Arborjet, Inc. v. Rainbow Treecare Scientific Advancements, Inc., — F.3d —-, 2015 WL 4366624, No. 14–23241 (1st Cir. July 16, 2015) (Souter, J., sitting by designation)
The district court granted a preliminary injunction based on a contractual violation, but denied one based on trademark infringement. Nonetheless, the injunction required more detailed labeling of the defendant’s products, which led the court of appeals to partially reverse.
Arborjet makes TREE-age, an emamectin benzoate solution used to protect trees from various pests. Rainbow used to have an exclusive right to distribute TREE-age, subject to a contract that provided, inter alia, that Rainbow wouldn’t “engage in affairs intended to replicate” TREE-age. After the agreement terminated, Rainbow began selling ArborMectin, another emamectin benzoate combination meant to compete directly with TREE-age.
The district court found that Arborjet could show likely success on the contract claims; among other things, “Rainbow’s website describes partnering with several institutions and companies to conduct research studies regarding ArborMectin’s effectiveness,” at least one of which “took place while Rainbow was … subject to the terms of the [sales agency a]greement.” The district court didn’t abuse its discretion. Though the EPA listed a different company, Rotam, as the approved creator of ArborMectin, the district court had evidence that Rainbow contributed to its creation.
Rainbow argued that the ban on “replicat[ing]” TREE-age was limited to exact copies, and ArborMectin differed from TREE-age in toxicity and other details. The district court correctly considered the word “replicate” in the context of the entire contract; Arborjet expressed its concern about guarding information that could hurt it if disclosed to competitors. “Accordingly, the prohibition was probably aimed at preventing efforts by Rainbow to place Arborjet at a competitive disadvantage, reflecting a concern broader than the mere creation of an exact copy.” Plus, at the time the contract was entered into, the active agent in TREE-age was apparently patented, so it seemed “highly unlikely (albeit not impossible) that Arborjet would include a contractual prohibition on exact copies only, as the patent laws already saw to that.” Also, “common sense suggests that, if the parties had an object as narrow as Rainbow claims, they would have written clearer language specific to that aim.”
However, the injunction also ordered Rainbow to “properly attribute Arborjet’s trademarks ‘Arborjet’ and ‘TREE-age’ by appending the ® symbol to those marks and a footnote stating ‘Registered Trademark of Arborjet, Inc.’” This requirement was improper, given the district court’s holding that Arborjet wasn’t likely to succeed on the merits of its Lanham Act claims. Nor was this requirement, as Arborjet argued, merely giving effect to Rainbow’s binding stipulation in the course of the proceedings. Rainbow did make an offer not to make future statements that ArborMectin was “improved TREE-age,” but that stipulation related to the false advertising claim. The preliminary injunction “probably” related to the false designation claim; but even as to that, the district court didn’t make a finding of likely success. In any event, the stipulation related to the phrase “improved TREE-age,” not to “attribution of Arborjet trademarks across the board.” That part of the injunction was vacated.
Comment: This result makes sense to me, though I think “improved TREE-age” could pose a false designation of origin problem, depending on how it was presented. Nonetheless, that is very different from leaving off an ®. Rainbow’s concession seems wise, but I don’t see how omitting the ® from an otherwise nonconfusing comparison could cause any issues with consumers. (We may see a fair amount of speculation about consumers’ understanding of ® in the ongoing §2(a) disparagement litigation, but I am unaware of any actual empirical research about it. Any leads would be much appreciated!)