False Advertising Archives

False Advertising

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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Personal Jurisdiction? Selling Products via Interactive Website Will Do It

by Cecilia Choy, Ph.D. and Hannah Hurley | Jul 13, 2023 | Trademarks

The US Court of Appeals for the Ninth Circuit reversed and remanded a district court’s dismissal for lack of personal jurisdiction, deciding that the sale of a product via an interactive website provides sufficient “minimum contacts” to support jurisdiction over a nonresident defendant in a state where the defendant causes the product to be delivered. Herbal Brands, Inc. v. Photoplaza, Inc., Case No. 21-17001 (9th Cir. July 5, 2023) (Graber, Clifton, Christen, JJ.)

Herbal Brands sells health, wellness, fitness and nutrition products directly to consumers and through authorized third-party retailers in Arizona. Photoplaza sold Herbal Brands products through two e-commerce storefronts without Herbal Brands’ permission. Herbal Brands sent three cease-and-desist letters, stating that Photoplaza’s sales harmed Herbal Brands in Arizona. Herbal Brands accused Photoplaza of trademark infringement and unfair competition under the Lanham Act, false advertising under the Lanham Act and tortious interference with contracts and business relationships under Arizona law. The district court granted Photoplaza’s motion to dismiss for lack of personal jurisdiction. Herbal Brands appealed.

The Ninth Circuit noted that Photoplaza failed to submit any evidence to contradict the jurisdictional allegations in the complaint. The Court found that under its three-part test, Photoplaza had sufficient minimum contacts with Arizona to warrant personal jurisdiction:

Photoplaza purposefully directed its activities at the forum.
Herbal Brands’ harm arose out of Photoplaza’s contacts with Arizona.
Exercise of jurisdiction over Photoplaza would be reasonable.

The second and third prongs of the Ninth Circuit’s test were easily resolved. Herbal Brands’ claimed harm rose out of and related to Photoplaza’s conduct of selling the products to Arizona residents. The Court referred to its 2004 holding in Schwarzenegger regarding a plaintiff’s burden to establish jurisdiction, whereupon the burden shifts to the defendants under the seven-factor balancing test of Freestream Aircraft (2018). The Court found that Photoplaza did not meet its burden to present a compelling case that exercising jurisdiction would be unreasonable.

The bulk of the Ninth Circuit’s decision focused on the first prong (purposeful availment), which applies when “a case sounds in tort,” such as claims of trademark infringement, false advertising and tortious interference with business relationships, each of which requires an intentional tortious or “tort-like” act. Referring to the effects test from the 1984 Supreme Court decision in Calder v. Jones, the Ninth Circuit explained that Photoplaza purposefully directed its activities toward the forum if it (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that Photoplaza knew was likely to be suffered in the forum state. Related to the Calder test’s first and third prongs, Photoplaza’s product sales to Arizona residents were intentional acts, and the cease-and-desist letters informed Photoplaza that its actions caused harm in Arizona.

Regarding the “express aiming” prong, the Ninth Circuit explained that when a website itself is the only jurisdictional contact, the analysis turns on whether the site had a forum-specific focus or whether the defendant exhibited an intent to cultivate an audience in the forum. The Court explained that [...]

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False Advertising: Verifiably False Versus Subjective Opinion

by Tim Dunker | Jun 22, 2023 | Trademarks

In a case originally based on a false advertising claim under § 43(a) of the Lanham Act, the US Court of Appeals for the Ninth Circuit affirmed in part, reversed in part and remanded the district court’s dismissal of the claim. The Ninth Circuit concluded that the defendant’s description of a competitor’s software product was plausibly alleged as an element of false advertising. Enigma Software Group USA, LLC v. Malwarebytes, Inc., Case No. 21-16466 (9th Cir. June 2, 2023) (Clifton, Bumatay, Baker, JJ.) (Baker, J., concurring) (Bumatay, J., dissenting).

Enigma is a security software company whose products detect and remove malicious software such as viruses, spyware, adware and ransomware. Malwarebytes is a direct competitor of Enigma and sells products aimed at detecting and removing malware and other potentially threatening programs on users’ computers. Enigma originally brought this action in the US District Court for the Southern District of New York, but the case was moved to the Northern District of California on a motion to transfer filed by Malwarebytes. The California court ruled that Enigma’s claims were barred by § 230 of the Communications Decency Act, a ruling that the Ninth Circuit reversed, holding that § 230 did not apply to “blocking and filtering decisions that [we]re driven by anticompetitive animus.” The Ninth Circuit remanded the case.

On remand, Enigma asserted four causes of action:

False advertising in violation of the Lanham Act
Violation of New York General Business Law (NYGBL) § 349, which prohibits deceptive and unlawful business practices
Tortious interference with contractual relations
Tortious interference with business relations.

On Malwarebytes’s motion to dismiss for failure to state a claim, the district court found that (for the Lanham Act claim) Enigma’s allegation that Malwarebytes’s designations were “just [nonactionable] subjective opinions” rather than “verifiably false.” On appeal, Enigma argued that designations of its products as malicious, threats and potentially unwanted programs were factually false and misrepresented the very purpose of the software.

To state a claim for false advertising under § 43(a) of the Lanham Act, Enigma had to plausibly allege the following:

Malwarebytes made a false statement of fact in a commercial advertisement.
The statement deceived or had the tendency to deceive a substantial segment of its audience.
The deception was material, in that it was likely to influence the purchasing decision.
The false statement entered interstate commerce.
Enigma was or was likely to be injured as a result.

To show falsity, Enigma had to allege that the statement was literally false, either on its face or by necessary implication, or that the statement was literally true but likely to mislead or confuse consumers.

The Ninth Circuit found that, taken as true at the motions stage, Enigma’s allegations were sufficient to state a Lanham Act claim because Malwarebytes’s designations employed terminology that was substantively meaningful and verifiable in the cybersecurity context. While terms such as “malicious” and “threatening” are adjectives subject to numerous interpretations, the Court found that in the context of software competitors, a [...]

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Electra Powers Second Circuit’s False Endorsement Analysis

by Nitya Anand | Jun 8, 2023 | Trademarks

Following on the heels of its 2021 decision in Electra v. 59 Murray, the US Court of Appeals for the Second Circuit affirmed the summary judgment denial of a Lanham Act claim related to false endorsement premised upon the unauthorized use of photographs in connection with promotional materials. Souza et. al. v. Exotic Island Enterprs., Inc., Case No. 21-2149 (2d Cir. May 19, 2023) (Lynch, Nardini, Menashi, JJ.) The Second Circuit also affirmed the district court’s summary judgment denial of Lanham Act false advertising and New York state right of publicity claims.

The operator of a gentlemen’s club used photographs of current and former professional models in social media posts promoting the club. The photographs were obtained without the models’ permission through a third-party vendor. The models sued the club operator asserting false endorsement, false advertising and right of publicity violations. The parties filed dueling summary judgment motions in February 2021. During the pendency of those motions, the Second Circuit decided Electra, a case involving overlapping plaintiffs suing on several of the same causes of action based on highly similar fact patterns. The district court subsequently granted the club operator’s motion for summary judgment and denied the models’ motion. The models appealed.

The Second Circuit relied heavily on its Electra decision to affirm the district court’s denial of the models’ false endorsement claim. To prevail on a false endorsement claim under Section 43 of the Lanham Act, the models were required to prove that there was a likelihood of confusion between their goods or services and those of the club operator. Likelihood of consumer confusion is evaluated using the eight Polaroid factors:

Strength of the trademark
Similarity of the marks
Proximity of the products and their competitiveness with one another
Evidence that the senior user may bridge the gap by developing a product for sale in the market of the alleged infringer’s product
Evidence of actual consumer confusion
Evidence that the imitative mark was adopted in bad faith
Respective quality of the products
Sophistication of consumers in the relevant market.

First, the models argued that the district court oversimplified the “strength of the mark” analysis (factor 1) to focus only on the recognizability of the mark. The Second Circuit disagreed, explaining that not only was Electra’s focus on recognizability binding precedent but also, that factor was required to be evaluated in the context of the mark’s strength in the false endorsement context (i.e., as a function of the extent to which the endorser’s identity could be linked with the product being sold). In other words, without an adequate showing that the models were recognized in the social media posts promoting the club, there could be no case of endorsement, let alone false endorsement.

Second, the models challenged the district court’s exclusion of their expert testimony on certain Polaroid factors. The district court excluded surveys conducted by the models’ expert as unreliable because they suffered from various methodological flaws and, therefore, did not provide a reliable [...]

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Veil Piercing Under Lanham Act Requires Specific Showing of Liability

by Sarah J. Fischer | Aug 18, 2022 | Trademarks

The US Court of Appeals for the Eleventh Circuit reversed a district court decision granting summary judgment of liability under the Langham Act, finding that the plaintiffs failed to apply the correct standards for piercing the corporate veil and individual liability in a false advertising and false endorsement dispute. Edmondson et al. v. Velvet Lifestyles, LLC, Case No. 20-11315 (11th Cir. Aug. 4, 2022) (Jordan, Pryor, Marcus, JJ.)

Miami Velvet operated as a swingers’ nightclub in Miami, Florida. Miami Velvet was owned, operated and managed by Velvet Lifestyles, LLC. Joy Dorfman was the president, manager and a salaried employee of Velvet Lifestyles. My Three Yorkies, LLC, was the managing member of Velvet Lifestyles, and Dorfman was, in turn, the managing member of Yorkies. She was also the president of Yorkies and received the management fees that Velvet Lifestyles paid Yorkies. Approximately 30 individuals sued Velvet Lifestyles, My Three Yorkies and Dorfman for false advertising and false endorsement under the Lanham Act. The individuals alleged that Velvet Lifestyles, My Three Yorkies and Dorfman used the individuals’ images in advertisements without their consent, without any compensation and in such a way that implied they were affiliated with and endorsed Miami Velvet.

The district court granted the plaintiffs’ motion for summary judgment, finding that Velvet Lifestyles, My Three Yorkies and Dorfman’s use of the plaintiffs’ images constituted false advertising and false endorsement. The plaintiffs’ motion treated all three defendants as effectively a single entity, and the district court made no finding that either My Three Yorkies or Dorfman had any direct involvement in the advertising. The district court did not apply the individual liability standard to Dorfman and instead treated all three defendants as a single entity as the plaintiffs’ motion had done. A jury awarded damages at trial. After post-trial motion practice, My Three Yorkies and Dorfman appealed.

The plaintiffs argued on appeal that My Three Yorkies and Dorfman had not properly preserved these issues for review on appeal. The Eleventh Circuit rejected the plaintiff’s argument, finding that because the plaintiffs did not properly plead the standards for piercing the corporate veil and individual liability, My Three Yorkies and Dorfman were not obligated to raise or respond to those issues and, therefore, any procedural failures on their part were inconsequential.

Turning to the merits, the Eleventh Circuit reversed the finding of liability on summary judgment. The Court explained that in order for My Three Yorkies to be liable for the actions of Velvet Lifestyles, the plaintiffs had to show that My Three Yorkies was directly involved in the violation of the Lanham Act. The Court found that the plaintiffs failed to show that My Three Yorkies took any action regarding the management of the club or the advertisement in question, and that therefore the plaintiffs had failed to establish that the corporate veil should be pierced. The Court further explained that in order for Dorfman to be liable as an individual, the plaintiffs had to show that she actively participated as the [...]

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No Harm, No Foul: No False Advertisement Where Trade Association Failed to Show Injury

by Tessa Kroll | Jun 30, 2022 | Trademarks

The US Court of Appeals for the Tenth Circuit affirmed a district court’s grant of summary judgment in favor of a home inspector association on a false advertising claim brought by a competitor, finding no evidence of injury or harm and explaining that harm could not be presumed merely from the fact that the parties compete for members. Am. Soc’y of Home Inspectors, Inc. v. Int’l Ass’n of Certified Home Inspectors, Case No. 21-1087 (10th Cir. June 14, 2022) (Tymkovich, C.J.; Carson, Rossman, JJ.)

The International Association for Certified Home Inspectors (InterNACHI) and the American Society of Home Inspectors (ASHI) are competing national organizations that offer memberships with benefits such as advertising, online education and logo design to independent home inspectors. InterNACHI brought a false advertisement claim under the Lanham Act against ASHI, its sole national competitor, for featuring the slogan “American Society of Home Inspectors. Educated. Tested. Verified. Certified.” on its website. InterNACHI alleged that ASHI’s tagline was misleading because ASHI’s membership includes “novice” inspectors who are not trained or certified. These “novice” inspectors are promoted on ASHI’s online “find-an-inspector” tool, where home buyers can find a local inspector and view their contact information, qualifications and membership level (associate, inspector or certified inspector). According to InterNACHI, ASHI’s misleading slogan coupled with its public promotion of novice members as inspectors caused InterNACHI to lose potential members. The parties filed cross motions for summary judgment. The district court granted summary judgment in favor of ASHI, concluding that InterNACHI failed to show that it was injured by the tagline as required under the Lanham Act. InterNACHI appealed.

InterNACHI argued that the district court incorrectly concluded that no reasonable jury could find that InterNACHI was harmed by the slogan and improperly refused to presume harm from the parties’ relationship as direct competitors. The Tenth Circuit disagreed, explaining that a plaintiff claiming false advertising under the Lanham Act must plead “an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” In support of its claim, InterNACHI offered the following:

A survey showing that consumers may be deceived by the slogan
Data showing an increase in ASHI associate membership following implementation of the slogan
A declaration by InterNACHI’s founder attesting to the harm caused to InterNACHI as a result of ASHI’s slogan.

The Tenth Circuit reasoned that consumer confusion does not bear on whether home inspectors are more likely to join ASHI instead of InterNACHI because of the slogan. The Court also declined to infer harm from ASHI’s increase in associate membership, which was likely attributable to other factors, such as the institution of reduced student membership fees or the closure of another national association for home inspectors around the time the slogan was introduced. The Court further noted that inspectors can join both organizations and that InterNACHI had not shown that its own membership levels decreased because of ASHI’s slogan. With respect to the declaration by InterNACHI’s founder that “use of th[e] slogan in connection [...]

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Half-Baked Case: No Misappropriation or False Advertising Given Over-Broad Allegations

by Paul Devinsky | Mar 31, 2022 | Trade Secrets, Trademarks

The US Court of Appeals for the Tenth Circuit affirmed a district court’s grant of summary judgment in favor of a defendant baker on a trade dress infringement claim and reversed the district court’s denial of the defendant baker’s motions for judgment as a matter of law on trade secrets misappropriation and false advertising claims. Bimbo Bakeries USA, Inc. v. Sycamore, Case Nos. 18-4062; -4031; -4040 (10th Cir. Mar. 18, 2022) (Hartz, Phillips, Eid, JJ.)

Bimbo Bakeries (and its predecessor, EarthGrains Baking Companies) owns, bakes and sells Grandma Sycamore’s Home-Maid Bread, a popular bread in Utah. U.S. Bakery is a competitor, and Leland Sycamore is the baker who developed the Grandma Sycamore’s recipe. Sycamore parted with his interest in Grandma Sycamore’s and opened his own bakery, Wild Grains Bakery. U.S. Bakery hired Wild Grains Bakery to produce another homemade bread product, Grandma Emilie’s. The relationship soured, and U.S. Bakery moved its Grandma Emilie’s operations in-house. U.S. Bakery developed a new formula for Grandma Emilie’s and enlisted a former Wild Grain employee to help. U.S. Bakery also created packaging for the bread based on Grandma Sycamore’s packaging. U.S. Bakery used several taglines to help sell its products, including “Fresh. Local. Quality.”

Bimbo Bakeries (then EarthGrains) sued Leland Sycamore, Tyler Sycamore (Leland’s son and co-baker), Wild Grains Bakery and U.S. Bakery, alleging multiple claims related to the Grandma Emilie’s operations, including trade secret misappropriation under the Utah Uniform Trade Secrets Act and trade dress infringement, trade dress dilution, false designation of origin, false advertising and unfair competition under the Lanham Act. Bimbo Bakeries alleged that U.S. Bakery’s use of the word “local” in the tagline “Fresh. Local. Quality.” constituted false or misleading advertising because U.S. Bakery did not actually bake all its bread products within the state of sale. The district court granted summary judgment in favor of U.S. Bakery on the trade dress infringement claim. The parties went to trial on the trade secrets misappropriation and false advertising claims. The jury ruled in Bimbo Bakeries’ favor on both and awarded more than $2 million in damages. The district court increased the damages owed by U.S. Bakery by almost $800,000 because U.S. Bakery was found to have willfully and maliciously misappropriated Bimbo Bakeries’ trade secret. The district court remitted the jury’s damages for the false advertising claim to around $83,000. The district court also permanently enjoined U.S. Bakery and Sycamore from using Bimbo Bakeries’ trade secret and denied renewed motions by U.S. Bakery and Sycamore for judgment as a matter of law for the trade secrets misappropriation and false advertising claims.

Bimbo Bakeries, U.S. Bakery and Sycamore appealed. Bimbo Bakeries argued that the district court should not have granted U.S. Bakery summary judgment on its trade dress infringement claim and should not have remitted damages for the false advertising claim. U.S. Bakery and Sycamore argued that the district court should have granted their renewed motions for judgment as a matter of law for the trade secrets misappropriation and false advertising claims.

On [...]

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Initial Confusion? Relax, Eighth Circuit Has Your Number

by Paul Devinsky | May 20, 2021 | Trademarks

Addressing a novel issue regarding when confusion must occur for it to be actionable, the US Court of Appeals for the Eighth Circuit concluded that initial-interest confusion was a viable infringement theory. Select Comfort Corp. v. Baxter, Case No. 19-1113 (8th Cir. May 11, 2021) (Melloy, J.)

Select Comfort owns registered trademarks, including “SELECT COMFORT,” “SLEEP NUMBER” and “WHAT’S YOUR SLEEP NUMBER,” for adjustable air mattresses, which it sells online and in stores across the United States. Baxter sells competing air mattresses online and through a call center. Select Comfort brought a suit asserting trademark infringement, trademark dilution and false advertising theories against Baxter. Select Comfort alleged that Baxter used Select Comfort’s registered trademarks in an identical or confusingly similar manner to advertise Baxter’s mattresses and divert consumers to its website and phone lines instead of Select Comfort’s. Select Comfort also alleged that Baxter made false representations about its products and failed to dispel consumer confusion about the products. At trial, Select Comfort pointed to similar terms in Baxter’s online advertising text, graphics and domain addresses, in addition to examples of actual confusion about the products in Baxter’s call-center transcripts.

Earlier in the case, in connection with summary judgment, the district court found that the relevant consumers were sophisticated as a matter of law, and, citing Eight Circuit precedent, rejected application of a theory of initial-interest confusion. The district court instead instructed the jury that in order to prevail on its trademark infringement claim, Select Comfort had to prove likelihood of confusion at the time of purchase. Based on this limiting instruction, the jury rejected Select Comfort’s trademark infringement claims. Select Comfort appealed.

The Eighth Circuit reversed. The Court explained that the district court erred on the availability of an initial-interest confusion as an infringement theory. For trademark infringement claims, the likelihood of confusion test is a fact-intensive inquiry with many factors. However, circuit courts have not definitively agreed on when confusion must exist. Must confusion occur only at the time of ultimate purchase, or can it also exist during pre-sale? The theory of initial-interest confusion involves the latter scenario, namely, when confusion about a product’s ownership causes a customer to have initial interest in the product, even if there is no actual sale at the time of the confusion. Actionable initial infringement protects competitors from getting a free ride on the goodwill of an established mark if a consumer falsely infers an affiliation between the companies.

In the precedential 2010 Eighth Circuit case Sensient Techs. v. Sensory Effects Flavor, the Court neither rejected nor adopted the initial-interest/pre-sale confusion theory. Instead, it merely found that the theory did not apply where consumers were sophisticated (i.e., where they exercise a high degree of care in purchasing products, a factor weighing against likelihood of confusion). Here, influenced by Lanham Act amendments and other circuit courts, the Court addressed the issue previously left open: whether the initial-interest confusion may be actionable in the Eighth Circuit in cases where the jury is left to [...]

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Fairness Is the Limit for Asserting False Advertising Claims

by Christopher M. Bruno | Feb 11, 2021 | Trademarks

Addressing whether Lanham Act claims for false advertising or false association under § 43(a) (15 USC § 1125(a)) are subject to a statute of limitations, the US Court of Appeals for the Fourth Circuit concluded that the sole time limit on bringing such claims is the equitable doctrine of laches. Belmora LLC v. Bayer Consumer Care AG, Case No. 18-2183 (4th Cir. Feb. 2, 2021) (Floyd, J.)

The facts of the underlying dispute are straightforward. Bayer has sold the pain reliever naproxen as FLANAX in Mexico since 1972 and in the United States as ALEVE. Belmora began selling naproxen under the name FLANAX in the United States in 2004, where it used similar packaging and described the drug as one sold successfully in Mexico. Both companies tried to register the mark with the US Patent & Trademark Office, where proceedings unfolded. Ultimately, in April 2014, the Trademark Trial and Appeal Board cancelled Belmora’s trademark registration, finding that Belmora had blatantly misused FLANAX by drawing on the popularity of Bayer’s Mexican product. Two months later, Bayer brought claims against Belmora under § 43(a) of the Lanham Act and California unfair competition law in the US District Court for the Central District of California. The suit was transferred to the Eastern District of Virginia, where Belmora moved to dismiss, arguing that § 43(a) and state law claims were barred by the statute of limitations. Bayer replied that § 43(a) had no statute of limitations, and that the time to bring the state law claims had been tolled during the Board’s proceedings. The district court granted both of Belmora’s motions, and the appeal followed.

Because there is no express statute of limitations for a § 43(a) claim, the question before the Court was whether to assume that Congress intended that the most analogous state law statute of limitations apply, or to apply either the most analogous federal statute or common law laches doctrine. “Conclud[ing] that § 43(a) is one such federal law for which a state statute of limitations would be an unsatisfactory vehicle for enforcement,” the Court held that laches was more appropriate, for primarily two reasons. First, the statutory text provides that § 43(a) damages are subject to the principles of equity, which would include the doctrine of laches. Second, the Court found persuasive the law of the Third, Seventh and Ninth Circuits, which each apply laches as to restrict the timeliness of as § 43(a) action. That said, the Court emphasized that on remand, the district court should consider the period for bringing a similar state action as part of the laches analysis, especially because the Fourth Circuit employs a presumption that claims brought after the expiration of the most-analogous statute-of-limitations are barred by laches.

The Court noted that Bayer could overcome a presumption of laches, and cited three factors for the district court to consider:

Bayer’s knowledge (or lack thereof) of Belmora’s adverse use
Whether Bayer’s delay was inexcusable or unreasonable
Whether Belmora had been unduly prejudiced by [...]

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Sticky Situation? Circumstantial Evidence Can Support Intent to Confuse in Trade Dress Claims

by Paul Devinsky | Nov 4, 2020 | Trademarks

The US Court of Appeals for the 11th Circuit reversed a district court’s grant of summary judgment for the defendant on trade dress infringement and trade dress dilution claims, finding that evidence relating to the likelihood of confusion was not viewed in the light most favorable to the plaintiff. However, the Court affirmed the grant of summary judgment for the defendant on the plaintiff’s false advertising claims because the allegedly deceptive advertising was not material to consumer purchasing decisions. J-B Weld Co., LLC v. Gorilla Glue Co., Case No. 18-14975 (11th Cir. Oct. 20, 2020) (Tjoflat, J.) (Carnes, J., concurring).

J-B Weld and Gorilla Glue are competitors specializing in heavy-duty adhesive products. Gorilla Glue introduced an adhesive under the brand name GorillaWeld that mimicked the packaging of a J-B Weld product. Gorilla Glue advertised GorillaWeld as a steel bond epoxy based on the strength of the bond and its similarity to an epoxy-group polymer, even though the product was not a chemical epoxy and did not contain any steel. J-B Weld sued, alleging trade dress infringement based on the Lanham Act and Georgia law, trade dress dilution based on Georgia law, and false advertising under the Lanham Act. The district court granted Gorilla Glue summary judgment on all claims, finding no trade dress infringement or dilution based on insufficient evidence of likelihood of confusion, and no false advertising because the evidence did not demonstrate that Gorilla Glue’s steel bond epoxy claim was material to consumer purchasing decisions. J-B Weld appealed, arguing that the district court did not properly view the evidence in the light most favorable to J-B Weld.

The 11th Circuit reversed on the trade dress infringement and dilution claims and affirmed on the false advertising claim. On the trade dress infringement claims, the 11th Circuit found that the district court did not view the evidence in the light most favorable to J-B Weld in analyzing the likelihood of confusion between the respective trade dress of J-B Weld and GorillaWeld, as required in the context of summary judgment. The 11th Circuit found that the district court did not properly credit evidence relevant to the similarity of the designs, Gorilla Glue’s intent and instances of actual confusion. For example, despite multiple similarities between the J-B Weld and GorillaWeld packages (including a V-shape tube arrangement and the use, emphasis and location of certain text), the district court found that the presence of the Gorilla Glue logo, brand name and color scheme negated a finding of similarity. The 11th Circuit deemed this finding error in the context of summary judgment. The Court also determined that communications from Gorilla Glue’s packaging design team that repeatedly referenced J-B Weld’s packaging and expressed a desire to use similar elements (including a communication in which a Gorilla Glue employee referred to the GorillaWeld design as a “knock off”) were improperly ascribed to innocuous motives based on self-serving testimony from a Gorilla Glue employee. As the Court explained, summary judgment required drawing all inferences in the light [...]

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