5th Circuit lays out analytical framework for assessing distinctiveness of registered design mark

The Fifth Circuit yesterday issued an opinion discussing how to analyze the distinctiveness of a registered design mark. In Amazing Spaces, Inc. v. Metro Mini Storage, No. 09-20702 (5th Cir. June 2, 2010), the court first held that the presumption of validity flowing from registration was not itself enough to stave off summary judgment of nondistinctiveness (at least in this case).

Moving on to an assessment of inherent distinctiveness, the court held that this registered design mark:



could not be analyzed under the seminal distinctiveness (generic, descriptive, suggestive, arbitrary/fanciful) test set forth in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2d Cir. 1976) (Friendly, J.) (generic, descriptive, suggestive, arbitrary/fanciful) because it was a "futile endeavor" to try to apply any of those labels to the mark. (The court resisted saying that Abercrombie could never be applied to a non-word mark, however.)

Instead, the court applied the distinctiveness test from Seabrook Foods, Inc. v. Bar-Well Foods Ltd., 568 F.2d 1342 (CCPA 1978), which is geared more toward design marks. The Seabrook test looks at whether the design is a common shape or form of ornamentation (as opposed to being unusual in its field), or is capable of being perceived as an indicator of source apart from any words it is used with. Applying Seabrook, the court held that so many others use designs similar to this one that it was not inherently distinctive.

The mark owner tried to establish secondary meaning by offering evidence of long usage, substantial sales revenue, and substantial advertising expenditures. But the 5th Circuit affirmed summary judgment of no secondary meaning because the evidence showed that the mark owner primarily used the mark as a form of ornamentation, along with word marks that were more clearly the main product identifiers. In other words, these other facts severed the inferential link the mark owner tried to make between this circumstantial evidence and the conclusion that the star design itself thereby acquired secondary meaning.

Tom

5th Circuit (in Unpublished Opinion) Says Strength of Junior User’s Mark May be Relevant in Reverse Confusion Analysis

Seemingly approving of other circuits’ holdings that, in a reverse confusion case, the strength of the junior user’s mark is relevant, the 5th Circuit vacated summary judgment in the reverse confusion case of The Great Amer. Rest. Co. v. Domino’s Pizza LLC, No. 08-40654 (5th Cir. Sept. 30, 2009). The court designated its short, four-page opinion as “unpublished,” however. While unpublished opinions can be cited pursuant to Fed. R. App. P. 32.1, the 5th Circuit’s local rule 47.5.4 states that its unpublished opinions “are not precedent.” So it’s questionable how much weight any court might give it.

I believe this is the first time that the 5th Circuit has mentioned the “reverse strength” concept applying in a reverse confusion case. Off the top of my head I know that the 3d and 9th Circuits also take this view (the 5th Circuit cited only the 3d Circuit’s decision in A&H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237 F.3d 198 (3d Cir. 2000)). The court did not address, however, whether the strength of the senior user’s mark remains relevant (or how) in the likelihood of reverse confusion calculus.

5th Circuit Adopts Presumption of Irreparable Harm by Rejecting Presumption of Irreparable Harm

In Paulsson Geophysical Serv., Inc. v. Sigmar, No. 07-50406 (5th Cir. May 23, 2008), the US plaintiff licensed the named US defendant (Sigmar) and his US company (RSI) to "promote Paulsson's MASSIVE 3D VSP services in Mexico." RSI immediately turned around and, going beyond merely "promoting" Paulsson's services, "licensed" its Mexican sister company, RSM, to "use" Paulsson's mark in Mexico, and RSM did. In Mexico. They just didn't use Paulsson's services with Paulsson's mark.

Paulsson sued in the US and got a preliminary injunction. The 5th Circuit affirmed. First it found it had extraterritorial subject matter jurisdiction even though the infringement was limited to Mexico because US companies were involved, there was no conflict with Mexican law, and the defendants obtained financing for their Mexican business in the US. In so holding, the 5th Circuit made fairly clear that, for a case claiming trademark infringement in a foreign country to have enough "effect" on US commerce to trigger the Lanham Act, a court need not limit its inquiry to the actual challenged transaction, but can look at all sorts of ancillary activity too.

Now to the irreparable harm issue. As you know, courts are beginning to apply eBay's holding ("no broad rules for or against patent injunctions") to the "presumption of irreparable harm" concept in trademark cases. See, e.g., N. Am. Med. Corp. v. Axion Worldwide, Inc., No. 07-11574, 2008 WL 918411, at *12 (11th Cir. Apr. 7, 2008), which I previously blogged on. The Fifth Circuit had been the last holdout on adopting this presumption. While patting itself on the back for holding out, and citing eBay, the Fifth Circuit in this case then turned around, however, and -- in effect -- adopted the presumption. It said it wasn't, but, really, it was. It said that "loss of control of the quality" of services RSM was offering (and mentioning the size of the RSM transaction), was enough to prove irreparable harm.

So the lesson here is this: To get the presumption of irreparable harm in TM cases in the 5th Circuit, simply have your client speculate, er, I mean "testify," about the potentially devastating consequences of the lack of control (i.e., "OMG! What if the defendants' [goods] [services] are sub-par? Their customers will probably think it's us!! And they'll, like, hate us forever!! OMG!"). And voila! Irreparable harm! (Just don't say "presumption.")

5th Circuit Shoots Down Creative Attempt to Remove a State Law Trademark Case

The Fifth Circuit recently shot down a creative attempt to remove a state court case claiming trademark infringement under Texas law (not under the Lanham Act) to federal court. In In re Hot-Hed Inc., No. 06-20893 (5th Cir. Jan. 30, 2007), the plaintiff sued in Texas state court, alleging trademark dilution under the Texas Business & Commerce Code, and trademark infringement and unfair competition under Texas common law. In its prayer for relief, the plaintiff demanded “attorneys’ fees as allowed by law.” The defendant removed to federal court, alleging that the claim raised a “federal question.”

The plaintiff moved to remand, saying that its complaint didn’t say a word about federal law. The defendant convinced the district court, however, that the phrase “attorneys’ fees as allowed by law,” which appeared in the prayer, must have meant federal law (i.e., the Lanham Act), since none of the three asserted Texas law claims permit the recovery of attorneys’ fees.

On mandamus, the Fifth Circuit disagreed. It said that Texas case law indicates that the plaintiff might have been able to ask for a declaratory judgment under the Texas Declaratory Judgment Act, even though the complaint didn’t mention the Texas D.J. Act or demand declaratory relief. And under Tex. Civ. Prac. & Rem. Code § 37.009, attorneys’ fees are available for a D.J. under the Texas D.J. Act. Applying the principle that “any doubt about the propriety of removal must be resolved in favor of a remand,” the Fifth Circuit ordered the district court to check out if diversity jurisdiction existed, and, if not, to remand. The Fifth Circuit also seemed swayed by the principle that removal of a trademark case is improper if the plaintiff doesn’t clearly state he’s seeking relief under the Lanham Act.

Coupla Trademark Decisions (1st and 5th Circuits)

The First and Fifth Circuit recently handed down trademark decisions.

In Borinquen Biscuit Corp. v. M.V. Trading Corp., No. 05-2591 (1st Cir. Apr. 4, 2006), the First Circuit upheld a preliminary injunction against an accused infringer. In so doing, the court spent considerable time discussing the parties' respective burdens on the issue of the distinctiveness as to an unregistered, registered but not yet incontestable mark, and a registered and incontestable mark. In an interesting side issue, the defendant tried to show that the plaintiff's mark was weak because the PTO had issued several registrations including the mark. The First Circuit turned this against the defendant on the issue of whether the mark was inherently distinctive, observing that the PTO wouldn't have issued so many registrations for the mark without requiring 2(f) showings of secondary meaning if the mark wasn't inherently distinctive. I wouldn't have seen that boomerang effect coming, but now we're all forewarned (at least in the First Circuit).

In Icee Distributors Inc. v. J & J Snack Foods Corp., No. 04-30060 (5th Cir. Apr. 11, 2006), the Fifth Circuit rejected trademark infringement claims by one licensee against another licensee. Essentially, the court decided that the plaintiff licensee had no claim under the Lanham Act because the licensor (also a defendant) had validly licensed the defendant licensee. Since the licensor couldn't have sued the defendant licensee for infringement, neither could the other licensee, whose rights were only as great as the licensor's. There were also some other side issues in play, but that's the core trademark holding.

GOP Cybersquatters?

I may live and practice in the great (red) state of Texas, but I was born, bred, schooled and worked exclusively in several true blue states before that. And so, yes, I'm a blue stater politically. As a democrat in Texas, however, I now understand how republicans in my native Massachusetts must feel. But still, as a trademark guy, I can't abide this little gambit.