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Functionality Dooms Alleged Trade Dress Protection

by | Nov 29, 2022 |

The US Court of Appeals for the Eighth Circuit affirmed summary judgment of noninfringement in a trade dress suit, finding that the trade dress was functional and the attorneys’ fee award—as diminished by the district court—was appropriate. Pocket Plus, LLC v. Pike Brands, LLC, Case No. 21-3414 (8th Cir. Nov. 15, 2022) (Gruender, Melloy, Erickson, JJ.)

Since 2009, Pocket Plus has sold vertically oriented pouches that attach to waistbands or belts to carry water bottles, cell phones and other small objects. Pike Brands, d/b/a Running Buddy, began selling similar pouches in 2012 and introduced a vertical version in 2015. In 2021, Pocket Plus sent cease and desist letters to Running Buddy, then sued for trade dress infringement under Iowa common law and the Lanham Act. Running Buddy moved for summary judgment, arguing that Pocket Plus’s trade dress was unprotectable. Running Buddy also threatened Rule 11 sanctions because of the weakness of the case. After winning summary judgment, Running Buddy moved to recover attorneys’ fees, which the district court partially granted. Both parties appealed, with Pocket Plus challenging the summary judgment grant and both parties challenging the amount of the attorneys’ fee award.

The Eighth Circuit began by noting that the issue of validity was complicated by Pocket Plus’s shifting explanation of what its trade dress was, explaining that its “definition evolved throughout the litigation,” becoming increasingly detailed. Eventually, the Court reasoned that regardless of which definition prevailed, the result was the same.

Addressing the noninfringement finding, the Eighth Circuit recited the relevant legal principles, explaining that to prove infringement, a plaintiff must show that its trade dress is nonfunctional and distinctive and that a lack of protection may confuse customers. The Court explained that it must consider trade dress in its entirety—not as individual elements—and determine whether features are protectable “arbitrary embellishment” or simply essential to product use. In this case, Pocket Plus never registered its trade dress so it did not benefit from a presumption of nonfunctionality. Pocket Plus argued that its vertical orientation and over-the-hip design were nonfunctional elements since competitors made pouches differently and that packaging illustrations likewise made the trade dress nonfunctional. The Court was not persuaded, finding that each feature the plaintiff pointed to was designed to “affect [the pouch’s] suitability for carrying objects,” making each feature essential to purpose and therefore functional. Because the Court found functionality, it affirmed noninfringement without addressing the other requirements.

The Eighth Circuit next considered the attorneys’ fees. Under the Lanham Act, a court may, in its discretion, grant attorneys’ fees to the winning party but only in “exceptional cases” after “considering the totality of the circumstances.” Pocket Plus argued that this case was not “exceptional” while Running Buddy argued that the district court abused its discretion in awarding only a portion of the attorneys’ fees.

The Eighth Circuit addressed both exceptionality and the amount awarded, in turn. To be “exceptional,” a case must be objectively unreasonable, motivated by ill will or frivolous. The Court noted Pocket Plus’s weak [...]

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Press # For Options, but Not for a Trademark Registration

by | Nov 29, 2022 |

In a precedential opinion addressing the most fundamental requirement for trademark protection, the Trademark Trial & Appeal Board (Board) affirmed the US Patent & Trademark Office’s (PTO) refusal to register a “#” based mark on the ground that it fails to function as a mark. In re Pound Law, LLC, Ser. No. 87724338 (TTAB Nov. 9, 2022) (Adlin, Lynch, Larkin, ATJ)

Pound Law, claiming acquired distinctiveness under Section 2(f) of the Lanham Act, sought to register #LAW as a mark for providing legal services and legal referral services to consumers seeking a lawyer where legal representation or referral is initiated by phone. During prosecution, the Examining Attorney refused registration on the ground that #LAW failed to function as a service mark, reasoning that a consumer would only understand that dialing #LAW would put them in contact with some legal service provider, but not specifically Pound Law. Pound Law appealed.

Pound Law argued that the Examining Attorney improperly applied a per se rule against mnemonic or vanity telephone number marks as being incapable of functioning as a mark identifying the source of goods or services. In response, the Examining Attorney asserted that the PTO refused registration only after engaging in a specimen-based determination tailored to the #LAW mark. The Examining Attorney argued that, based on the manner of using the mark with a telephone, a consumer would regard #LAW only as a means of contacting Pound Law and concluded that #LAW does not indicate the source of legal services to be rendered, only a means by which legal services might be obtained.

To assess whether #LAW conveys an informational message or functions as a source identifier, the Board considered whether the nature of #LAW affects consumer perception of the asserted mark. The Board cited examples #LAW or #law being used throughout the legal industry, including as a hashtag in social media content. The Board reasoned that, in the context of social media, a hashtag functions as a searchable keyword, not as a source identifier. Pound Law argued that it ran radio advertisements vocalizing #LAW as “pound law” to explain to consumers that the asserted mark is not a hashtag.

The Board did not find Pound Law’s evidence persuasive, explaining that Pound Law’s radio advertising was insufficient to instill Pound Law as the source of the legal services in a consumer’s mind since “there is no correct pronunciation of a trademark, and consumers may pronounce a mark differently than intended by the brand owner.” The Board also pointed to evidence of Pound Law’s “extensive visual-only advertising,” which does not distinguish the use of an octothorpe as specifically a pound sign on a telephone keypad as opposed to a hashtag used on social media platforms. The Board concluded that many consumers would understand and pronounce #LAW as a hashtag (i.e., vocalized as “hashtag law”) “given the prevalence of social media and hashtags.” On this point, the Board highlighted “quite persuasive” evidence of numerous examples from the record showing third parties—e.g., law firms, legal [...]

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Supreme Court to Consider First Amendment Protection for Parody Dog Toy

by | Nov 29, 2022 | ,

The Supreme Court of the United States has agreed to consider the scope of protection afforded by the First Amendment to commercial parody products that feature the unauthorized use of another party’s trademark(s). Jack Daniel’s Properties, Inc. v. VIP Products LLC, Case No. 22-148 (Supr. Ct. Nov. 21, 2022) (certiorari granted). The questions presented are as follows:

  1. Whether humorous use of another’s trademark as one’s own on a commercial product is subject to the Lanham Act’s traditional likelihood-of-confusion analysis, or instead receives heightened First Amendment protection from trademark-infringement claims.
  2. Whether humorous use of another’s mark as one’s own on a commercial product is “noncommercial” under 15 U.S.C. § 1125(c)(3)(C), thus barring as a matter of law a claim of dilution by tarnishment under the Trademark Dilution Revision Act.

This is the second time Jack Daniel’s has filed a petition for certiorari in connection with this case. The Supreme Court first considered the matter in January 2021, following the US Court of Appeals for the Ninth Circuit’s decision to vacate and remand the district court’s finding of trademark infringement, reverse the judgment on dilution and uphold the validity of Jack Daniel’s trademark and trade dress rights.

The case then returned to the district court, which granted summary judgment to VIP Products. The Ninth Circuit affirmed and then Jack Daniel’s filed its second petition for certiorari.

The Supreme Court will seek to settle the long-standing split amongst the US Courts of Appeal regarding the proper analysis for parody in trademark infringement and dilution claims and the scope of protection afforded to it via the First Amendment.



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Not So Clean: Federal Circuit Upholds Trade Dress Preliminary Injunction, Finds Defenses Improperly Plead

by | Nov 17, 2022 |

The US Court of Appeals for the Federal Circuit upheld a “narrow” preliminary injunction in a trade dress case, finding that the opponent of a registered configuration mark failed to prove its lack of secondary meaning and functionality defenses. SoClean, Inc. v. Sunset Healthcare Solutions, Inc., Case No. 21-2311 (Fed. Cir. Nov. 9, 2022) (Newman, Lourie, Prost, JJ.)

SoClean manufactures Continuous Positive Airway Pressure (CPAP) machines. SoClean sued Sunset—a former distributor of SoClean products—for patent infringement and later added trademark infringement claims. At issue in this appeal was a single SoClean mark “for the configuration of replacement filters for its sanitizing devices.”

SoClean requested a preliminary injunction to stop Sunset from making or selling allegedly infringing CPAP filters. The district court granted the injunction but narrowly tailored the injunction to only enjoin Sunset from selling its filter cartridges without Sunset’s own brand name attached to the filter drawing so that customers would not falsely believe they were buying SoClean products. Sunset appealed.

While a party seeking preliminary injunction must prove all four eBay elements, this appeal focused on just one: “likelihood of success on the merits.” Sunset argued that the district court abused its discretion in finding that SoClean would likely defeat Sunset’s lack of secondary meaning defense and its functionality defense.

After noting that the parties agreed that SoClean’s trade dress was protectable only upon a showing that it had obtained secondary meaning, the Federal Circuit divided the secondary meaning issue into two subparts:

  1. Whether the district court should have questioned the validity of SoClean’s registration in light of Sunset’s evidence
  2. Whether the district court held Sunset to an improperly high standard of proof.

As to the first issue, the Court noted that federal registration is prima facie evidence of a mark’s validity. When, as here, the challenged mark was registered fewer than five years prior, the burden shifts from plaintiff to defendant, such that the defendant must rebut the presumption of validity. Sunset acknowledged that it had this burden, but its arguments to the district court focused only on the US Patent & Trademark Office’s decision to grant SoClean’s registration. The Court rebuffed that argument, noting that “scrutinizing the application process and deciding whether the trademark examiner was correct to issue the registration in the first place is the opposite” of the statutory presumption of validity.

Next, the Federal Circuit addressed Sunset’s standard of proof argument. The Court acknowledged that the district court misstated the law by suggesting that there was a “vigorous evidentiary requirement” on the challenging party, instead of simply a “preponderance of the evidence.” However, the Court also noted that the district court considered Sunset’s lack of secondary meaning evidence to be “equivocal, at best,” which “plainly fails to satisfy a preponderance-of-the-evidence standard.” Therefore, the Court judged the error to be harmless.

The Federal Circuit thus affirmed the finding that SoClean would likely defeat Sunset’s secondary meaning challenges.

The Federal Circuit next turned [...]

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Up in Smoke: TTAB Dismisses E-Cigarette Opposition, Provides Guidance for Effective Evidence and Testimony

by | Nov 10, 2022 |

In a precedential opinion, the Trademark Trial & Appeal Board (Board) dismissed an opposition filed against an application for registration of a logo mark containing the word “SMOKES,” finding no likelihood of confusion with the opposer’s registered mark SMOK. The Board cited the dissimilarity of the marks and the weakness of the common mark element SMOK, as well as a lack of evidence that the parties’ trade channels overlapped. Shenzhen IVPS Technology Co. Ltd. v. Fancy Pants Products, LLC, Opp. No. 91263919 (Oct. 31, 2022) (precedential) (Goodman, Pologeorgis, English, ATJ). The decision was rendered without a brief, testimony or evidence filed by the trademark applicant.

Fancy Pants Products filed an application to register a logo mark (depicted above) that included the stylized word “SMOKES.” The application record disclaimed “smokes,” meaning that Fancy Pants conceded that the word “smokes” was not inherently distinctive for its applied-for goods: “[c]igarettes containing tobacco substitutes … with a delta-9 THC concentration of not more than 0.3% on a dry weight basis,” i.e., a description for hemp-derived products eligible for federal registration in accordance with the 2018 Farm Bill. Shenzhen IVPS Technology opposed registration of Fancy Pants’ mark on the ground of likelihood of confusion with Shenzhen’s alleged rights in the trademark SMOK. In support of the opposition, Shenzhen pleaded ownership of 11 registered SMOK and SMOK-variant marks for electronic cigarettes, parts and components (among other goods) and related retail services.

Fancy Pants did not take testimony or introduce any evidence during its testimony period, nor did it file a brief. The Board noted, however, that Fancy Pants was not required to make these submissions because Shenzhen bore the burden of proving its entitlement to a statutory cause of action and its trademark “likelihood of confusion” claim by a preponderance of the evidence.

The Board first looked at what trademark rights Shenzhen could properly rely on in the opposition proceeding in view of the rights pleaded. As a result of Shenzhen’s errors in the presentation of its trademark registrations into the record with respect to verifying the current status and title of the registrations, the Board found that 10 of Shenzhen’s 11 pleaded trademark registrations were not properly made of record. Nevertheless, Shenzhen was allowed to rely on common law rights for these 10 SMOK-variant trademarks since Fancy Pants failed to object to Shenzhen’s evidence of common law use.

Having determined the scope of the trademark rights at issue, the Board turned to the issue of priority in Shenzhen’s alleged trademarks. Priority over Fancy Pants’ mark was not at issue with respect to Shenzhen’s one properly pleaded §2(f) trademark registration for the SMOK mark that was made of record (and the goods and services covered thereby). As to Shenzhen’s common law rights in its alleged family of the other 10 SMOK-variant marks, the Board explained that Shenzhen first had to establish that it even owned a “family” of marks—i.e., marks that share a “recognizable common [...]

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Supreme Court to Consider Whether Lanham Act Reaches Foreign Defendants’ Extraterritorial Conduct

by | Nov 10, 2022 | ,

The Supreme Court of the United States agreed to review the geographic scope of the Lanham Act and the extent to which trademark owners can use US trademarks to police foreign sales. Abitron Austria GmbH et al. v. Hetronic International Inc., Case No. 21-1043 (Supr. Ct. Nov. 4, 2022) (certiorari granted). The question presented is as follows:

Whether the court of appeals erred in applying the Lanham Act extraterritorially to petitioners’ foreign sales, including purely foreign sales that never reached the United States or confused U.S. consumers.

In the underlying case, the US Court of Appeals for the Tenth Circuit upheld a damages award for Hetronic International based on its conclusion that the Lanham Act can affect conduct that substantially affects US commerce, such as the products Hetronic Germany and others sold to European customers.

The US Solicitor General suggested that the case is “a suitable vehicle” to clarify the Lanham Act’s geographic scope, noting that the Lanham Act provides a remedy for a foreign defendant’s use of a US trademark abroad only if that use is likely to cause confusion within the United States.



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Color Me Unsurprised: No Preclusion of Plaintiff’s Claims

by | Oct 27, 2022 |

The US Court of Appeals for the Seventh Circuit reversed the lower court’s order determining that the plaintiff’s federal lawsuit was barred under the doctrines of claim and issue preclusion, noting an Illinois law exception on claim preclusion and finding no issue preclusion. Creation Supply, Inc. v. Selective Ins. Co. of the Southeast, Case No. 21-3172 (7th Cir. Oct. 19, 2022) (Rovner, Hamilton, Scudder, JJ.)

Creation Supply is a producer of markers. In 2012 one of its competitors sued it for trademark violations. Creation requested that Selective Insurance provide coverage for the lawsuit, but Selective refused. Creation entered into a settlement agreement with its competitor that prevented Creation from selling one of its primary lines of markers. As a result, Creation lost much of its business and struggled financially.

Selective did not provide coverage for Creation’s legal defense. It also sought a declaration in Illinois state court that it owed Creation no duty to defend. Creation countersued, seeking a declaration that Selective did owe it a duty to defend. Creation also alleged that Selective breached the insurance policy between the parties. The Illinois circuit court entered partial summary judgment for Creation on its duty to defend the claim and finalized an award of incidental relief in October 2017.

In 2014, during the state court litigation, Creation filed a suit against Selective in federal court for breach of contract and a claim under the Illinois Insurance Code for vexatious and unreasonable conduct. In 2016, Creation requested voluntary dismissal of the state court breach of contract claim. The Illinois circuit court granted the motion and expressly reserved Creation’s right to maintain its federal action on its breach of contract claim. After the end of the state court litigation in 2017, the federal court case continued. The district court granted summary judgment for Creation on the insurance coverage question. After a bench trial on the Illinois Insurance Code claim, the court found for Creation and awarded almost $3 million in damages. On appeal, the Seventh Circuit reversed and remanded, instructing the district court to resolve the remaining issue of contract damages.

After the remand, Creation sought to amend the complaint to seek punitive damages. The district court denied that request. Selective then moved for judgment on the pleadings, contending that the doctrines of claim and issue preclusion barred Creation’s remaining contract claim. The district court agreed and entered judgment for Selective because the Illinois state courts had resolved the issue of Selective’s duty to defend. Creation appealed.

The Seventh Circuit affirmed the district court’s denial of Creation’s leave to amend, then turned to the issue of claim preclusion, a legal doctrine that prevents a party from repeatedly litigating the same cause of action against the same adverse party. Claim preclusion requires the following:

  • A court with proper jurisdiction must have issued a final judgment on the merits.
  • The claims in the two actions must be the same.
  • The parties in the second action must be the same (or in privity with) those [...]

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Long Live the Kingpin: No Abandonment Based on Nonuse During Drug Sanctions Period

by | Oct 13, 2022 |

In a precedential decision, the Trademark Trial & Appeal Board (Board) dismissed an opposition, finding that the trademark applicant’s long period of nonuse due to government sanctions was excusable nonuse and not abandonment. ARSA Distributing, Inc. v. Salud Natural Mexicana S.A. de C.V., Opposition No. 91240240, 91243700 (TTAB Sept. 28, 2022) (Taylor, Greenbaum, English, ATJ)

Salud sought a trademark registration of the standard character mark EUCALIN for “pharmaceutical products, namely, vitamin supplements, nutritional supplement made with a syrup with jelly base, honey base, and with a mixture of plants with propolis base, and herbal remedies in the nature of herbal supplements,” and the composite mark set forth below for “herbal supplements; nutritional supplements; vitamin supplements.”

ARSA opposed the registration, alleging prior common law use of the mark EUCALIN for “dietary and nutritional supplements.” ARSA argued that its sales and advertising of its EUCALIN product from 2008 to October 6, 2015, and October 9, 2017, established that ARSA had used its EUCALIN mark long before the constructive use filing dates of Salud’s application. Thus, ARSA had priority of use of the EUCALIN mark on nutritional and dietary supplements.

In response, Salud asserted it had priority in the EUCALIN mark based on use since 1999. Salud argued that between 1999 and October 2008, ARSA was Salud’s US distributor and, therefore, all goodwill for any EUCALIN-labeled product went to Salud as the supplier of the goods and products.

ARSA asserted that there was no distribution agreement between the parties, but even if Salud “could have reasonably claimed rights based on some alleged distribution agreement before 2008,” Salud “has long since abandoned any rights it would have had.” ARSA asserted that Salud was legally banned from conducting business in the United States between October 2, 2008, and May 2015 because it was declared a Specially Designated Narcotics Trafficker (SDNT). ARSA argued that Salud failed to produce any evidence establishing that it had concrete plans or intent to resume use between 2008 and 2015.

The Board found that there was no clear manufacturing-distribution agreement between the parties, and therefore there was a rebuttable presumption that the manufacturer (Salud) owned the mark. The Board explained that the following six factors are considered in determining which party has superior rights:

  1. Which party created and first affixed the mark to the product
  2. Which party’s name appeared with the trademark on packaging and promotional materials
  3. Which party maintained the quality and uniformity of the product, including technical changes
  4. Which party the consuming public believes stands behind the product (g., the party to which customers direct complaints and contact for correction of defective products)
  5. Which party paid for advertising
  6. What a party represents to others about the source or origin of the product.

The Board concluded that, on the balance, the factors favor Salud. The Board explained that the first, second, third and sixth factors favored Salud because it created the mark and product, maintained quality control [...]

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The Saddest Hour? Closing Time for Trademark Cancellation Petition

by | Oct 6, 2022 |

In a precedential decision, the Trademark Trial & Appeal Board (Board) denied a petition to cancel a trademark registration based on priority. The Board explained that the petitioner bears a higher burden of proof to show prior use when it has amended its trademark application during prosecution to allege an earlier use date. JNF LLC v. Harwood Int’l Inc., Cancellation No. 92070634 (TTAB Sept. 21, 2022) (Wellington, Greenbaum, Heasley, ATJ)

On October 6, 2014, Harwood International applied to register the standard character mark HAPPIEST HOUR on the Principal Register for “bar and restaurant services.” The application matured into a registration on July 26, 2016. Almost two years later, on May 1, 2018, JNF applied to register the mark THE HAPPIEST HOUR in standard characters on the Principal Register for “restaurant and bar services.” In its application, JNF claimed to have first used the mark anywhere and in commerce “at least as early as 10/00/2014.” The examining attorney assigned to JNF’s application issued an office action citing Harwood’s HAPPIEST HOUR registration as a bar to registration. JNF then amended its claimed date of first use to September 7, 2014. JNF subsequently filed a petition to cancel Harwood’s registration and further requested suspension of its application pending disposition of the cancellation proceeding. Harwood answered the petition and admitted that its registered mark HAPPIEST HOUR was cited as confusingly similar to JNF’s THE HAPPIEST HOUR application but denied that JNF had established prior rights to the mark.

The Board explained that for priority purposes, Harwood may rely on the filing date of the underlying application that matured into its involved registration. The Board further explained that JNF bears the burden of proving that its mark was “previously used in the United States,” before Harwood’s constructive filing date of October 6, 2014. The Board also noted that while a petitioner must ordinarily prove its priority entitlement by a preponderance of the evidence, in the circumstances of this case, the burden was heavier. Because JNF alleged a first use date of “at least as early as 10/00/2014” when it filed its application to register THE HAPPIEST HOUR, the date presumed for purposes of examination was the last day of the month, October 31, 2014—several weeks after Harwood’s constructive use date of October 6, 2014.

As the Board explained, although JNF subsequently amended its date of earliest use, that amendment came with a cost. The Board explained that where an applicant has stated an earliest use date under oath but then amends the oath and attempts to show an earlier date, the applicant is under a heavier burden of proof: clear and convincing evidence. Citing to Federal Circuit precedent, the Board further explained that the original allegation of first use date may be considered to have been made against interest at the time of filing. The Board found that this rationale applied with even greater force in the current situation because the alleged dates were very close to Harwood’s constructive use date and because JNF only [...]

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FDCA’s Exclusive Enforcement Provision Reigns Supreme over State Laws

by | Sep 29, 2022 |

In its first occasion to interpret § 353b of the Federal Food, Drug, and Cosmetic Act (FDCA), the US Court of Appeals for the Ninth Circuit relied on the “implied preemption doctrine” to affirm a district court’s case dismissal for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy Services, Inc., Case No. 20-56227 (9th Cir. Sept. 13, 2022) (Kleinfeld, Nelson, VanDyke, JJ.)

Nexus developed and trademarked Emerphed, a US Food & Drug Administration (FDA) approved ready-to-use ephedrine sulfate in a vial. Central Admixture operates a network of compounding pharmacies and sells ephedrine sulfate in ready-to-use syringes without FDA approval, because compounding pharmacies do not need FDA approval. Compounding happens when ingredients in medicines are combined, mixed and altered for individual patients. Under 21 U.S.C. § 353b, drug compounding by “outsourcing facilities” is allowed without FDA approval, but the FDCA excludes compounded drugs that are “essentially a copy of one or more approved drugs.”

The FDCA contains an exclusive enforcement provision prohibiting private enforcement, stating that proceedings to enforce or restrain violations of the FDCA, which includes the compounding statute, must be by and in the name of the United States. To avoid the FDCA’s bar on private enforcement, Nexus alleged that Central Admixture violated the laws of several states in which it sells Emerphed, all of which prohibit the sale of drugs not approved by the FDA. Nexus argued that Central Admixture’s ephedrine sulfate was “essentially a copy” of Emerphed and therefore was excluded from the outsourcing facilities exception. The district court disagreed and dismissed the state law claims under the implied preemption doctrine. The district court explained that all of Nexus’s claims depended on the determination of whether Central Admixture’s ephedrine sulphate was “essentially a copy” of Emerphed, and that the “plain text of the [FDCA] left that determination in the first instance to the FDA and its enforcement process.” Nexus appealed.

The Ninth Circuit explained that the Supremacy Clause of the US Constitution is the “source of preemption doctrine, which invalidates state laws that are contrary to federal statutes,” but noted that there is no clear sorting of case law and no rigid formula to determine when state law runs contrary to federal law. Therefore, the Court relied on several controlling cases regarding the statute governing FDA approval of medical devices, not drugs. Medical device cases are distinguishable because the medical device statute includes an express preemption clause prohibiting states from imposing any safety or effectiveness requirement different from or in addition to those imposed by federal law. In explaining these cases, the Court noted that the claims that were allowed to go forward did not rely on noncompliance with FDA requirements (as Nexus did), but rather on traditional tort law duties. The purported violation of a state law that substantively says “comply with the FDCA” is not a traditional common law tort. The Court also explained that these cases taught that despite a presumption against implied preemption, [...]

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