Can’t Live Without It, LLC v. ETS Express, Inc., — F.Supp.3d —-, 2018 WL 401778, No. 17-cv-3506 (S.D.N.Y. Jan. 15, 2018)
Plaintiff S’well sued ETS for trademark infringement and related claims based on its sales of the Force and Swig Bottles, which have the exact same shape as plaintiff’s S’well and S’ip Bottles, respectively. The court denied ETS’s motion for summary judgment, among other things holding that §349 and §350 don’t incorporate whatever is left of the Lanham Act’s “use in commerce” requirement, which meant that ETS’s partial motion for summary judgment as to its use of the S’well name was only partly granted.
S’well has a registration for the shape of its S’well bottle, on the Principal Register as of 2017. “The S’well Bottle has been very successful, obtaining substantial amounts of free, unsolicited media coverage, selling millions of bottles and an increasing number each year, and generating millions of dollars in income.” (Turns out I own a bottle with this shape, whose maker I don’t know; I didn’t buy it on the basis of the shape, either as source indicator or as an especially aesthetic shape, though it is pleasantly curved.) S’well sells to consumers, retailers, and a custom program in which an imprint of a company’s name or logo is added to the bottle and the company then resells or gives away the bottles.
|The S’ip and the S’well
ETS is a drinkware company that sells various water bottles, including ones that are “patterned after” retail brands. The Force Bottle is one of ETS’s most popular products and is shaped identically to the S’well Bottle. ETS operates in the “promotion products market” rather than the retail market, meaning it fulfills orders placed by intermediaries for custom-printed products and the intermediaries then sell those products to businesses that give them away as promotions, though ETS does sell Force Bottles directly to some retailers — including, at least, college bookstores and a coffee shop chain with locations throughout California. Some distributors also sell to retailers who sell Force Bottles to end-users either online or in retail stores.
ETS’s argument against the distinctiveness of the S’well bottle was that consumers couldn’t possibly associate the bottle shape here at issue with any single source because so many different businesses manufacture similarly shaped bottles. Declarations from various ETS employees stated that they purchased S’well-like bottles from various stores and websites, providing pictures, descriptions, and receipts, and ETS identified 130 different sources of water bottles that had the same shape. There’s no numeric rule about how many other sources prevent distinctiveness. “If, for example, one source has such a large market share and strong brand awareness that the public strongly associates its mark with that brand, consumers will likely assume that products bearing that mark are associated with that brand, regardless of the number of ‘knockoff’ manufacturers. The number of manufacturers is therefore a relevant, but not determinative factor.” [NB: This reasoning, which I accept, puts the lie to trademark owners’ claims that they have to enforce their trademarks to the hilt to avoid losing them. As long as the trademark retains trademark significance, it’s not going to be a problem.]
S’well submitted “substantial evidence suggesting that the public in fact does associate this particular shape with S’well, including undisputed, significant levels of advertising expenditures, sales success, and unsolicited media coverage.” ETS salespeople in emails with distributors themselves referred to the Force Bottle as a “S’well knockoff,” a “swell like option,” “S’well-like,” and “the ones that look like Swell,” and online retailers advertised Force Bottles similarly. “These comparisons would be meaningless if the audience did not associate the shape with the brand.”
Nor did ETS show functionality. S’well submitted material to the PTO indicating that the S’well and S’ip contain “mouths” that are big enough for ice cubes but small enough for “drip-free sipping” and are located in the center of the bottle, so users never need to rotate the bottle to begin drinking. ETS also argued that the circular shape is the “strongest and the easiest to make,” and that the bottles’ “smooth tapering at a relatively shallow angle from the base to the mouth permits the bottles to be emptied completely with relatively minor tilts.” The alternative, straight sides with a sharp angle just before the mouth, creates “a ‘catch basin,’ so that the liquid in the bottle, rather than smoothly flowing out, is trapped in the depression where the angle changes until the bottle is tilted further, at which point it comes rushing out all at once, leading to spills and other dangers.” [As a certified spiller of things, I can testify to the truth of this.] However, ETS didn’t submit evidence on its claims, and it wasn’t self-evident that they were true—for example, a rectangular shape might likely be easier to stack and ship. S’well’s founder also declared that she made several aesthetic choices when she designed the bottles that she knew would be more expensive.
ETS also offered no evidence suggesting that no other designs could have these same functional benefits; S’well hadn’t registered “all water bottles with gently sloping sides.” In fact, ETS’s argument that “both the S’ip and S’Well Bottles have ideal shapes, despite the two being shaped differently, suggests that these benefits may be available in other shapes as well.” Nor did ETS make arguments about the distinctive bottle cap, which is part of S’well’s trade dress.
Likely confusion: again, summary judgment was unavailable, given the evidence of distinctiveness/strength and the similarity of the parties’ products. Though ETS argued that the products
were sold in separate markets to sophisticated consumers who would not confuse them, ETS submitted
no empirical research or data analysis. S’well submitted evidence of distributors specifically requesting “S’well Bottles” from ETS, which appeared to fill the orders with Force Bottles without correction. And 10-15% of S’well’s business was in the promotional market, while ETS sold directly to at least some retailers and some distributors, who then sell Force Bottles to retailers or directly to end-users online, so there was some market overlap. In addition, post-sale confusion among end consumers was still possible.
And listen to this take on status goods: “Nor does it matter, as ETS argues, that the two bottles are of the same physical quality, particularly where, as here, there is evidence that they are not of the same expressive quality” (citing magazine article describing S’well Bottles as “suddenly a feverish must-be-associated-with-thing among a certain stylish, in-the-know set”). “The purchase of one product under the mistaken belief that it is another product is a prototypical harm against which the Lanham Act protects.”
There was also evidence of actual downstream confusion. “At least one retailer mislabeled Force Bottles as ‘Swell Bottles’ on its shelves, and several consumers have contacted S’well customer service in the mistaken belief that they had S’well Bottles, when in fact they had Force Bottles or, perhaps, similar bottles from other brands.” An internet survey indicated that 59% of S’well’s target demographic — female potential purchasers of stainless steel water bottles — associated the shape at issue with S’well, and calculated an overall net confusion rate of 26.6% between the S’well and Force Bottles.
ETS argued that it didn’t know about S’well before it decided to make the Force bottle, and learned about it only after researching the bottle shape requested by customers. Given S’well’s success, that was a disputed issue, and anyway ETS learned of S’well before the Force bottle was actually produced. Evidence also suggested that ETS “made changes to the Force Bottle for the express purpose of making it more similar to the S’well Bottle.” ETS’s “Retail Brands Guide” compared its products to retail products, which was distributed to at least some customers. A jury could find bad faith.
Under §§ 349 and 350 of the NY GBL, a plaintiff must show “that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice.” Consumer-oriented conduct must threaten an injury “to the public interest over and above ordinary trademark infringement or dilution.” However, the court rejected federal district court precedent that something like “potential danger to the public health or safety” is required, reasoning that the New York courts interpret these laws broadly. “New York courts distinguish not between minor economic harms and threats to public safety, but between disputes that are essentially between two parties, such as contract disputes, and “acts or practices [that] have a broader impact on consumers at large.” However, the court still granted ETS’s motion for summary judgment on those claims, because S’well didn’t show a genuine dispute about whether Force bottles were inferior to S’well bottles. Though there had allegedly been complaints “from time to time” about customer misuse leading to leaks and the “imprint” on Force Bottles coming off, but even setting aside hearsay problems with this evidence, S’well might have shown that Force bottles weren’t perfect but did not show that its bottles were any better.
S’well also argued that ETS’s plastic Impact bottle was not made of stainless steel and argued that this would harm consumers, but S’well didn’t address the Impact bottle in its complaint, and anyway no reasonable consumer boying plastic Impact Bottles would think she was buying a stainless steel S’well Bottle, nor would she infer that S’well’s steel bottles were somehow worse simply because a plastic version existed. She might think there was a link to S’well somehow, “but that consumer confusion is insufficiently consumer-oriented to state a claim under New York’s deceptive practices and false advertising statutes.”
False designation/unfair competition under federal and state law: S’well moved for summary judgment in its favor based on claims that ETS (1) misleadingly suggested to its customers that Force Bottles were a type of S’well Bottle, and (2) sold Force Bottles to customers who requested S’well Bottles without informing them of the difference. ETS argued that there was no relevant “use in commerce.” The court disagreed with 1-800 Contacts, but Rescuecom didn’t overrule it, so there is still some “use in commerce” requirement for infringement. The use of a mark in the sale of products, as opposed to services, where the mark isn’t attached to the product/associated with it physically, doesn’t fall within the §1127 definition of “use in commerce.” The only “printed” version of the S’well mark was in ETS’s Retail Brands Guide, but that use was more like use “in the sale or advertising” of the product than it was to a sales display. Anyway, no reasonable juror could find that this guide could confuse a distributor into thinking that the Force Bottle was a version of the S’well Bottle, as it clearly stated that the two were simply similar, and the Guide had dozens of other retail brands along with their ETS analogues.
Because of 1-800 Contacts, “even if ETS employees actually provided Force Bottles to distributors seeking S’well Bottles without informing them, and even if ETS representatives really did suggest in emails to distributors that Force Bottles were a type of S’well Bottle, ETS nonetheless did not violate Section 43(a) of the Lanham Act because of an absence of applicable ‘use in commerce.’” This ended the Lanham Act claims, but the court didn’t belive that New York courts would impose a similar limit on common law unfair competition claims, which are “adaptable and capacious.” “Palming off — that is, the sale of the goods of one manufacturer as those of another — was the first theory of unfair competition endorsed by New York courts, and has been extended to situations where the parties are not even in competition.”
Because ETS was allegedly using S’well’s exact mark, Polaroid analysis was not required; “[u]se of the exact same mark is inherently confusing.” So the key question was how ETS employees had actually used the S’well name. S’well identified multiple emails in which various distributors asked for “S’well” or “Swell” bottles and ETS employees didn’t clarify in those email threads that they only sold Force Bottles. In one email, a distributor requested S’well Bottles, and asked that ETS “try to get these exact brands and items!” Another email involved a new customer who asked for a quote and sample of S’well Bottles.
ETS rejoined that these requests were in fact for Force bottles, and “a lot of people call it just ‘the S’well shape.”’ ETSs CEO testified that “they “try” to train their sales staff to correct customers who ask for S’well Bottles, but repeat customers consistently respond that they know they are getting the Force Bottle and are just referring to the shape, sometimes growing frustrated by being corrected.”
Another employee similarly testified that repeat customers “get upset sometimes if you keep asking them to confirm what item they’re looking for,” saying things like, “’Dang it, Jen. You know what I’m looking for. Stop asking me. You know it’s the Force.”’ A reasonable juror could find either way.
S’well also argued that ETS told customers that its Force bottle was a version of the S’well bottle specific to the promotional products market. In one email chain, a distributor asked, “What is the retail brand that looks like this?” and the manager responds, “The S’well bottle is the retail version of this bottle.” The distributor’s question suggested that he understood the lack of affiliation, and that the Force just “looked like” the S’well; a reasonable juror could find that the employee meant only to convey the similarity. Other email chains were similarly ambiguous. Interestingly, the court indicated that the success of S’well’s claim would turn on “the credibility of the ETS witnesses regarding what they meant to communicate in these emails,” rather than the messages their interlocutors received; I would have gone the other way.
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