Saturday, July 21, 2012

It Takes More Than a Village Registration to Be Infringement Says Florida District Court

      Recently the Middle District of Florida ruled that even though a trademark was incontestable it was so weak that it could not support a preliminary injunction to halt alleged infringement of a use of the same word in a very similar mark.  Holding Co. of the Villages v. Power Corporation, 101 U.S.P.Q.2d 1528 (M.D.Fla. 2012).  This is important because it reiterates the principle that even though a mark may have been registered more than five years, and thus  has become incontestable under 15 U.S.C. 1065; it may be so weak in spite of this that an alleged infringer may win the "strength of mark" factor in the likelihood of confusion analysis undertaken by all eleven Circuit Courts of Appeal in the U.S. Thus even though an incontestable mark may be valid it still may be attacked by an opponent in an infringement case.

      In this case the plaintiff stated that it sold residential real estate throughout the United States under the mark "The Villages" since as early as June 1993, and had long held a registration for the Mark. The Defendant sold real estate lots for a development called Lakeside Landings at The Villages and later The Villages at Lakeside Landings.   The Eleventh Circuit requires a seven factor test to determine whether the alleged infringing mark is likely to be confusing to consumers with the plaintiff's mark.  The first factor is the type of mark and its "strength."  Because of the registration more than five years the plaintiff's Mark "The Villages" was incontestable.  However, the Court noted that the word "incontestable is really a misnomer because an incontestable mark that is weak can still be attacked by a defendant in an infringement lawsuit.   The Defendant claimed it was weak, and thus less likely to cause confusion, by demonstrating that there were 79 active registrations for marks using the term "Villages;" 34 registrations disclaiming the word "Village" as a descriptive term; 19 registrations of "Village" claiming use prior to that of the plaintiff; 17 trademarks with the term "Village" or "The Village" followed by a place name; and 1,165 companies registered in Florida using the word "Village."  Therefore the defendant did a great job showing how nearly generic the term "Village" was in the trademark and business world.  Therefore, the Court found that the Mark of the plaintiff was weak and can be afforded only a narrow range of protection.  Interestingly the Court never labeled the Mark as descriptive or any of the other standard terms used in the trademark cases to place the strength of the mark in a certain spot on the scale.  It simply found that it was weak based on the quality of the defendant's evidence. 

     The Court went on to weigh the remaining factors and found that the services and customers were similar, and the advertising media were similar, which weighed in favor of the plaintiff. However, the other factors weighed in favor of the defendant, including the strength of the mark,  the dissimilarity of the marks, the intent of the defendant, and evidence of actual confusion.  In the end the balance went for the defendant and the court found no likelihood of success.  Therefore, the motion for an injunction was denied. 

Monday, April 16, 2012

Wisconsin Court of Appeals Determines That The Glove Fits: Trade Dress Suit Was a Covered Advertising Injury Claim Triggering Duty to Defend

The Wisconsin Court of Appeals reversed a lower court ruling in favor of the insured recently, finding that the insurer of Ross Glove Company did indeed have to duty to defend a lawsuit against Ross alleging, among other things, trade dress infringement.  Acuity v. Ross Glove Company, 2012 WL 1109035 (Wis. Ct. App. 2012).  The case is not really a difficult one, and it is hard to see how the lower court got it wrong.  The underlying suit was brought by Seirus against Ross based on certain cold weather face and neck protection gear sold by Ross through a deal with Cabela's sporting goods stores.  The complaint alleged patent infringement and trade dress infringement.  Trade dress involves the look and feel of the product, and/or its packaging, such that infringement would be an attempt to imitate or "knock-off" the original product. 

Under its Commercial General Liability ("CGL") Policy, Ross was covered against claims for "advertising injury."  The trade dress allegations, as they often do in cases involving retail consumer products, including claims that the packaging for the allegedly infringing products was substantially similar and likely to confuse customers as to whether the products sold by Ross were associated with the Seirus products.  It is well settled that packaging is advertising and that putting a packaged product on retail shelves is "publishing" the advertising to the public.  Therefore, the allegations regarding the alleged confusion over the shelf products constituted claims of injury related to the advertising of Ross.  It is worth noting that Wisconsin follows the general rule regarding the duty of an insurance company to defend a lawsuit with potentially covered claims in it. If any of the claims in the complaint could be covered, then the insurer must pay to defend all of the claims, even, in this case, the patent claims which were apparently not covered by the policy.  Therefore, as a result of the ruling, Acuity has to pay to defend the entire lawsuit as long as the trade dress claims remain part of the case. 

The lawsuit sought enhanced Lanham Act damages against Ross claiming intentional trade dress infringement.  Acuity sought to get out of the defense of the suit based on an exclusion in the policy for "knowing" or "intentional" infringement.  However, as the court pointed out, the lawsuit also alleged damages based on unintentional infringement, and while intent is a factor in a trade dress case, it is not a prerequisite that intent be demonstrated in order to succeed on a trade dress claim.  Moreover, while the complaint contained a bare allegation of intent and damages as a result of it, it did not recite any specific facts in support of the claim that Ross intentionally imitated the Seirus trade dress.  Under these circumstances, the court held that the exclusion for intentional activity would not excuse Acuity from defending the case.

This is just another reason why it is important to have CGL insurance for a business, because trade dress claims continue to increase.  Also, as I have pointed out before, a 2007 survey of litigants found that the average cost per party of trade dress litigation was $700,000.  Many companies do not even realize they have coverage for advertising injury related to trade dress or other intellectual property claims, and they may fail to notify their insurance company of a lawsuit for infringement.  It is critical to notify the CGL carrier of such lawsuits.  It is also important to have counsel that understands the area of IP insurance coverage if the insurer balks at defending the case.  I have had insurers deny coverage for a client initially, but have gotten them to reverse themselves and pay for the defense after a challenge from  me arguing that the policy does trigger the duty to defend.  For a small business that cannot afford to pay six figures to get out of a lawsuit, the question of the duty to defend can become a "bet the company" situation.  That is why it is critical to have experienced advisers dealing with this kind of situation.