Wake Forest Law Review
11Apr

Too Many Cooks in the Kitchen: Home Chef Challenges the Circuit Split on the Trademark Infringement Likelihood-of-Confusion Analysis

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Hannah Doherty

In 2014, the prominent meal-kit company, Home Chef, merged with supermarket chain, Kroger, Co., and adopted a new trademark, the “HC Home Mark.”[1] The mark, which is protected by five federal trademark registrations, features the silhouette of a fork and knife, contained within the outline of a house.[2] By 2021, Home Chef had invested significant resources and spent more than $450 million in advertising under this mark.[3]

But these efforts were hindered when Grubhub, a leading food delivery service, introduced an extremely similar mark, which also featured the outline of a fork and knife within a house.[4] This mark was designed after Grubhub’s parent organization, Just Eat Takeaway (“JET”), filed a trademark application for an almost identical mark, and was rejected by the US Patent and Trademark Office (“USPTO”).The USPTO deemed  JET’s mark “confusingly similar” to Home Chef’s HC Home Mark.[5] JET then combined this rejected mark with Grubhub’s house logo, and the mark was approved,[6] despite its resemblance to Home Chef’s mark.

Home Chef sent a cease-and-desist letter to Grubhub, demanding the company discontinue their use of the similar mark.[7] Instead, Grubhub and JET responded by collectively filing a complaint against Home Chef and Kroger, seeking a declaratory judgment for non-infringement, which would allow them to continue using the mark.[8]

In an action for trademark infringement, the plaintiff must establish that their mark had priority over the infringing mark and demonstrate that the similarity of the marks is likely to cause confusion for consumers.[9] In evaluating whether there is a likelihood of confusion between the two marks, the court considers “whether consumers who might use either product [or service] would likely attribute them to a single source.”[10] In the Seventh Circuit, the court applies a multifactor test consisting of the following seven factors, none of which is dispositive: “(1) similarity of the marks in appearance and suggestion; (2) similarity of the products [or services]; (3) the area and manner of concurrent use; (4) the degree of care likely to be exercised by consumers; (5) the strength of the senior user’s mark; (6) the existence of actual confusion; and (7) the intent of the defendant to ‘palm off’ its product as that of another.”[11]

Based on this analysis, the Magistrate Judge recommended granting a preliminary injunction in favor of Home Chef, but the U.S. District Court for the Northern District of Illinois refused to enjoin Grubhub’s use of the mark, finding Home Chef did not sufficiently demonstrate a likelihood of consumer confusion.[12]

Home Chef appealed to the Seventh Circuit U.S. Court of Appeals, which reviewed the District Court’s ruling under a clearly erroneous standard.[13] The panel found no clear error in the District Court’s likelihood-of-confusion analysis, and upheld the denial of the injunction.[14]

But the standard of appellate review applied in trademark infringement claims differs significantly across circuits, because jurisdictions are not consistent in whether they regard the likelihood-of-confusion analysis as a legal conclusion or a factual finding.[15]

In circuits where the likelihood-of-confusion analysis is deemed a question of law, the appellate court will review the district court’s finding de novo, which is the least deferential standard, as no deference is given to the trial court’s assessment.[16] This is the approach taken in the Second Circuit and the Federal Circuit.[17]

Oppositely, in circuits where the likelihood-of-confusion analysis is considered a question of fact, a clearly erroneous standard is applied on appeal.[18] This standard is less deferential, therefore the likelihood of success on appeal is significantly lower.[19] Under this standard, even if the reviewing court believes the outcome should have been different, they will not overturn the lower court’s ruling unless the circumstances are egregious and the court is “left with the definite and firm conviction that a mistake has been committed.”[20] This is the standard applied in the Fourth, Seventh, and Ninth Circuits, and was used in the case between Grubhub and Home Chef.[21]

Further complicating the circuit split, the First, Third, Fifth, Eight, Tenth, and Eleventh Circuits treat trademark infringement claims as mixed questions of law and fact and apply a clearly erroneous standard to the factual issues, while also analyzing the legal principles de novo.[22] And the sixth circuit reviews each of the seven factors under the clearly erroneous standard, but reviews the ultimate balancing of the factors and likelihood-of-confusion decision de novo.[23]

Furthermore, the circuits differ in how each of the likelihood-of-confusion factors are weighed in the balancing test; some courts emphasize certain factors more than others, some analyze slightly different factors, and some courts skip factors altogether.[24]

For example, the Seventh Circuit places more weight on the similarity of the marks, the defendant’s intent, and actual confusion factors.[25]  In this case the District Court found all three of these factors weighed against a likelihood of confusion, and thus, in favor of Grubhub.[26] It was undisputed that the remaining four factors all weighed in favor of Home Chef, and on appeal, Home Chef argues that “all seven factors are ‘interconnected,’” and thus “the district court clearly erred by focusing only on the factors in dispute without addressing the undisputed factors,” three of which weighed in favor of Home Chef.[27] In courts where the factors are weighed differently, the outcome could have been different. These distinctions between circuits result in inconsistent outcomes and cause unpredictability.

Home Chef highlights the fact that “three sequential decisions analyzed differing combinations of factors and evidence, applying different legal standards,”[28] and claims that the court’s failure to consider all the relevant likelihood-of-confusion factors results in “arbitrary and capricious findings,” as courts can ignore relevant factors, “enabling subjective decision-making.”[29]

On January 9, 2024, Home Chef petitioned the U.S. Supreme Court for a writ of certiorari, requesting that the court resolve the Circuit Split regarding the proper likelihood-of-confusion analysis in trademark infringement actions.[30] Specifically, Home Chef asked the court whether the likelihood-of-confusion analysis is a factual finding, and thus reviewable under a clearly erroneous standard, or a legal conclusion, reviewable de novo.[31] Further, Home Chef asked the court to decide whether the court must explain its analysis for all of the likelihood-of-confusion factors in the balancing test. An Amicus Curiae brief has been filed, urging the Supreme Court to adopt a uniform national standard for trademark infringement analyses.[32]

Home Chef contends that the circuit split “weakens the trademarks and the benefits afforded by the registration system.”[33] Not only does a flawed trademark system harm consumers, who might experience difficulties discerning the origin of products and services, but it also harms businesses that devote significant resources to building brand recognition and consumer goodwill under their protected trademark.

[1] Amici Tell High Court Jury Should Decide Likelihood of Confusion, 25 Mealey’s Litig. Rep. Trademarks 7 (Mar. 2024) [hereinafter “Amici”], https://plus.lexis.com/api/permalink/0e75dbd6-ad72-49c0-b95a-6a9378ad9c4a/?context=1530671.

[2] Tessa Kroll, Grubhub Relishes Victory Against Trademark Preliminary Injunction, The Nat’l L. Rev. (Sept., 28, 2023), https://www.natlawreview.com/article/grubhub-relishes-victory-against-trademark-preliminary-injunction.

[3] Id.

[4] Amici, supra note 1.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Grubhub Inc. v. Relish Labs LLC, 80 F. 4th 835, 844 (7th Cir. Sept. 12, 2023).

[10] Id.

[11] Id. at 847.

[12] Id. at 841.

[13] Id. at 844.

[14] Grubhub Inc. v. Relish Labs LLC, 80 F. 4th 835, 858 (7th Cir. Sept. 12, 2023).

[15] Eileen McDermott, Kroger Asks SCOTUS to Fix Circuit Inconsistencies in Likelihood of Confusion Analysis IP Watchdog (Jan. 11, 2024, 5:45 PM), https://ipwatchdog.com/2024/01/11/kroger-asks-scotus-fix-circuit-inconsistencies-likelihood-confusion-analysis/id=171890/.

[16] Identifying and Understanding Standards of Review, Geo. U. L. Ctr. (2019), https://www.law.georgetown.edu/wp-content/uploads/2019/09/Identifying-and-Understanding-Standards-of-Review.pdf.

[17] McDermott, supra note 15.

[18] Identifying and Understanding Standards of Review, supra note 16.

[19] Id.

[20] McDermott, supra note 15.

[21] Id.

[22] Id.

[23] Id.

[24] Home Chef Asks High Court to Standardize Trademark Likelihood-Of-Confusion Test, 20 Mealey’s Litig. Rep. Trademarks 13 (Feb. 5, 2024) [hereinafter “Home Chef”], https://plus.lexis.com/api/permalink/bdc91b30-86bd-4340-b02a-b89390ad64df/?context=1530671.

[25] Grubhub Inc. v. Relish Labs LLC, 80 F. 4th 835, 847 (7th Cir. Sept. 12, 2023).

[26] Id. at 848–857.

[27] Id. at 858.

[28] McDermott, supra note 15.

[29] Home Chef, supra note 24.

[30] Amici, supra note 1.

[31] Id.

[32] Id.

[33] Home Chef, supra note 24.

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30Mar

Chanel, Inc. v. The RealReal, Inc.: The Firsthand Problems of the Secondhand Market

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By: Carson Easterling

The developing nature of the modern fashion industry, including the recent emphasis on sustainable fashion, has created a need for new legal issues to be addressed.  As awareness of the waste and environmental harm caused by the fashion industry has come under fire in recent years, many consumers have turned to purchasing designer products from secondhand consignment stores, especially those operating on an online platform.  One successful luxury consignment store is The RealReal.[1]  The RealReal is a California-based online consignment store for luxury products.[2]  The RealReal operates by accepting luxury designer property from potential sellers on a consignment basis.[3]  The RealReal then takes the property through an inspection and authentication process before marketing and selling the luxury goods to potential consumers.[4]

While consumers and environmentalists have eagerly embraced luxury consignment, high-end brands, such as the iconic French-brand Chanel, have taken issue with the new market.[5]  Chanel is a fashion brand now based in New York, New York.[6]  The brand is known for their double “CC” monogram and other widely known trademarks that are easily recognizable throughout the world.[7]  Chanel is a brand that prides itself on luxury and quality and the potential misuse of their famous trademark has raised serious concerns within the company.[8]  Chanel has historically exercised an extreme amount of control over the creation, marketing, and distribution of its products.[9]  Therefore, Chanel has raised legal concerns over The RealReal’s guarantee that every item advertised to consumers on the site is 100% authentic, directly threatening Chanel’s control to protect consumers from low-quality counterfeit products.

In 2018, Chanel alleged that it had uncovered at least seven counterfeit Chanel bags listed on The RealReal’s site.[10]  After discovering that TheRealReal was not authenticating Chanel products as advertised, the company filed suit in U.S. District Court for the Southern District of New York alleging trademark counterfeiting and infringement, false advertising, and unfair competition under New York common law.[11]  In determining that the claims should be allowed forward, the court relied on the Second Circuit’s rationale in Tiffany v. eBay[12] where the court noted “the law prohibits an advertisement that implies that all of the goods offered on a defendant’s website are genuine when in fact . . . a sizeable proportion of them are not.”[13]  While it is still undetermined if the seven unauthenticated bags will satisfy the court’s interpretation of “a sizeable proportion,” the court noted that unlike eBay, The RealReal exercises substantial control over their products by taking physical possession of the items to approve their authenticity.[14]  The application of the language comes as a clear warning to secondhand dealers claiming 100% authentic luxury goods.  The RealReal and similar online consignment stores receive substantial benefits from taking physical possession of luxury goods and reselling them to consumers.  Therefore, the companies assume the additional burden of ensuring that their products satisfy any guarantees made that their products are 100% authentic.[15]  The court noted secondhand sellers may bear the potential liability of marketing, selling, and distributing counterfeit goods in the markets they’ve created.[16] 

In February 2021, The RealReal was granted permission to amend their initial answer to assert counterclaims based on internal Chanel documents that recently emerged.[17]  The RealReal has asserted counterclaims against Chanel alleging antitrust violations specifically “that Chanel has engaged in violations of Section 1 and 2 of the Sherman Act, anticompetitive arrangement in violation of the Donnelly Act, tortious interference with contract, and tortious interference with prospective business relations.”[18]  The counterclaims were based on new information that Chanel had previously invested in another secondhand luxury consignment store, Farfetch.[19]  The RealReal has alleged that Chanel has violated antitrust laws by attempting to monopolize the secondhand market through strategic investments and litigation.  Specifically, The RealReal noted that Chanel has declined to pursue litigation against FarFetch for the same conduct that Chanel alleges is illegal for The RealReal.  The RealReal raised these allegations after discovering that Chanel has previously invested in FarFetch and would therefore benefit from FarFetch’s success, and alternately, The RealReal’s failure, in the secondhand market.  Additionally, The RealReal alleges Chanel went further in their attempts to monopolize the secondary market by using its dominant reputation to pressure popular stores, such as Neiman Marcus and Saks, to deny The RealReal advertising and retail relationships.

The current legal battle displays the full implications of attempting to integrate sustainability into the world of high fashion.  The current legal battle displays the ongoing friction between traditional fashion brands dragging their feet to embrace the adaptations within the modern fashion world, and their desire to protect their consumers and guarantee the quality of their products.  Internal memos from Chanel U.S.’s President and Chief Operating Officer adequately capture the company’s struggle to simultaneously “address the threats from the secondhand market while exploring the opportunities it provides.”[20]  The final ruling in the current case could send a clear message to the future of sustainable fashion efforts through consignment.  Both online consignment stores, as well as fashion giants, need clearer guidelines about how they may control the prestige of their brand while adapting to a secondhand market going forward.

[1] About, The RealReal, https://www.therealreal.com/about (last visited Mar. 24, 2021); Sustainability, The RealReal, https://www.therealreal.com/sustainability (last visited Mar. 24, 2021).

[2] Chanel, Inc. v. RealReal, Inc., 449 F. Supp. 3d 422, 430 (S.D.N.Y. 2020).

[3] Consignment Terms, The RealReal, https://www.therealreal.com/consignor_terms#:~:text=The%20RealReal%20markets%20and%20sells,%22)%20on%20a%20consignment%20basis (last visited Mar. 24, 2021).

[4] Id.

[5] Sharon Edelson, The RealReal Cites Antitrust Concerns in Counterclaim to Chanel Lawsuit, Forbes (Feb. 1, 2021), https://www.forbes.com/sites/sharonedelson/2021/02/01/the-realreal-cites-antitrust-concerns-in-counterclaim-to-chanel-lawsuit/?sh=20ff01967360 (“In the last three years, Chanel in the U.S. has targeted the secondhand industry with ‘three lawsuits and 15 cease and desist letters for trademark violations such as false association, false endorsement, false sponsorship, and unfair competition.’”).

[6] Chanel, 449 F.Supp.3d at 429.  

[7] Id.

[8] Id.

[9] Anna Cabigiosu, An Overview of the Luxury Fashion Industry, in Digitalization in the Luxury Fashion Industry 9, 19 (2020) (“Custom-made products enhance the sense of exclusivity that a luxury product can offer. These attributes must be managed concurrently and require a consistent and coherent approach to create and maintain a luxury fashion brand positioning.”).

[10] Chanel, 449 F.Supp.3d at 433.

[11] Id. at 429.

[12] 600 F.3d 93 (2d Cir. 2010).

[13] Id. at 114.

[14] Chanel, 449 F.Supp.3d at 444; Kassidy Michel, Chanel v. The RealReal: Luxury Meets Resale, Univ. Cin. L. Rev. Blog (Dec. 14, 2020), https://uclawreview.org/2020/12/14/chanel-v-the-realreal-luxury-meets-resale/#_ftn19. 

[15] Chanel and The RealReal Both Nab Wins in Latest Round of Ongoing Counterfeit Lawsuit, The Fashion Law (Mar. 31, 2020), https://www.thefashionlaw.com/chanel-the-realreal-both-nab-wins-in-latest-round-of-ongoing-counterfeit-lawsuit/.

[16] Id. (“’By adopting a business model in which [TRR] itself controls a secondary market for trademarked luxury goods, and by curating the products offered through that market and defining the terms on which customers can purchase those products, [TRR] reaps substantial benefit,’ according to Judge Broderick.”).

[17] New York Judge Greenlights The RealReal’s Antitrust Counterclaims in High-Stakes Lawsuit by Chanel, Paul Weiss (Feb. 24, 2021), https://www.paulweiss.com/practices/litigation/antitrust/news/new-york-judge-greenlights-the-realreal-s-antitrust-counterclaims-in-high-stakes-lawsuit-by-chanel?id=39456.

[18] The RealReal Files Anti-Competition Counterclaims Against Chanel in Ongoing Legal Battle, The Fashion Law (Feb. 26, 2021), https://www.thefashionlaw.com/with-court-approval-the-realreal-files-anti-competition-counterclaims-against-chanel-in-ongoing-legal-battle/.  

[19] Edelson, supra note 5.

[20] Id. (“Chanel cites benefits to becoming more involved in the secondary market, including communicating directly with a client who’s purchased through secondhand, potentially capturing client data, which would allow Chanel to establish a relationship with a new client and expose the new client to the Chanel experience.”).

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2Feb

The Big (Trademark) Game: The NFL’s Battle to Protect Its “Super Bowl” Trademark

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By Blake Witty

This Sunday, nearly one in three Americans[1] will turn to their televisions to watch Patrick Mahomes and the Kansas City Chiefs take on Tom Brady and the Tampa Buccaneers in Super Bowl LV.[2]  The Super Bowl has become a mainstay in American culture and is arguably the most followed and prestigious event on the American sports calendar.  Being such a massive event, one would expect that many small businesses would try to use the Super Bowl name to attract football fans and customers alike to events.  However, this is not the case because of the National Football League’s (“NFL”) aggressive defense of the trademarked phrase “Super Bowl.”[3]  This blog post will look at the NFL’s recent history showcasing its fervent desire to protect its trademark and also explore whether the NFL actually has the right to go as far as it does (and if it’s even worth it for them).

The NFL has had the Super Bowl trademark since 1969 and has sent many cease and desist letters to businesses allegedly violating the trademark over the years.[4]  The most prominent example of the NFL flexing its trademark muscle was all the way back in 2007 when the League sent a cease and desist letter to the Fall Creek Baptist Church in Indianapolis, which caused the church to cancel their event.[5]  The League claimed the church was violating NFL rules because the church was charging patrons $3 to come watch the game.[6]  While the NFL has since eased its protocols by allowing places of gathering to use the Super Bowl moniker, these places of gathering still cannot charge admission fees to events that are advertised with the phrase “Super Bowl.”[7]

There have also been examples of the NFL having success in court in restraining suppliers from using its intellectual property, including the Super Bowl trademark.  For example, in NFL Properties, LLC v. Does 1 Through 100[8], the NFL successfully obtained permission by the court to seek a seize and desist order to stop the defendants from selling counterfeit merchandise and tickets with NFL trademarks ahead of Super Bowl 50.[9]  More recently, in NFL Properties, LLC v. Does 1–200[10], the NFL was granted a temporary restraining order, seizure order, and order to show cause when the defendants were also purported to be planning to sell counterfeit merchandise and tickets that bore NFL trademarks, including the Super Bowl trademark, ahead of last year’s Super Bowl.[11]  Further, in NFL Properties, LLC v. Humphries[12], the NFL won a default judgment to dispose of, once again, counterfeit items that bore NFL trademarks.[13]  Finally, in Titlecraft, Inc. v. NFL Properties, LLC[14], the NFL was granted a motion for summary judgement when a company manufactured custom wood trophies that were too similar in appearance to the legendary Vince Lombardi trophy awarded to each Super Bowl champion.[15]  The court held the aspects of the two trophies were similar enough to grant the NFL summary judgment for copyright infringement.[16]  While these cases are not centered on the issue of use of the NFL’s Super Bowl trademark by small businesses, they do show one thing: the NFL has had its share of successes in court in regard to protecting its trademarks.

Even considering all of these successes, how far can the NFL really go to protect its trademarks, especially the Super Bowl trademark?  Some commentators argue that the NFL can go quite far, while others are not as convinced.  For example, one commentator advises to not use the words “Super Bowl” at all to promote a business or watch party and to not use the names of the teams competing in the game to advertise.[17]  Another asserts that bars and restaurants should not use “Super Bowl” to advertise their showings of the game and that sweepstakes or giveaways should also avoid using it.[18]  Yet others think the NFL has really strayed out of bounds.[19] One article argues that one cannot trademark factual information and the NFL would only have a trademark infringement claim if a company claimed endorsement from the NFL or used the phrase “Super Bowl” in a very vague way.[20]  For example, few would suspect that a small bar that advertised a Super Bowl watch party is actually sponsored by the NFL.[21]  This potential confusion is what trademarks are truly intended to protect against.[22]  It is also important to note that there is a trademark concept called “nominative fair use.”[23]  Under this doctrine, a trademarked phrase or logo is permissible to use as long as there is no suggested relationship between the advertiser and the trademark’s owner.[24]  That is why this post and all these other articles are able to use the Super Bowl name.[25]  Maybe these small businesses or bars could also use this doctrine to argue for the use of the Super Bowl name. These small businesses or bars perhaps could say that there is no way a person could reasonably believe that the business or bar was sponsored by the NFL. The NFL would definitely object to this, but it could be an interesting argument.

So what’s the actual answer here?  Does the NFL have as broad of trademark rights as it purports, or does it have a weaker case than it lets on?  It appears to me that the NFL likely does have a ton of latitude. Much of the reasoning behind this conclusion is that a small restaurant or bar would likely need to assert its trademark use defense in court: a tall ask given the NFL’s vast legal team.[26]  As one commentator puts it: “any small business owner would be an eleventy-billion-point underdog in a courtroom match-up.”[27]  So while there could potentially be a case, the NFL’s legal resources in addition to their past court successes make any legal challenge difficult.

But there is also the question, is all this even worth it for the NFL? Instead of using the Super Bowl name to advertise, many companies have come up with their own slogans, the most common of which is probably “The Big Game.”[28]  Further examples include Budweiser using the term “Bud Bowl”[29] or Animal Planet using “Puppy Bowl.”[30]  Fans and consumers clearly know what is being referenced and these phrases are not trademarked so there is no infringement.  There is also a risk of bad publicity if the NFL keeps sending cease and desist letters to small businesses and churches.[31]

So should the NFL actually care about its Super Bowl trademark as much as it does?  They probably still should.  For example, if the NFL allows one small company to use the Super Bowl name, this single snowflake could form a snowball in which others want to use the name, leading to an avalanche that the NFL might not be able to stop.[32]  And again, with the NFL having such a large amount of legal resources[33], it probably is not that much of an inconvenience.  To top it off in regard to any bad publicity: the NFL probably does not “care about a few fans who get annoyed.”[34]

Thus, the answer to our overall question is yes, the NFL probably does have the latitude to defend its Super Bowl trademark as much as it does (or it at least has the resources to defend its actions) and yes, all this is probably worth it for the NFL.  So if you are thinking about hosting a watch party at your local bar or planning some sort of gathering for the game in which you’ll charge admission, it might be a good idea to not use the name “Super Bowl.”  Just like all of us, the NFL is watching.

[1] Helen Coster, Super Bowl TV Audience Rises Slightly to 99.9 Million Viewers, Reuters (Feb. 3, 2020, 3:19 PM), https://www.reuters.com/article/us-football-nfl-superbowl-ratings/super-bowl-tv-audience-rises-slightly-to-99-9-million-viewers-idUSKBN1ZX2LI.

[2] Cody Benjamin, 2021 Super Bowl Sunday: Everything to Know About Super Bowl LV with Time, TV, Odds, How to Watch and More, CBS Sports (Feb. 2, 2021), https://www.cbssports.com/nfl/news/2021-super-bowl-sunday-everything-to-know-about-super-bowl-lv-with-time-tv-odds-how-to-watch-and-more/.

[3] James Leggate, NFL’s Super Bowl Trademark Is Why Some Companies Call It ‘The Big Game’, Fox Business (Jan. 28, 2020), https://www.foxbusiness.com/markets/nfl-super-bowl-trademark-why-some-companies-call-big-game.

[4] Id.

[5] Marcus Baram, NFL Sacks Super Bowl Church Parties, ABC News (Apr. 14, 2009, 8:22 AM), https://abcnews.go.com/US/story?id=4229536&page=1.

[6] Id.

[7] Michelle Kaminsky, Super Bowl Legal Blitz: Inside the NFL’s Legendary Trademark Defense, Forbes (Jan. 30, 2018, 6:20 AM), https://www.forbes.com/sites/michellefabio/2018/01/30/inside-the-nfls-legendary-trademark-defense/?sh=37eb44203293.

[8] NFL Properties, LLC v. Does 1 Through 100, No. 16-CV-00474, 2016 WL 9223833 (N.D. Cal. Feb. 2, 2016).

[9] Id. at *1, *3.

[10] NFL Properties, LLC v. Does 1–200, No. 20-CV-20265, 2020 WL 7493120 (S.D. Fla. Jan. 28, 2020).

[11] Id. at *2–3.

[12] NFL Properties, LLC v. Humphries, No. C 16-474, 2016 WL 2606708 (N.D. Cal. May 26, 2016).

[13] Id. at *1–2, *4.

[14] Titlecraft, Inc. v. NFL Properties, LLC, No. 10-758, 2010 WL 5209293 (D. Minn. Dec. 20, 2010).

[15] Id. at *1, *4.

[16] Id.

[17] Superb Owl or Super Bowl Trademarks, Intell. Prop. Ctr. (Feb. 1, 2019), https://theipcenter.com/2019/02/superb-owl-or-super-bowl-trademarks/.

[18] Wilkinson Barker Knauer, LLP, As Super Bowl Approaches, Advertisers Should Be Aware of the NFL’s Efforts to Protect Its Golden Goose – 2018 Update on Super Bowl Advertising and Programs, Lexology (Jan. 11, 2018),  https://www.lexology.com/library/detail.aspx?g=86464d4b-5b77-4bb8-ad2a-12f9a7204d71.

[19] Timothy Geigner, It’s That Time of Year: No, the NFL Can’t Stop Every Business From Using ‘Super Bowl’ in Every Instance, Techdirt (Jan. 31, 2020, 9:34 AM), https://www.techdirt.com/articles/20200130/10363443827/that-time-year-no-nfl-cant-stop-every-business-using-super-bowl-every-instance.shtml.

[20] Id.

[21] Kaminsky, supra note 7.

[22] Id.

[23] Wilkinson Barker Knauer LLP, supra note 18.

[24] Id.

[25] Leggate, supra note 3.

[26] Kaminsky, supra note 7.

[27] Id.

[28] Geigner, supra note 19.

[29] Leggate, supra note 3.

[30] About Puppy Bowl, Animal Planet, https://www.animalplanet.com/tv-shows/puppy-bowl/about (last visited Feb. 2, 2020).

[31] Baram, supra note 5.

[32] Leggate, supra note 3.

[33] Kaminsky, supra note 7.

[34] Baram, supra note 5.

Post image of quarterbacks Patrick Mahomes and Tom Brady created by Wake Forest Law Review Online staff using official NFL imagery, courtesy www.nfl.com.

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23Mar

Fourth Circuit Interprets and Applies Lanham Act

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drug-1070943_1280

By: Mikhail Petrov

On March 23, 2016, in the published civil case of Belmora LLC v. Bayer Consumer Care AG, the Fourth Circuit considered whether the Lanham Act permits the owner of a foreign trademark to pursue false association, false advertising, and trademark cancellation claims against the owner of the same mark in the United States. Bayer Consumer Care AG (“BCC”) owns the trademark “FLANAX” in Mexico and has sold naproxen sodium pain relievers under that mark in Mexico since the 1970s. Belmora LLC owns the FLANAX trademark in the United States and has used it in the United State since 2004 in the sale of its naproxen sodium pain relievers. BCC and its U.S. sister company Bayer HealthCare LLC (which is licensed to sell naproxen sodium pain relievers in the United States under the brand name ALEVE) contend that Belmora used the FLANAX mark to deliberately deceive Mexican-American consumers into thinking they were purchasing BCC’s product.

Facts

BCC registered the trademark FLANAX in Mexico for pharmaceutical products, analgesics, and anti-inflammatories. It has sold naproxen sodium tablets under the FLANAX brand in Mexico since 1976. BCC’s FLANAX brand is well known in Mexico and other Latin American countries, as well as to Mexican-Americans and other Hispanics in the United States. Belmora LLC began selling naproxen sodium tablets in the United States as FLANAX in 2004. The following year, Belmora registered the FLANAX mark in the United States. Belmora’s early FLANAX packaging closely mimicked BCC’s Mexican FLANAX packaging, displaying a similar color scheme, font size, and typeface. In addition to using similar packaging, Belmora made statements implying that its FLANAX brand was the same FLANAX product sold by BCC in Mexico. BCC points to evidence that the similarities resulted in Belmora’s distributors, vendors, and marketers believing that its FLANAX was the same as or affiliated with BCC’s FLANAX.

Procedural History

BCC successfully petitioned the U.S. Trademark Trial and Appeal Board (“TTAB”) to cancel Belmora’s registration for the FLANAX mark based on deceptive use. Belmora appealed the TTAB’s decision to the district court. In the meantime, BCC filed a separate complaint for false association against Belmora under § 43 of the Lanham Act, and in conjunction with BHC, a claim for false advertising. After the two cases were consolidated, the district court reversed the TTAB’s cancellation order and dismissed the false association and false advertising claims.

Although the district acknowledged that Belmora’s FLANAX has a similar trade dress to BCC’s FLANAX and is marketed in such a way that capitalizes on the goodwill of BCC’s FLANAX, it nonetheless concluded that the Lehman Act does not allow the owner of a foreign mark that is not registered in the United States, and has never been used in the United States, to assert priority rights over a mark that is registered in the United States by another party and used in United States Commerce. BCC appealed the decision.

Rule of the Case

The plain language of § 43(a) of the Lahman Act does not require, as an element of the cause of action, that a plaintiff possess or have used a trademark in U.S. commerce. Under § 43(a), it is the defendant’s use in commerce — whether of an offending “word, term, name, symbol, or device” or of a “false or misleading description [or representation] of fact” that creates the injury under the terms of the statute.

What § 43(a) requires is that BCC was “likely to be damaged” by Belmora’s “use in commerce” of its FLANAX mark and related advertisements. The Supreme Court recently considered the breadth of this “likely to be damaged” language in Lexmark International, Inc. v. Static Control Components, Inc., (a false advertising case arising from a dispute in the used printer-cartridge market). The Court concluded that § 43(a)’s broad authorization is framed by two background principles. First, a plaintiff’s claim must fall within the “zone of interests” protected by the statute, defined in §45 of the Lanham Act. Second, a statutory cause of action is limited to plaintiffs whose injuries are proximately caused by violations of the statute.

Reasoning of the Fourth Circuit

The Fourth Circuit first addressed the position, pressed by Belmora and adopted by the district court, that a plaintiff must have initially used its own mark in commerce within the United States as a condition precedent to a § 43(a) claim. The Fourth Circuit found that the district court erred in requiring BCC, as the plaintiff, to have pleaded its prior use of its own mark in U.S. commerce when it is the defendant’s use of a mark or misrepresentation that underlies the § 43(a) unfair competition cause of action.

Although the plaintiffs’ use of a mark in U.S. commerce was a fact in common in the foregoing cases, substantial precedent reflects that § 43(a) unfair competition claims come within the statute’s protectable zone of interests without the U.S. commerce precondition. The Supreme Court has pointed out that § 43(a) goes beyond trademark protection, is cases of generic mark and reverse passing off. See Dastar Corp. v. Twentieth Century Fox Film Corp 539 U.S. 23, 29 (2003). These cases illustrate that § 43(a) actions do not require, implicitly or otherwise, that a plaintiff have first used its own mark in United States commerce. If such a use were a condition precedent to bringing a § 43(a) action, the generic mark and reverse passing off cases could not exist. Additionally, the plain language of § 43(a) makes no reference to U.S. commerce. Therefore, neither the Supreme Court in Lexman nor the Lanham Act’s plain language contain an unstated requirement that plaintiff have used a U.S. trademark in U.S. commerce to bring a Lanham Act unfair competition claim.

The Fourth Circuit then examined Lexmark’s two fold inquiry to determine whether BCC can make a § 43(a) claim. The first inquiry is whether the alleged acts of unfair competition fall within the Lanham Act’s protected zone of interests? If so, the second inquiry is whether BCC pleaded proximate causation of a cognizable injury.

BCC adequately pleaded a § 43(a) false association claim for purposes of the zone of interests prong. Lexmark advises that most of the Lanham Act’s enumerated purposes are relevant to false association cases. One such enumerated purpose is making actionable the deceptive and misleading use of marks. Here, BCC lost sales revenue because Belmora’s deceptive and misleading use of FLANAX conveyed to consumers a false association with BCC’s product. Further, by deceiving distributors and vendors, Belmora makes its FLANAX more available to consumers, which exacerbated BCC’s losses.

The Fourth Circuit then turned to Lexmark’s second prong, and concluded that BCC may plausibly have been damaged economically and in its reputation by Belmora’s alleged deceptive use of the FLANAX mark. Therefore, there was enough to conclude that BCC’s injuries were proximately caused by Belmora’s violations of the false association statute.

Holding

The Fourth Circuit conclude that BCC is entitled to bring its unfair competition claims under Lanham Act § 43(a) and its cancellation claim under § 14(3). The district court’s judgment was vacated and the case remanded for further proceedings consistent with this opinion.

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31Mar

A Tale of Two Bishops: Trademark, State Law, and When a Federal Court Must Abstain

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 By Chad M. Zimlich

In a published civil opinion handed down on Tuesday, March 31, 2015, the Fourth Circuit in vonRosenberg v. Lawrence took on an action in the District Court for the District of South Carolina involving two bishops of The Protestant Episcopal Church in the Diocese of South Carolina (“The Church”).

The Leader of a Church, Trademark, and a Pending State Court Decision

The case centered on a dispute between two clergymen, both claiming to be the head of The Church. Bishop Charles G. vonRosenberg filed an action against Bishop Mark J. Lawrence, alleging two Lanham Act violations and seeking declaratory and nondeclaratory relief. In response, Bishop Lawrence asked the district court to abstain pending state court proceedings. Relying on the abstention doctrine and broad discretion articulated in Brillhart v. Excess Insurance Co. of America, and Wilton v. Seven Falls Co., the district court stayed the action.

A Power Struggle

Bishop vonRosenberg claimed that in December 2012, the Disciplinary Board of The Protestant Episcopal Church in the United States removed Bishop Lawrence from his position. Following this, a Convention of the Diocese elected and installed vonRosenberg as Lawrence’s replacement. He further claimed that Bishop Lawrence has improperly continued to use the Church’s service marks and falsely advertised himself as the leader of the Church.

Bishop Lawrence asserted that he was never actually removed from office, but that Bishop vonRosenberg was the leader of an “unincorporated Episcopal association created to supplant the Diocese.” As each party asserted they were the head of the Church, each felt entitled to use the Church’s trademarks.

On January 4, 2013, prior to the lawsuit in the district court, a faction of Bishop Lawrence’s supporters filed suit in state court against the Episcopal Church. In the suit, the supporters alleged “service mark infringement” and “improper use of names, styles, and emblems” all under South Carolina state law. The state court responded by issuing a temporary restraining order preventing anyone other than Bishop Lawrence and those under his direction from using these service marks and names.

Bishop vonRosenberg then filed against Bishop Lawrence in district court seeking declaratory and injunctive relief for two violations of the Lanham Act, 15 U.S.C. § 1114 and § 1125(a)(1)(A) (2012). He alleged that Bishop Lawrence violated the Lanham Act by the unauthorized use of four service marks belonging to the Diocese of South Carolina, as well as by falsely advertising himself as the real Bishop. Bishop Lawrence then filed to dismiss the federal action for lack of standing or, in the alternative, for the court to abstain and stay this action pending resolution of the state court case.

The district court granted Bishop Lawrence’s motion to abstain, finding that, while Bishop vonRosenberg had standing, the court had broad discretion to abstain and to decline to grant declaratory relief under Brillhart and Wilton. This appeal followed that decision.

The District Court Should Have Used Colorado River, and, Thus, Was In Error

The Fourth Circuit noted that, as the decision to abstain was a legal question, their review was de novo. Bishop vonRosenberg’s contention on appeal was that the district court should have applied Colorado River Water Conservation District v. United States, rather than Brillhart or Wilton.

Under Colorado River, a federal court may abstain from deciding non-frivolous, nondeclaratory claims in favor of a parallel state suit for reasons of “wise judicial administration” only in “exceptional” circumstances. The Court explained that a federal court has a duty to decide federal claims, and thus the decision to abstain due to “administrative reasons” was much more limited. Additionally, a court is to balance several factors, with the balance heavily against abstention. The district court, however, did not consider any factors, and instead relied solely on the Brillhart/Wilton standard.

The Fourth Circuit noted that, while they had never spoken to the issue of standards in regards to complaints asserting claims for declaratory and nondeclaratory relief, it has held that when a court must deal with a nondeclaratory claim, it is cannot abstain from the declaratory claim, making it an all-or-nothing deal.

The Court noted that “Colorado River permits a court to abstain only in the rare circumstance” where judicial administration was so “pressing” that it overrides the natural obligation of the court. Brillhart and Wilson’s broad discretion, however, flowed from the Declaratory Judgment Act, which runs contrary to circumstances where a court must exercise jurisdiction.

The Fourth Circuit concluded by stating that Colorado River “must guide a court’s decision to abstain from adjudicating mixed complaints alleging claims for both declaratory and nondeclaratory relief.”

Furthermore, the Colorado River standard would apply to all mixed claims, even those where the claims are ancillary to the request for declaratory relief. The only exception would be a case where the injunctive relief is frivolous or to attempt to forum shop.

Applied to This Case, Colorado River Means a Higher Standard and a New Review

Because the district court did not apply the Colorado River standard, the Court vacated the stay order and remanded the case to the district court to make a determination of whether, under the circumstances, the “exceptional” standard was met.

 

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31Mar

The Fourth Circuit Disagrees with the Eighth and Sixth Circuits Regarding Georgia-Pacific’s Trademark Infringement Claim

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By Ashley Escoe

On Monday March 30, 2015, the Fourth Circuit released a published opinion regarding the civil case of Georgia-Pacific Consumer Products v. Von Drehle Corporation. In its opinion, the court agreed with von Drehle Corporation (“von Drehle”) and vacated the district court’s injunction and award of attorneys fees and also reversed the increase in damages and the award of prejudgment interest–all of which had been in favor of Georgia-Pacific Consumer Products (“Georgia-Pacific”).

Georgia-Pacific’s Claim of Trademark Infringement

Georgia-Pacific brought this trademark infringement case against von Drehle for designing and selling ten-inch paper-towels specifically for use in Georgia-Pacific’s “enMotion” motion sensor towel dispensers. Georgia-Pacific owns the trademark “enMotion” and alleged that von Drehle had violated the Lanham Act, 15 U.S.C. § 1114(1)(a), for contributory trademark infringement because the von Drehle towels were “likely to cause confusion and . . . deceive End-User Customers.”

Georgia-Pacific brought three separate actions against von Drehle for selling these ten-inch paper-towels: in the Western District of Arkansas, the Northern District of Ohio, and the Eastern District of North Carolina. The first to rule on this issue was Arkansas, which concluded that von Drehle towels made for use in an enMotion dispenser were not likely to cause confusion, and therefore not an instance of trademark infringement. The Eighth Circuit affirmed. The district court in Ohio then ruled against Georgia-Pacific as well, holding that Georgia-Pacific was precluded from litigating the same issue; the Sixth Circuit affirmed.

The Eastern District of North Carolina initially ruled against Georgia-Pacific based on von Drehle’s affirmative defense of claim and issue preclusion. However, on appeal the Fourth Circuit reversed this decision, concluding that von Derhle waived those defenses by failing to raise them in a timely manner. A jury awarded Georgia-Pacific the $791,431 in profits von Drehle made from the paper-towel sales. The district court trebled the jury verdict and awarded attorneys’ fees as well as prejudgment interest–totaling $4,887,283.51. The district court also granted Georgia-Pacific a permanent, nationwide injunction prohibiting von Drehle from selling its paper-towels.

On appeal, von Drehle challenged the geographical scope of the injunction and the monetary awards.

The Scope of the District Court’s Injunction Was Too Broad

The Fourth Circuit determined that the district court abused its discretion by granting a nationwide injunction. Generally, a district court has the authority to issue a nationwide injunction prohibiting trademark infringement. 15 U.S.C § 1116(a). In this instance, however, for the sake of inter-circuit comity, the court determined that the injunction should be limited to the states in the Fourth Circuit. The Sixth and Eighth Circuits have already ruled that von Drehle was not prohibited from selling its ten-inch paper towels, and the other Circuit courts that have not yet ruled on the issue should be free to resolve this matter for their jurisdictions. The Fourth Circuit vacated the district court’s injunction and remanded the issue.

Trebling the Damages Award Was Inappropriate

The Fourth Circuit concluded that the district court’s reliance on Larsen v. Terk Techs. Corp. was an erroneous conflation of 15 U.S.C. § 1117(a) and § 1117(b). In Larsen, the issue was the use of a counterfeit mark and thus was governed by § 1117(b), which mandates treble damages for willful and intentional infringement. The instant case does not concern counterfeit marks, but rather is a general trademark infringement case governed by § 1117(a). Section 1117(a) does allow a court to adjust a jury award, but only if the award was inadequate or excessive and never solely to punish the defendant. Georgia-Pacific only requested an award of von Drehle’s profits, and that is precisely what the jury awarded; therefore, there was no basis for the district court to find the award inadequate. The Fourth Circuit reversed the increase in the damages award and ordered the jury award be reinstated.

A New Standard for “Exceptional” in Regard to Attorneys Fees

The district court granted attorneys’ fees to Georgia-Pacific, finding the case to be “exceptional” because von Drehle purposefully and willfully sold its towels to be used in Georgia-Pacific’s dispensers. However the Fourth Circuit noted that the district court failed to distinguish between willfully performing an act one believes to be lawful and willfully breaking the law. Further, after the district court made its ruling, the Supreme Court issued its decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc. Though this decision did not define “exceptional” in the attorneys’ fees provision of § 1117(a), it defined an “exceptional case” in an identical provision of the Patent Act. The Supreme Court held that a district court may determine a case is exceptional by looking at the totality of the circumstances. The Fourth Circuit vacated the award of attorneys’ fees and remanded the issue for the district court to determine in light of the Octane Fitness standard.

Congress Did Not Intend for Prejudgment Interest in This Circumstance

Section 1117 is particular about what types of monetary relief are available for trademark infringement in specified circumstances. The Fourth Circuit concluded that if Congress did not include a certain type of monetary relief in a specified circumstance, then it was Congress’ intention that it not be available. Section 1117(a) does not provide for prejudgment interest in cases concerning recovery of a defendant’s profits. The court noted that it may be possible to recover prejudgment interest under § 1117(a) as an element of damages, but Georgia-Pacific only claimed von Drehle’s profits, not damages. Therefore the Fourth Circuit reversed the district court’s award of prejudgment interest.

The Fourth Circuit Vacated, Reversed in Part, and Remanded in Part the District Court’s Decision

The Fourth Circuit vacated the district court’s injunction and award of attorneys fees’ and remanded on these issues. It also reversed the increase in the damages award and the award of prejudgment interest.

Judge Shedd Disagrees with Limiting the Scope of the Injunction

Judge Shedd wrote separately, concurring in part and dissenting in part. Judge Shedd only disagreed with the decision to restrict the injunction to the Fourth Circuit. On appeal, injunctions are reviewed for abuse of discretion. Judge Shedd points out that the district court “applied the correct injunction standard, did not rely on a clearly erroneous finding of material fact, and did not misapprehend the law with respect to the underlying issues of this case.” The district court did not abuse its discretion, and the Fourth Circuit should affirm the injunction. Instead the majority of the panel relied on the doctrine of comity in determining that the nationwide scope of the injunction was too broad. The doctrine of comity is not a rule of law, but just a courtesy; and, according to Judge Shedd, relying on comity was not appropriate in this situation.

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