First Circuit lifts injunction requiring D’s use of (R) for P’s mark

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
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!)

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