Seen in Cambridge

Is this really a Pop Tart?

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The trademark part of ASTM v. PublicResource.org

American Soc. for Testing & Materials v.
Public.Resource.Org, Inc., No. 13-cv-1215 (D.D.C. Feb. 2, 2017)
The copyrightability/fair use issues are serious and
arguable here, but I’m going to focus on the trademark analysis, because unlike
the copyright analysis it’s incoherently wrong.  Public Resource made copies of ASTM standards
incorporated into various laws.  ASTM
sued for copyright infringement and trademark infringement; the court granted
summary judgment to ASTM on both claims.
PR argued that posting the standards infringed PR’s
trademark. The court thought Dastar
didn’t bar this because there was an “independent” basis for the infringement
claim: “Defendant distributed standards online bearing Plaintiffs’ registered
trademarks and logos,” confusing people as to the origin of the copies.  But that doesn’t work.  Compare the Slep-Tone cases in the 7th and 9th Circuits:
you can’t get around Dastar by
incorporating a trademark into your copyrighted work, because that would create
a perpetual copyright over the unmutilated work. The presence of the Universal
“roaring lion” at the beginning of a movie cannot keep Universal movies out of
the public domain; likewise, ASTM’s trademark interest in its name and logo cannot
prevent it from being correctly identified as the producer of a work on which it uses that name and logo.  (Also, depending on the circuit, mere
distribution on the internet might not be “use in commerce,” contrary to the
court’s conclusion here.) 
The court also rejected PR’s first sale argument because
these were copies, and “Defendant’s quality control standards in reproducing
Plaintiffs’ standards were outside of Plaintiffs’ control and below that
sufficient to deem the standards it distributed ‘genuine.’”  ASTM didn’t have to show a defect in the
copies, only that it couldn’t exercise quality control.  PR’s quality control “resulted in missing or
inverted pages and typographical errors in numerical values or formulas.”
Then, the court found confusion likely on the theories that
(1) ASTM authorized PR’s posting, and (2) ASTM produced the PDF and HTML
versions of the standards PR posted.  PR
argued that, under Prestonettes, Inc. v. Coty, 264 U.S. 359 (1924), its
disclaimer was enough to inform consumers that it repackaged or changed the
original.  But “the disclaimer in that
case stated clearly that the distributor was not connected with the producer
and that the producer’s product was merely a constituent part of the
distributor’s new product,” whereas PR’s initial disclaimer was:
In order to promote public
education and public safety, equal justice for all, a better informed
citizenry, the rule of law, world trade and world peace, this legal document is
hereby made available on a noncommercial basis, as it is the right of all
humans to know and speak the laws that govern them.
The court found that this didn’t mention PR’s creation of
the reproductions, PR’s lack of authorization, that the reproductions were reproductions (what else would they
be?), “and can hardly be called disclaimers at all.”  Even if the PDFs looked like scans, that
wouldn’t help a consumer determine whether PR or ASTM created the scan.  (Why on earth would they care?)  PR’s later disclaimer was instituted after
the litigation began and the court didn’t analyze whether it would avoid
confusion.
Although there was no evidence of actual confusion, the
court found this “nearly as black-and-white a case as possible” because PR “intentionally
created a copy that is meant to appear identical, including use of Plaintiffs’
trademarks.” A consumer might download that standard for free from PR “without
knowing that it is not created by the Plaintiffs and may contain missing pages
or typographical errors leading to inaccurate values for measurements.”  And here’s the problem: that “it.”  What is the “it” at issue?   The
court clearly cares about the similarity of the content, not the source
identification, but trademark law is not about content, and Dastar should make it impossible to
argue that trademark infringement occurs merely from correctly copying content.

The court then rejected PR’s nominative fair use defense by taking a “one from
column A, one from column B” approach to the different circuits’ tests.  It started with the 9th Circuit
version, requiring PR to show “that its use of Plaintiffs’ trademarks was
necessary to describe their standards; that it only used as much of the marks
as was reasonably necessary to identify the standards; and that it has not done
anything to suggest sponsorship or endorsement by the Plaintiffs or to
inaccurately describe the relationship between the parties’ products.”  (citing  Rosetta Stone Ltd. v. Google, Inc., 676 F.3d
144, 154 (4th Cir. 2012)). But then: “Nominative fair use by a defendant makes
it ‘clear to consumers that the plaintiff, not the defendant, is the source of
the trademarked product or service’” (citing Century 21 Real Estate Corp. v.
Lendingtree, Inc., 425 F.3d 211, 220 (3d Cir. 2005)), a case that adopts a
different version of the test).  

And finally, “if Defendant’s use is nominative fair use, it
would not create ‘confusion about the source of [the] defendant’s product’”
(citing Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 102 (2d Cir. 2010)
(alteration in original), a case that doesn’t actually apply any particular
test, just announces a conclusion that means that nominative fair use isn’t a defense
or a separate test: You don’t
need a defense if your use doesn’t cause confusion; outside of the Second
Circuit the nominative fair use test therefore substitutes
for the usual confusion factors, because those factors work really badly in
cases of referential use (e.g., similarity of the marks will always be
identical if there’s a reference).  Just
to confirm that the court isn’t treating nominative fair use as a defense, it
concludes “because the court has
already determined that consumer confusion as to the source of the trademarked
standards is likely, the nominative fair use defense is inapplicable and the
court need not assess each of the Rosetta
Stone
factors” (emphasis added)  That
is, of course, exactly why nominative fair uses need to be treated differently.  Even in the Second Circuit version, there’s a need to consider the nominative fair use elements along with the other factors!

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GM’s defeat device is almost by definition fraudulent omission

Counts v. General Motors, LLC, No. 16-cv-12541, 2017 WL
588457 (E.D. Mich. Feb. 14, 2017)
Plaintiffs sued GM for deceptive advertising, breach of
contract, and fraudulent concealment claims under the laws of thirty states based
on GM’s alleged installation of a “defeat device” in the 2014 Chevrolet Cruze
Diesel, which results in significantly higher emissions when the vehicle is in
use compared to when it is being tested in laboratory conditions.  The court declined to apply the primary
jurisdiction doctrine or find the claims preempted by the Clean Air Act, but
did give GM some victories.
GM argued that the plaintiffs lacked Article III standing
because they didn’t allege a concrete and particularized injury and because
they brought claims arising under the law of states where none of the named plaintiffs
reside or bought their vehicle.  GM
characterized their claims as arising from alleged environmental harms and
violation of government standards, but plaintiffs alleged a standard
overpayment theory: if they’d known the truth about the defeat devices/the
actual emissions levels, they wouldn’t have bought the supposedly “clean diesel”
vehicles or would have paid less for them, especially given that GM charged
more for the diesel model than a comparable gas model.  GM argued that this higher price came from the
increased power and fuel efficiency that diesel engines feature.  The court agreed with the plaintiffs.
Plaintiffs plausibly pled deceptive behavior.  The complaint detailed “numerous studies and
reports from European authorities finding that GM vehicles are noncompliant
with European emission regulations, despite meeting those regulations when
tested in laboratory settings.” It also alleged that plaintiffs’ own tests of a
Cruze found that emissions were significantly higher than represented. Though
plaintiffs did not specifically allege that the Cruze they tested was the 2014
diesel model, they plausibly alleged that GM’s vehicles share common designs,
including engines; “common sense compels the conclusion that GM does not start
anew each time it designs a vehicle.”
Nor did plaintiffs have to show reliance to show Article III
standing:
The clean diesel features of the
Cruze were an important component of the vehicle, as evidenced by GM’s
advertising campaign which featured the clean diesel system. That system
elevated the apparent value of the vehicle. Even if Plaintiffs did not
specifically choose the Cruze because of its clean diesel system, they paid
more for the vehicle because it included the system. If the system did not
actually provide any value to the vehicle, then Plaintiffs suffered financial
injury through overpayment regardless of whether they relied on GM’s alleged
misrepresentations.
Turning to the fraudulent concealment claims, they had to be
pled with particularity, even though they were omission-based.  However, particularity demands different
things in different contexts.  “If a
plaintiff’s theory for relief involves a failure to act, then requiring the
plaintiff to specifically identify the point in time when the defendant should
have acted may be unduly burdensome. … [T]he difficulty of obtaining proprietary
GM information or pinpointing the point in time when a fraudulent omission
occurred will be taken into account.”
Here, the complaint sufficiently alleged with particularity
facts showing that GM fraudulently concealed or misrepresented that the functionality
and effectiveness of the Cruze’s “clean diesel” system was substantially lower
than a reasonable customer would expect, given the representations made in GM’s
advertising campaign. Further, where omissions are at issue, showing reliance
means showing that the facts deliberately withheld would be material to a
reasonable consumer.
GM argued that the ad claims plaintiffs cited were mere
puffery.  The more general a statement
is, the more likely it is to be puffery. But numbers alone aren’t enough, if
they’re still not believable.  GM’s
statements about the “high-quality” and “safety” of its vehicles were
inherently subjective and couldn’t form the basis of a fraud action, nor could
“Turbocharged Clean Diesel” nor statements regarding cleanliness, “more
efficient combustion,” and improved “performance.”  
Indeed, even claiming that the “turbocharged engine in Cruze
Clean Turbo Diesel [sic] generates at least 90% less nitrogen oxide and
particulate emissions when compared to previous-generation diesels” and that
“Cruze Diesel emissions are below strict U.S. environmental standards” was
nonactionable, because it wasn’t quantifiable by itself.  The purported comparison to
previous-generation diesels wasn’t specific enough—did it mean past GM diesel
vehicles, all diesel vehicles, or all diesel vehicles from before a certain
date?  [This is ridiculous
nitpicking.  A reasonable consumer might
not have formed an opinion about the exact meaning, but could reasonably
presume that there was a generally understood industry meaning, especially in
combination with percentages and specific named pollutants.]  The court seemed to think it was important
that no competitor was named (even though identifying a competitor is exactly
when we might be able to rely on competitor suits to backstop consumer suits),
nor was there a specific assertion that the claim was based on testing.  “One might argue that some type of testing is
implicitly assumed by the language [indeed one might!], but the advertisement’s
level of generality further supports a finding of puffery.”  The court thought it would be hard to prove
the falsity of this claim, because the complaint included no data about the
level at which “previous-general diesels,” however defined, produced emissions.
And the Cruze might simultaneously
produce more emissions than expected when being driven and still produce, in
total, 90% less emissions than previous-generation diesels.
The final affirmative representation at issue was that
“Cruze Diesel emissions are below strict U.S. environmental standards.” But a
lawsuit against GM for producing a vehicle that produces emissions in
noncompliance with EPA regulations would be preempted by the CAA.

On the other hand, fraudulent concealment, instead of
affirmative misrepresentations, was adequately alleged.  A duty to disclose can arise under the laws
of some states where there’s exclusive knowledge of a defect or active
concealment of that defect.  The very
nature of the “defeat device” suggests active concealment: “The only plausible
purpose of such a device is to create the appearance of low emissions without
the reality of low emissions,” and GM couldn’t reasonably argue that plaintiffs
could have found out about it before buying. 
Both common-law and statutory consumer protection claims based on
omissions thus survived.

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claims about others’ patent infringement can be factual, commercial speech subject to Lanham Act

Global Tech Led, LLC v. HiLumz International Corp., 2017 WL
588669, No. 15–cv–553 (M.D. Fla. Feb. 14, 2017)
The parties, former business partners, now compete in the
retrofit LED lighting industry. Global Tech sued defendants for patent
infringement. HiLumz counterclaimed for false advertising/trade libel under
federal and state law based on statements such as one that Global Tech “received
a permanent injunction, rendering account and damages based on its
newly-granted patent against HiLumz USA for infringement of its US patent” and
accusing defendants of “stealing” and “copying” Global Tech’s product ideas.  Someone from Global Tech warned HiLumz
distributors attending the 2015 World Energy Engineering Congress to “be
careful what products you sell” and said that “HiLumz will be out of business
soon.” Global Tech also allegedly told “customers, sales representatives,
competitors, and others” that HiLumz infringed Global Tech’s patents, that
“HiLumz USA is no longer allowed to sell LED retrofit kits,” and that “Global
Tech was preparing to file suit against HiLumz, and would also file suit
against anyone who does business with HiLumz.”
Global Tech argued that its alleged statements were mostly
not made in commercial advertising or promotion.  First, it argued that the challenged ads
weren’t commercial speech because they referenced only Global Tech’s patents,
not any products, but referring to a particular good or service isn’t required
under Bolger.  Plus, even if a product reference were
required, it was present in most of the challenged statements—for example,
Global Tech’s press release  specifically
mentioned Global Tech’s “LED lighting products” with hyperlinks for the word
“products.” Warning distributors to take care when determining which products
to sell, in light of HiLumz’s impending demise, and statements that defendants
couldn’t sell HiLumz retrofit products, also referenced products. And
defendants sufficiently alleged economic motivation.
However, one challenged statement—posted on a personal
LinkedIn profile page, incorrectly asserting that a relevant parent patent  “issued on June 8, 2009” instead of having
been filed then—wasn’t commercial speech. 
The speaker “sought merely to showcase his contribution to the world of
patentable technology.”
The court also mostly found the statements adequately
disseminated to the relevant purchasing public, at least as a matter of
pleading. Disseminating the press release online made it available to the
world; disseminating claims to distributors attending the World Energy
Engineering and to “customers, sales representatives, competitors, and others”
also were plausibly pled as adequate dissemination of those statements “to the
relevant purchasing public.”  However,
allegations that “when internet users searched on the internet for ‘global tech
LED hilumz’ ” at least as late as on October 6, 2015, a Google search result
appeared containing a URL wrongly stating that Global Tech had already received
a permanent injunction against HiLumz.  “[T]he
Court cannot gratuitously infer that any netizen beside Defendants ever
actually googled ‘global tech LED hilumz’ during the relevant time period.”
Global Tech then argued any statements regarding HiLumz’s
impending demise, patent infringement, and inability to sell retrofit kits were
“non-actionable opinion.”  The court
agreed that the statement warning HiLumz distributors that HiLumz was “going
out of business” was non-verifiable “prediction or opinion about the future of
[Hilumz], and consequently, is not actionable as a false or misleading
statement of fact under the Lanham Act.”
However, claims that defendants infringed Global Tech’s
patents and therefore defendants weren’t allowed to sell them  “fairly implies a factual basis” and was thus
properly treated as a statement of fact, despite being “framed as an opinion.” The
outcome of the patent infringement claim will reveal the truth, making the
statements empirically verifiable.  Plus,
the counterclaim alleged that Global Tech had been making these statements as
early as fall of 2012, years before Global Tech actually obtained the patent in
suit. “Given that ‘[a] patent application cannot be infringed,’ the falsity of
these statements may be readily ascertainable.”
State-law unfair competition claims survived to the same
extent. Florida Deceptive and Unfair Trade Practices Act claims also survived;
the court rejected the argument that only consumers have standing under the
current version of the law.

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Doctor’s evaluation of another doctor’s treatment isn’t commercial speech

Tobinick v. Novella, No. 15-14889 (11th Cir. Feb. 15, 2017)
Ultimately, despite a long battle, this is a relatively easy
case about “the medical viability of a novel use for a particular drug.”  Dr. Tobinick (plaintiff, along with related
entities) thinks his “unorthodox use for the drug etanercept” can be used to
treat spinal pain, post-stroke neurological dysfunctions, and Alzheimer’s
disease, though it isn’t FDA-approved for those conditions.  Dr. Novella, a neurologist, blogs about
various topics.  In response to an
article in the LA Times about Dr Tobinick’s novel treatments, Dr. Novella
discussed the Los Angeles Time article, the typical characteristics of “quack
clinics” or “dubious health clinics,” the key features of Dr. Tobinick’s
clinic, and lastly the plausibility of and the evidence supporting Dr.
Tobinick’s allegedly effective use of etanercept.
Dr. Novella also quoted a portion of the LAT article, which
reported that “[Dr. Tobinick’s] claims about the back treatment led to an
investigation by the California Medical Board, which placed him on probation
for unprofessional conduct and made him take classes in prescribing practices
and ethics.” A second article, filed after Dr. Tobinick filed his initial
complaint, detailed the lawsuit and provided Dr. Novella’s view that the
lawsuit was designed to silence his public criticism of Dr. Tobinick’s
practices, which he then restated in large part.   He
again mentioned the Medical Board of California (MBC)’s investigation,
explained that the MBC “filed an accusation in 2004, amended in 2005 and 2006,”
and listed the different allegations made in the 2004 Accusation. 
Tobinick’s claims were based on state law and the Lanham
Act.  As relevant here, the district
court granted Dr. Novella’s special motion to strike state law claims, applying
California’s anti-SLAPP law. The court of appeals affirmed, accepting that Dr.
Tobinick was a limited public figure, and agreeing that he hadn’t produced
evidence of actual malice that would allow a probability of prevailing.
California applies a subjective test in which “[t]here must
be sufficient evidence to permit the conclusion that the defendant in fact
entertained serious doubts as to the truth of his publication.”  Relevant factors include “[a] failure to
investigate, anger and hostility toward the plaintiff, [and] reliance upon
sources known to be unreliable or known to be biased.”  Tobinick primarily argued that Dr. Novella improperly
relied on the MBC’s 2004 Accusation, which had been superseded by a 2006 Second
Amended Accusation, and that the articles contained false statements such as
that Dr. Tobinick ran a “one-man institute.” However, Tobinick’s evidence was
insufficient to allow a reasonable jury to conclude that Dr. Novella had
serious doubts as to the truth of the content contained in his two articles.  For one thing, the evidence showed that Dr.
Novella consulted the 2006 accusation, and even referenced competing studies
(which themselves were referenced in a 2007 MBC decision with a stipulated settlement)
in his second article, admitting that “[t]here are small studies for disc
herniation showing conflicting results.” 
Alleged falsities and inconsistencies didn’t demonstrate
actual malice—awareness or recklessness as to falsity.  Indeed, Tobinick couldn’t show that many of
Dr. Novella’s statements were false. For example, Dr. Novella characterized
Florida—one of the states in which Tobinick worked—as a “very quack-friendly
state,” but this was plainly opinion. 
Other details in the articles didn’t go to their essential criticism of
Dr. Tobinick’s medical practices, and at most could show negligence.  For example, Tobinick argued that Dr. Novella
falsely implied that Tobinick’s clinics committed health fraud by putting the
first article into a website category labeled “Health Fraud,” but the article
itself never said Tobinick committed health fraud, and there was no evidence
that Dr. Novella decided what category to put the article into.  Also, as to the “one-man institute” phrase,
Tobinick failed to rebut Dr. Novella’s statement that he looked at Tobinick’s
websites and saw that the only physician named and profiled on the websites was
Tobinick.  “Dr. Novella’s statement is
reasonably held, as the name of Dr. Tobinick’s California clinic, ‘Edward Lewis
Tobinick, MD,’ further supports his belief that ‘Dr. Tobinick was a solo
practicioner[.]’”
The court noted that, although “[t]he failure to conduct a
thorough and objective investigation, standing alone, does not prove actual
malice,” the evidence of Dr. Novella’s investigation, “in which he looked to trustworthy
sources, demonstrates his lack of subjective belief that the articles contained
false statements.”  Before he wrote, Dr.
Novella consulted the LA Times article, many of Dr. Tobinick’s case studies,
the MBC’s accusations, and Tobinick’s websites. 
The Lanham Act claims then failed because the articles
weren’t commercial speech.  They weren’t
core solicitations, nor did they satisfy the Bolger test for non-core commercial speech. The articles weren’t
ads, nor could they reasonably construed as such. The first didn’t mention Dr. Novella’s
practice or medical services; the second did so only in providing context for
Dr. Novella’s criticism of the lawsuit as an attempt to suppress Dr. Novella’s critiques.
Indeed, Dr. Novella clarified that he primarily treats headaches, “thereby
distancing the types of medical services he provides from the services marketed
by Dr. Tobinick.”  The articles didn’t
discuss any products Dr. Novella sold, nor did they tout his practice.  References to the treatments Tobinick sold
weren’t themselves sufficient to make the speech commercial—Gordon & Breach held that product
reviews aren’t commercial speech, and so too here, even though the seller of
the reviewed product could convert the review into commercial speech by using
the review to advertise the product.  Dr.
Novella’s discussion “resemble[d] a medical peer review of a treatment’s
viability.”

Finally, Tobinick didn’t show economic motivation for the
speech sufficient to make it commercial. 
It didn’t matter whether the websites on which the speech appeared were
profit-seeking.  Tobinick’s complex
theory about how profits were “funnelled” from website-related revenue sources
to Dr. Novella “relies on such a level of attenuation that it fails to
demonstrate economic motivation in the commercial speech context.”  In World Wrestling Federation Entertainment,
Inc. v. Bozell, 142 F. Supp. 2d 514 (S.D.N.Y. 2001), the district court held
that the WWF could use the Lanham Act to sue a “concerned parents” council over
a public attack campaign about violence in wrestling, because the council
featured the attacks “prominently in a fundraising video,” in “fundraising
letters,” and in order “to raise the profile of [the council].”  None of that was true here.  The court of appeals also emphasized that “neither
the placement of the articles next to revenue-generating advertising nor the
ability of a reader to pay for a website subscription would be sufficient in
this case to show a liability-causing economic motivation for Dr. Novella’s
informative articles.” Those are standard features of magazines and
newspapers.  “Even if Dr. Novella
receives some profit for his quasi- journalistic endeavors as a scientific
skeptic, the articles themselves, which never propose a commercial transaction,
are not commercial speech simply because extraneous advertisements and links
for memberships may generate revenue.”

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Use of P’s photos to advertise D’s goods must be challenged via copyright, not Lanham Act, under Dastar

Barn Light Electric Company, LLC v. Barnlight Originals,
Inc., 2016 WL 7135076, No.14–cv–1955 (M.D. Fla. Sept. 28, 2016)
Plaintiff BLE, owned by the Scotts, sells light fixtures to
consumers over the internet. Defendant Hi–Lite, owned by the Ohais, makes light
fixtures and sells to distributors, not to end users. In 2008, BLE became a
retail distributor for Hi–Lite and bought lighting components from Hi–Lite.
Hi–Lite provided BLE with photographs, line drawings, and other depictions of
its products, providing BLE a license to use its copyrighted photographs.
Hi–Lite designates its products by parts numbers.
BLE decided to begin making its own light fixtures patterned
after the fixtures sold by Hi–Lite. In 2012, Hi–Lite had a sales rep use BLE’s
website to order the “Barn Light ‘The Original’ Warehouse Shade” and the “Barn
Light Warehouse Pendent Shade.” The BLE website showed the products with the
parts numbers H–15116 and H–15116G, corresponding to Hi–Lite’s parts numbers,
and they were accompanied by pictures from Hi–Lite’s catalog. But BLE shipped
light fixtures bearing BLE’s logo that were actually manufactured by BLE. The
order confirmation for the sale included the Hi-Lite parts numbers.  Hi-Lite terminated the parties’ business
relationship and asked BLE to remove all photos and drawings of Hi-Lite
fixtures from BLE’s website.
After the relationship ended, defendant Ohai created defendant
Barnlight Originals, Inc., a retail seller of light fixtures. BLO sells Hi–Lite
fixtures. Ohai registered BARNLIGHT ORIGINALS and BARNLIGHT ORIGINALS, INC.,
the domain name http://ift.tt/2l8sGH8, and a logo with the United States
Patent and Trademark Office.  Hi-Lite
also sent BLE a C&D charging infringement of a pending patent application.
Hi-Lite counterclaimed for trade dress infringement of the
design of twelve of its light fixtures. Product design trade dress requires a
“high degree of proof” to show secondary meaning.  Hi-Lite lacked survey evidence, and the
representative of a Hi-Lite marketer couldn’t identify the source after being
shown thirty images of products from Hi–Lite (including those at issue), BLE,
and other third parties. For all of the fixtures he was shown, he testified
that there were multiple manufacturers that made the same or very similar
designs.  A previous BLE employee who now
operates his own retail company and sells Hi–Lite products likewise testified
that although he recognized photos of Hi–Lite’s alleged trade dress from its
catalogs, he would not be able to identify the products as manufactured by
Hi–Lite unless he looked at the hidden backing plate with Hi–Lite’s name
embossed on it.
Hi-Lite argued that BLE’s intentional copying and use of its
sales and advertising efforts showed secondary meaning. It also claimed use for
7-12 years and sales of thousands to tens of thousands of units, plus
“considerable” advertising expenses in its catalogs, in magazines, on the
internet, at trade shows, and in show rooms.  Intentional copying isn’t enough to show
secondary meaning, given the other possible motivations for copying and the
perfect acceptability of copying public domain designs. Nor do extensive sales
and advertising show secondary meaning, which requires the effective creation
of consumer recognition.  The court found
that Hi-Lite couldn’t show secondary meaning and granted summary judgment on
the trade dress claims.
Other Lanham Act claims: Hi–Lite alleged that BLE used
Hi–Lite’s photographs and parts numbers to sell BLE products on its own website,
violating the Lanham Act. BLE responded, “Dastar,”
and the court agreed.  Uncredited use of
another’s photos in connection with the sale of goods or services “must be
pursued as copyright claims.” Hi-Lite’s false designation of origin claim was “directed
to the same conduct that underlies its copyright infringement claims,” which
wouldn’t do.  Moreover, Hi-Lite’s claim
would only work if the images themselves were “source-identifying marks” for
Hi-Lite’s products, but the photos merely depicted Hi-Lite’s light fixtures,
thus requiring a protectable trade dress rights in the design and appearance of
the light fixtures, which Hi-Lite lacked. 
Similarly, Hi-Lite didn’t show that its parts numbers functioned as
marks.
False advertising: To the extent that this was merely a
restatement of the false designation of origin claim, it failed.  Even without Dastar, Hi-Lite lacked enough evidence to prevail on the
merits.  It failed to show that the
alleged deception—advertising Hi-Lite fixtures but delivering BLE fixtures—was
material.  The only evidence was the
Hi-Lite-induced purchase from the BLE site, but the sales rep wasn’t acting as
a consumer but rather as an agent on behalf of Hi–Lite. BLE’s
misrepresentations “could not have made a difference in his purchasing decision,”
and he wasn’t an expert qualified to opine on likely consumer confusion.

However, claims based on BLE’s alleged use of the BARN LIGHT
ORIGINALS word mark survived.

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Incontestability precludes non-listed defenses, court affirms

NetJets Inc. v. IntelliJet Gp., LLC, No. 15-4230 (6th Cir.
Feb. 3, 2017)
NetJets is a private aviation company that specializes in
“fractional ownership” of private airplanes and related endeavors. NetJets’s
predecessor company developed a software program to “run [the company’s]
business,” and named the program IntelliJet. In 1995, it successfully applied
to register INTELLIJET in connection with the good of computer “software . . .
for managing the business of aircraft leasing and sales.” In 2002, the company
filed a “declaration of use and incontestability,” which was accepted by the
USPTO.
NetJets licensed the IntelliJet software to two external
companies, though one apparently stopped and the other was acquired by NetJets.
The company also uses the software to communicate with caterers and other
vendors. In early 2013, NetJets debuted an “owner’s portal,” allowing customers
to put their reservation requests directly into the IntelliJet software over
the internet; the portal features the INTELLIJET mark. NetJets discusses
IntelliJet on tours of the NetJets facility for customers and potential
customers, and in its own promotional literature, and the mark has been
mentioned in several trade press and general news sources.
 
Portal–see “powered by IntelliJet” at the bottom: good use?
IntelliJet was founded in 2005 and is primarily a broker for
private jet services, or helping customers buy or sell an aircraft. It offers
referral services for aircraft management and leasing services, but does not
perform these services itself. IntelliJet uses a sales-tracking software that
it has referred to as “IntelliShit.” In choosing the name, IntelliJet searched
the internet for other jet aircraft brokers, business names in Florida, and the
USPTO website. That last search turned up several registrations of
“IntelliJet,” including NetJets’s registration. IntelliJet’s principal Spivack
determined that the mark was “specifically for a software package,” and that
“being in the industry,” he knew the registered agent as “NetJets.” 
NetJets sued for trademark infringement and related claims;
IntelliJet counterclaimed for cancellation of NetJets’s trademark registration
on the grounds that NetJets abandoned it and that it was void ab initio. This
appeal was from the district court’s grant of summary judgment to
IntelliJet.  The district court reasoned
that NetJets’s mark was not incontestable and that the mark was void ab initio
because NetJets could not show that it was used in commerce at the time of its
registration. Nor could NetJets show that it had rights to the INTELLIJET mark
as a service mark under the Lanham Act or Ohio common law. Finally, the
district court also granted summary judgment on the basis that there was no
likelihood of confusion.
The court of appeals reversed the cancellation but otherwise
affirmed.
A mark may become incontestable if it is not successfully
challenged within five years of its registration. One requirement is continuous
use in commerce for “five consecutive years” subsequent to the date of the
registration, along with continued use in commerce. “Once incontestability is
established, only [the] . . . defenses enumerated in § 1115(b) can be
interposed in an action for trademark infringement.” Void ab initio, or non-use
at the time of registration, isn’t one of the defenses enumerated in § 1115(b).
 (And, unlike functionality, void ab
initio wasn’t implied from a “judicially created rule which predates the Lanham
Act”—even though use and nonfunctionality are both pretty important parts of
the common law.)  Thus, the court of
appeals held, it was not a proper defense to incontestability.  See University of Kentucky v. Kentucky
Gameday, LLC, 2015 WL 9906634, at *2 (T.T.A.B. 2015),(rejecting a void ab
initio claim because the claim was “not enumerated under Trademark Act Sec.
14(3), and is not available against a registration which is more than five
years old.”).
It seems to me that one could establish lack of continuous
use for any 5-year period at all over the life of the registration and defeat
incontestability; one simply can’t start with “void ab initio.”  It must be the case that it is valid to
challenge incontestability on the ground that the registrant failed to satisfy
the statutory requirements therefor; it’s just that distinctiveness is not one
of the statutory requirements, and apparently use at the time of registration
isn’t either—but five years of continuous use is.  Because §1064 barred IntelliJet’s void ab
initio challenge, the court of appeals said, it didn’t need to decide whether
the mark was actually incontestable under §1065; thus, the issue remains for
remand.
The court of appeals did affirm the district court’s
conclusion that IntelliJet wasn’t a service mark under Ohio common law, because
it was used as a mark for software as a good, not as a service mark. The
IntelliJet software is “the conduit through which NetJets provides its
services,” not the service provided by NetJets itself.
Likely confusion: IntelliJet is suggestive, and relatively
weak, “especially considering other federal registrations of the term and
additional third party uses of the same or similar terms.”  NetJets argued that incontestability made the
mark presumptively strong, but incontestability (if it existed) wouldn’t be determinative of strength.  The services were related but not directly
competitive.  Although the district court
reasoned that no one would confuse NetJets’s IntelliJet software with NetJets’s
aviation services, the question was about source confusion, not product/service
confusion.  Still, IntelliJet doesn’t
sell software that could be confused with NetJets’s software; relatedness
didn’t favor NetJets.  Similarity:
obviously favors NetJets.  There was no
evidence of actual confusion, which favored IntelliJet.  Marketing channels: both used the internet,
but the products were still marketed differently, and NetJets’s software wasn’t
marketed as a standalone product. 
Consumer care: the parties’ customers are highly sophisticated.
Intent: Use of a mark with knowledge of another’s rights can
be evidence of likely confusion.  But
here, IntelliJet knew of several
IntelliJet registrations, and there was no indication that it chose the name to
copy or compete with NetJets specifically. 
Likely expansion: Though NetJets argued that IntelliJet wanted to
compete with NetJets in areas such as chartering, leasing, and aircraft
management, it wasn’t appropriate to compare NetJet’s business as a whole with
IntelliJet’s services.  There was no
indication that NetJets intended to market its software separately, or that
IntelliJet intended to begin selling its own aviation software.

Based on this de novo review, the court of appeals found
confusion unlikely.

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