Saturday, February 19, 2011

Northern District Leaves No Stone Unturned in Refusing to Enjoin Korean Stone Bed Trademark Under First Sale Doctrine

Editor's Note:  This is a case I handled for the defense.  The word "jangsoo" in Korean means "longevity"  or "long life." The only two Korean furniture dealers in Atlanta have gotten into a dispute about the jangsoo mark.  According to Judge Batten in the District Court for the Northern District, the pending case Jangsoo Industry Co. Ltd. v. Jangsoo Furniture Land, Inc., Civil Action No. 1:10-cv-1225-TCB 2011 U.S. Dist. LEXIS 1421, (Decided February 11, 2011) may not survive much longer. The case involves a trademark for a Korean company that manufactures and sells stone beds, one of which is pictured. Some Koreans claim that studies show sleeping on heated stone beds (yes, stone, as in polished rock) provides numerous health benefits including but not limited to increased longevity. And for Koreans, the admiration of longevity has long been a mainstay of its ancient culture. Thus, to live longer an expensive stone bed with an electric heating element in it is just the ticket.

The Korean company Jangsoo Industry, Ltd. has numerous US trademarks covering Korean stone beds and variations of phrases with the word jangsoo in it. At one point, a furniture company owned by the Furniture Land owner had Jangsoo stone beds in its inventory that it bought from Jangsoo Ltd. in Korea.  That company dissolved and the owner started Furniture Land, bringing the old Jangsoo stone bed inventory on board.  In July, 2007 the Jangsoo Ltd. company entered into a deal with the defendant Jangsoo Furniture Land ("Furniture Land") to sell its stone beds and use its registered trademarks.  The parties executed a contract in Korean.

Pursuant to that agreement, Jangsoo Ltd. stone beds were purchased for sale, leaving Furniture Land with an inventory of Jangsoo stone beds bought from plaintiff Jangsoo Ltd. (as well as the beds already in inventory).  The parties dispute why and how, but they agree that the deal to purchase and sell Jangsoo stone beds fell apart in late 2007. The English translation of the Korean contract had a term in it that the contract "shall be valid and effective when [Furniture Land's] first year order amount is fulfilled" and that amount was $100,000.  Furniture Land only bought $28,000 in beds, claiming that they did not sell well.  The parties dispute whether the term about the contract becoming effective upon purchase of a certain amount was a condition precedent or subsequent.  Furniture Land bought no more beds from Jangsoo, but continued to sell the beds it had in inventory, and contends that it is still selling only that inventory and nothing else. 

After 2007, Jangsoo Ltd. gave exclusive distribution rights to a new company formed by the fellow who had previously sold the Jangsoo beds to Furniture Land which opened its own retail furniture store in Atlanta.  Jangsoo Ltd. and the new store, "Health Life," claimed that Furniture Land no longer had the right to sell Jangsoo beds or advertise the marks because the 2007 deal was over.  Furniture Land continued to advertise and sell Jangsoo marked beds and Jangsoo Ltd. and Health Life filed a trademark infringement lawsuit. Jangsoo also filed a motion for a preliminary injunction to stop Furniture Land from using the mark in advertising and selling Jangsoo marked goods.

One of the interesting issues raised in the opinion is the claim by Furniture Land that Jangsoo in Korean is a generic term that should not be protected by trademark.  According to Furniture Land, a court in Korea has ruled that Jangsoo is a generic term that cannot be protected for Jangsoo stone beds.  The local court stated that it did not have enough information to rule on that point and invited further discovery on the matter.  The fact that this term may be generic in Korean hints at the ubiquitous nature of longevity in the Korean Culture.  Fascinating.

Jangsoo claimed in its complaint and motion that Furniture Land was selling counterfeit Jangsoo items, but Furniture land countered with unrebutted evidence that the Jangsoo items it is selling are the remainder of the old inventory explained above, and that therefore Furniture Land is protected from an infringement suit by the "first sale doctrine."  The first sale doctrine states that the reselling of genuine trademarked goods does not constitute infringement.  Furniture Land claimed that it had not done anything to alter the goods it bought, so consumers therefore could not be confused -- the beds are the real thing and did come from Jangsoo Ltd.  With no evidence offered to show this to be untrue, the Court refused to grant the injunction based on the first sale doctrine, Furniture Land is apparently advertising and reselling real Jangsoo stone beds. 

Jangsoo Ltd. also brought a false advertising claim that the advertising of the Jangsoo mark created a false impression that Furniture Land was affiliated with the Jangsoo company.  However, Furniture Land countered that because it is using the mark in advertisements to sell real Jangsoo beds, the advertising is not false.  The court refused to enjoin that behavior either, siding with Furniture Land based on the current facts in the record.