even see how the applicant responded to the Office Actions under the TSDR tab on the USPTO website.

A report also shows the types of trademarks which tend to be accepted or rejected by the USPTO and design your trademarks accordingly, thereby optimizing your chances of approval.

While a trademark search report costs a few hundred dollars, it is obviously preferable to spend a small amount of money up front rather than a lot of money later in litigation.

David Lilenfeld

 

20Jan/160

Nestlé Can’t Get a Trademark Break for its Kit Kat Bar

Kit Kat, the iconic chocolate-covered wafer candy, was first produced in Great Britain in 1935.  Nestlé understandably wanted to register the Kit Kat’s four-finger shape as a trademark, filing an application there in 2010.

In arguing for registration of the trademark, Nestlé’s relied heavily on a survey its experts conducted.  In administering the survey, Nestlé presented a photograph of the four-finger shape to consumers and asked them – to describe what they saw.  According to Nestlé, more than 90% of those surveyed made a reference to the Kit Kat bar, upon viewing the four-finger shape.  

However, the British courts were not enticed and cooked up another bad break for Nestlé.  The European Court of Justice Court refused to acknowledge the four-finger anatomy of the Kit Kat bar as a protectable trademark.  The rejected trademark, described in the case as the “shape of a four finger chocolate-coated wafer," likely leaves wide-open the market for other four finger chocolate covered candies, undoubtedly leaving a bad taste in Nestlé’s mouth.

First up to explore that wide-open market could be Nestlé’s rival, Cadbury, who led the charge to ensure the high court rejected Nestlé’s four-finger trademark application.

By the way, David Lilenfeld's research into this story revealed the Kit Kat is made by a division of Hershey, under a license from Nestlé and taste great.

18Jan/160

Supreme Court Tackles Trademark Tacking

Trademark tacking – not a term you’ll hear very often.  But the Supreme Court of the United States tackled the topic earlier this year in Hana Financial, Inc. v. Hana Bank, (9th Cir. 2013) 735 F.3d 1158, 1163-1164, cert. granted, 134 S. Ct. 2842 (2014) and aff’d, 135 S. Ct. 907 (2015).

When a trademark owner re-brands, a brand new trademark is typically introduced.  But what if a trademark owner tweaks its brand – is it a new youthful trademark, or just a freshened-up version of the old trademark?  This is where “trademark tacking” comes into play.  Trademark tacking allows a trademark owner to “tack on” the period of time it used the older trademark to the new youthful trademark, so that the new trademark has the benefit of the Date of First Use of the older trademark. The Supreme Court reiterated that tacking is allowed when “two marks are so similar that consumers generally would regard them as essentially the same.”  The Court explained that two trademark marks “may be tacked when the original and revised marks are ‘legal equivalents,’” meaning that the two trademarks “‘create the same, continuing commercial impression’ so that consumers ‘consider both as the same mark.’”

“The key take-away from this case, though,” said David Lilenfeld, founding partner of Lilenfeld PC, “is the Supreme Court’s ruling that at the trial court level, trademark tacking should be decided by the jury, not the judge.”

 


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