Dilution Archives - IP UPDATE

Well-Pleaded Factual Allegations Must Be Taken as True When Considering Motion to Dismiss

by Lois D. Mermelstein | Aug 29, 2024 | Trademarks

The US Court of Appeals for the Fifth Circuit, in dismissing a trademark infringement matter under Rule 12(b)(6) for failure to state a claim, ruled that a district court “erroneously assumed the veracity” of the defendants’ assertions over the “well-pleaded factual allegations” in the plaintiff’s complaint. Molzan v. Bellagreen Holdings, LLC, Case No. 23-20492 (5th Cir. Aug. 12, 2024) (Davis, Southwick, Duncan, JJ.)

In 2008, Houston-based chef Bruce Molzan and two partners began the first of what would become a group of five Ruggles Green restaurants. In 2016, as part of a sale of the restaurants, Molzan licensed his Ruggles Green trademarks to Bellagreen Holdings and related entities (collectively, Bellagreen) and transferred the rugglesgreen.com domain name to Bellagreen. Following the sale, Bellagreen changed the name of the restaurants from Ruggles Green to Bellagreen.

Molzan filed a complaint against Bellagreen alleging federal and state trademark infringement, false advertising, unfair competition, trademark dilution, breach of a 2018 settlement agreement in which Bellagreen agreed to cease using the Ruggles Green trademark, and unjust enrichment. Molzan alleged that he had been unable to substantially reduce the internet association of the Bellagreen restaurants with him or his Ruggles Green trademark, even after a Uniform Domain-Name Dispute-Resolution Policy (UDRP) proceeding (a private, binding arbitration proceeding to resolve domain name disputes) ruled in Molzan’s favor. Although Bellagreen deleted references to Ruggles Green from its websites, the “knowledge panels” for Bellagreen continued to cause confusion in Google searches and Google Map searches for Ruggles, Ruggles Green, and Ruggles Black, even after Molzan requested that Google correct the information. Searches for Ruggles on Google Maps and other online maps as well as Houston First Corporation’s website resulted in results for Bellagreen restaurants, something Molzan alleged would have happened only with the approval and direction of Bellagreen.

The district court granted Bellagreen’s motion under Rule 12(b)(6) for failure to state a claim and denied Molzan leave to file a second amended complaint. In granting Bellagreen’s motion to dismiss, the district court determined that Molzan did not allege any facts explaining why Bellagreen would have a connection to any of the third-party websites or their users. Molzan appealed.

The Fifth Circuit, reviewing the district court’s judgment de novo by accepting all well-pleaded facts as true and drawing all reasonable inferences in favor of the nonmoving party, reversed the dismissals of Molzan’s federal and state trademark infringement claims, Molzan’s federal and state false advertising and unfair competition claims, and state (but not federal) trademark dilution claim. Because Molzan’s unjust enrichment claim relied on his underlying trademark infringement and unfair competition claims, the Court reversed the dismissal of this claim as well. The Court vacated the district court’s Rule 12(b)(6) dismissal of additional defendants involved in the website design and internet promotion for Bellagreen because the district court erred in ruling on the merits of Molzan’s claims against them prior to ruling on personal jurisdiction. The Court also vacated the district court’s order denying Molzan leave to amend his complaint.

The Fifth Circuit [...]

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Unbranded Brandy: COGNAC Certification Mark Matters, Even in Hip-Hop

by Katherine Pappas | Aug 15, 2024 | Trademarks

The US Court of Appeals for the Federal Circuit vacated a ruling from the Trademark Trial & Appeal Board, disagreeing with the Board’s dismissal of Bureau National Interprofessionnel du Cognac’s opposition to a trademark application filed by Cologne & Cognac Entertainment related to a hip-hop record label. Bureau National Interprofessionnel Du Cognac v. Cologne & Cognac Entertainment, Case No. 23-1100 (Fed. Cir. Aug. 6, 2024) (Lourie, Clevenger, Hughes, JJ.)

The certification mark COGNAC is protected by two entities: the Bureau National Interprofessionnel du Cognac (the interprofessional union of all growers, producers and merchants of COGNAC spirits) and the Institut National des Appellations d’Origine (an administrative agency within the French government) (collectively, the opposers). Unlike a trademark that indicates a single source for a product, a certification mark is used by an entity other than the owner and is typically used to certify regional or other origin-related characteristics of the product (e.g., FLORIDA oranges, DARJEELING tea or GEORGIA peaches). The opposers are responsible for controlling and protecting the common law certification mark COGNAC for brandy manufactured in the Cognac region of France according to particular standards.

The applicant filed a trademark application in March 2019 seeking registration of a composite trademark for Cognac & Cologne Entertainment to be used for hip-hop music and production services.

The opposers opposed that trademark application, claiming priority and arguing both a likelihood of confusion with the COGNAC certification mark and that the applicant’s mark, by creating an association with the COGNAC mark, would likely cause dilution through blurring. In a split decision, the Board dismissed the opposition, finding no likelihood of consumer confusion and no likelihood of dilution. The opposers appealed.

For likelihood of confusion, the opposers argued and the Federal Circuit agreed that:

The Board applied the wrong legal standard for “fame,” and its finding that the COGNAC mark was not famous was not supported by substantial evidence.
The Board legally erred in analyzing similarities in the parties’ marks, and its allegedly inconsistent findings showed that its conclusion on similarity was not supported by substantial evidence.
The Board applied the wrong legal standard in evaluating the relatedness of goods, trade channels and consumers.

The Federal Circuit reviewed the Board’s decision, working through each issue in turn. First, the Court assessed likelihood of confusion, reviewing the Board’s ultimate legal conclusion de novo and underlying factual findings for substantial evidence. The Court analyzed the DuPont factors to assess whether a likelihood of confusion existed.

Fame: DuPont factor five assesses the fame of the prior mark, including sales, advertising and length of use. Fame is not binary, but instead is a spectrum from very strong (i.e., very famous) to very weak. More famous marks have more extensive public recognition and renown and accordingly are afforded a broad scope of protection. The Federal Circuit found multiple reversible errors in the Board’s fame analyses.

The Federal Circuit explained that the first Board error was its requirement [...]

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Déjà vu Decision on Likelihood of Confusion

by Amol Parikh | May 19, 2022 | Trademarks

The US Court of Appeals for the Fifth Circuit affirmed a district court’s dismissal of a trademark suit that was essentially identical to a previous lawsuit that was dismissed based on a finding of lack of confusion. Springboards to Education, Inc. v. Pharr San Juan Alamo Independent School District, Case No. 21-40336 (5th Cir. May 10, 2022) (Willett, Engelhardt, Wilson, JJ.)

Springboards sells products to school districts in connection with its “Read a Million Words Campaign.” The campaign builds excitement around reading by incentivizing school children to read books through promises of induction into the Millionaire’s Reading Club and access to rewards, such as t-shirts, backpacks and fake money. Springboards’ goods may typically bear any combination of trademarks that it registered with the US Patent & Trademark Office (PTO), including “Read a Million Words,” “Million Dollar Reader,” “Millionaire Reader” and “Millionaire’s Reading Club.”

Pharr San Juan Alamo (PSJA) is a public school district in Hidalgo County, Texas. Springboards sued PSJA in 2016 in federal court, alleging trademark infringement based on the school district’s use of “millionaire”-themed reading incentive programs allegedly “using products and services bearing marks and branding identical to or confusingly similar to Springboards’ marks.” While the case was pending, the Fifth Circuit issued its decision in Springboards to Education, Inc. v. Houston Independent School District, where it found that another public school district’s summer reading program did not infringe Springboards’ trademarks. Observing the parallels between the Houston case and the PSJA case, the district court granted PSJA’s motion for summary judgment that it did not infringe any of Springboards’ trademarks. Springboards appealed.

Calling it “déjà vu all over again,” the Fifth Circuit affirmed the district court’s finding that PSJA’s use of Springboards’ marks was not likely to cause confusion. The Court explained that distinguishing between Springboards’ catalog of “millionaire”-themed goods and unaffiliated “millionaire”-themed goods that other educational entities have elected to deploy is not difficult, and unique imprints on “millionaire”-themed reading challenges are widespread in the educational field. The Court noted that as in Houston, Springboards did not allege that PSJA itself is in the business of competing with Springboards by selling its own “millionaire”-themed products to the school districts that make up Springboards’ customer base. The Court thus concluded that PSJA’s use of a million-word reaching challenge did not confuse and was not intended to confuse the sophisticated school districts that Springboards targets with its marks.

Springboards tried to distinguish the Houston case by arguing that the Houston school district had one summer reading program whereas PSJA has had several year-long reading programs and that the requirements of PSJA’s reading program are identical—and not merely similar to—Springboards’ model program. Springboards also noted that its founder worked his entire career in Hildago County (where PSJA is located) and visited schools, teachers and administrators in the district—unlike Houston, which was over 300 miles away. The Court found that these facts did not move the needle, in light of its finding that sophisticated school district customers can [...]

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Knock It Off, Knockoffs? Ninth Circuit Affirms Trade Dress Rights but Not Fame

by Sarah Bro | Jul 9, 2020 | Trademarks

Taking on issues of functionality and fame relating to trade dress rights, the US Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the district court’s judgment after a jury trial on claims of infringement and dilution of trade dress rights in furniture. The Ninth Circuit distinguished utilitarian functionality from aesthetic functionality, and reaffirmed the high burden on the proponent of dilution to establish that the mark has become a “household name.” Blumenthal Distributing, Inc. DBA Office Star v. Herman Miller, Inc., Case Nos. 18-56471, -56493 (9th Cir. June 25, 2020) (Korman, J.).

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