Coping with the New Reality of Vulgar Trademarks

The last ban against vulgar trademarks fell recently. The U.S. Supreme Court struck down the ban on trademarking immoral and scandalous material on the ground that it was a form of discrimination against a viewpoint, which violates the First Amendment. The U.S. Supreme Court previously held that the ban on trademarking disparaging material also violated the First Amendment.

With respect to immoral and scandalous material, there are currently about 202 pending trademark and service mark applications that are for or contain the F’Word. With respect to disparaging material, there are 10 pending applications for the N’Word, and 4 pending applications for the C’Word. Not surprising that a majority of these applications identify clothing as the applied for goods.

As consumers we hold the trump card to these vulgar trademarks; namely, we don’t need to support them by purchasing the goods or services associated with the vulgar mark. But this option gives little solace to those groups of individuals that are subject to slurs and stereotypes. It does not help me when I am walking with my young daughter and have to explain to her why someone has the F’Word on their t-shirt. Unfortunately, there is no perfect solution for everyone, but there is for certain groups and that solution is to own the word.

For example, the National Organization for Women should apply for the C’Word in connection with as many goods and services for which it can support use. The National Action Network should apply for the N’Word in connection with as many goods and services for which it can support use. An Evangelical church should apply for the F’Word, although that ship has probably sailed given the large number of pending applications for the F’Word. By owning these words as trademarks, these organizations and others can enforce those rights against others that may use the words in a trademark sense. After all, someone now is entitled to own these vulgar words and have the exclusive right to use them in commerce.

In fact, the Supreme Court’s decision could have just paved the way for a new organization bent on controlling vulgar speech applying for and ultimately owning a large portfolio of vulgar trademarks. This possibility exists because the organization does not have to engage in large scale production of a good or service in order to maintain rights in a trademark or service mark. The legal requirement is that consumers associate the mark with the goods or services, but there is no required number of consumers. The Courts have said the number needs to be more than insubstantial and more than negligible.

The Supreme Court could have created a situation where one party controls vulgar trademarks whereas before no one could exclusively own a vulgar trademark.

Nestle is Next to Battle the First Sale Doctrine

"arm holding a Nestle crunch candy bar outdoors the importation of which is protected under the first sale doctrine"

Nestle USA, Inc. filed a lawsuit against Market Centre, Inc. for selling in the United States genuine product purchased in Mexico from Nestle Mexico, S.A. de C.V. The goods sold in the U.S. is considered a grey market good. Société des Produits Nestlé S.A. is the owner of the NESTLE and other trademarks in the United States and Mexico. Société des Produits Nestlé S.A. exclusively licenses its U.S. trademarks to Nestle USA and exclusively licenses its Mexican trademarks to Nestle Mexico, which are its operating subsidiaries in these two countries.

Nestle USA alleged, similar to PopSockets, that it has a robust quality control program in the U.S. and provides after-sale benefits to consumers such as receiving and addressing complaints and addressing spoilage issues. Not surprising, no allegations are made with respect to the quality control program administered by Nestle Mexico or the after sale benefits to consumers provided by Nestle Mexico. However, chances are the programs are very similar if not the same.

Similar to the PopSockets case where reselling a domestic product is not per se illegal, importing a genuine good from a foreign country to the United States is not per se illegal because in the United States under the first sale doctrine a trademark owner that releases its goods into commerce cannot prevent the subsequent resale of those goods by others. Whether “material differences” between imported goods and domestic goods exist will determine whether the sale of the grey market good is illegal.

The “difference” does not need to be enormous. Slight variations in labeling, packaging, or quality control measures can be sufficient if they are likely to influence consumers’ purchasing decisions. Some U.S. courts have held that when the U.S. distributor is a wholly-owned subsidiary of a foreign manufacturer, the existence of material differences does not give rise to trademark infringement because the goodwill associated with the trademark still remains under the control of the foreign manufacturer.

This is an argument that Nestle USA will undoubtedly have to face. Despite Nestle USA and Nestle Mexico being operating entities, the goodwill associated with the marks from these countries remains under the control of the trademark owner Société des Produits Nestlé S.A. And the trademark owner has an interest in maintaining consistent quality in its products and ensuring a positive consumer experience regardless of what geographic location in which its goods are sold.

However, whether consumers are likely to be confused trumps all including the first sale doctrine. If the court believes that consumers are likely to be confused by the differences between the goods imported from Mexico and the goods authorized for sale in the U.S., the Court is likely to side to Nestle USA in this case.

Lessons from Trademark Litigation Over PATAGONIA for Beer

"Patagonia beer packaging spurs trademark litigation"

The Patagonia clothing company commenced trademark litigation with AB InBev over what has been characterized as its “launch” of a new beer brand PATAGONIA in Colorado. Although, this characterization is not accurate. Nevertheless, on its face, the Patagonia clothing company should have a real concern with AB InBev’s PATAGONIA beer brand. AB InBev is BIG and could easily saturate the market with advertising bearing the PATAGONIA brand.

Patagonia was founded as a climbing hardware manufacturing company in about 1960. By about 1970, the company expanded into clothing and it was also the time the PATAGONIA mark was adopted. Fast forward to the present, and the Patagonia company had revenue of about $209M in 2017, and has 33 retail locations nationwide.

And Patagonia expanded into beer in 2016, but not under its PATAGONIA mark. Its beer is branded LONG ROOT ALE. Unfortunately, there is a reason for this.

On July 24, 2007, Warsteiner Importers Agency, Inc. filed an intent-to-use application for PATAGONIA (in standard characters) in connection with “beer.” A statement of use was filed on July 17, 2012 with a specimen of use consisting of a beer bottle with a label depicting a mountain range and the word PATAGONIA. The PATAGONIA application for “beer” matured into a registration on October 16, 2012.

About two months later, on December 20, 2012, Anheuser-Busch, LLC acquired the PATAGONIA registration from Warsteiner Importers Agency, Inc. The assignment was officially recorded with the United States Patent and Trademark Office on February 8, 2013. On October 5, 2018, the PATAGONIA registration was maintained by Anheuser-Busch and the Declaration of Incontestability was filed. This declaration can only be filed if the registered mark has been continuously used for the previous 5 years. This declaration must be valid because Patagonia clothing did not petition to cancel the PATAGONIA registration for beer on the ground that it was abandoned.

For the news outlets to characterize AB InBev as having “launched” the PATAGONIA brand is not accurate. It appears that the PATAGONIA brand for beer has been around for almost 7 years and Anheuser-Busch was in charge of the brand for 99% of that time.

The more pressing problem for Patagonia clothing company is the Colorado Statute of Limitations for Unfair Competition claims. The federal Trademark Act does not contain a statute of limitations like the Copyright Act. Instead, courts look to state unfair competition statutes of limitation to determine whether a trademark infringement claim was not brought in time.

In Colorado, the statute of limitations is 3 years from the time the plaintiff knew or should have known of the infringing act. The Patagonia clothing company has retail stores in Boulder, CO and Denver, CO, and is a large company. Therefore, the key question in the case will be whether Patagonia clothing company knew or should have known of AB InBev’s PATAGONIA beer brand by 2015. If this is the case, then Patagonia clothing company will not succeed in its lawsuit.

The takeaway from this case is the importance as trademark owners to monitor the filings at the Trademark Office, and have a thought out enforcement strategy. Had Patagonia been monitoring the Trademark Office, maybe it would have acquired the PATAGONIA trademark application before Anheuser-Busch. That would have avoided trademark litigation.

Trademark Dispute Driven By Emotions Not Necessarily Fact

"Trademark dispute over Bittman's Medium publication"

About a month ago, Mark Bittman – a cookbook author and former New York Times columnist – announced the launch of his new online food publication called SALTY. His publication would cover the world of food with an eye for politics and inequality, in addition to recipes and personal essays. Unfortunately for Mr. Bittman, another publication was already using the SALTY name and took issue with Mr. Bittman’s choice of name.

The focus of the other SALTY publication was a sex, dating, and relationships newsletter for women, transgender, and non-binary people. The founder said SALTY was chosen because “it’s visceral. Sex is salty, sweat is salty, sweat is salty, tears are salty.” This publication has not been around for a long time having been launched in March 2018.

When the founder learned of Mr. Bittman’s publication she reportedly was “really angry.” This reaction is not uncommon in trademark disputes. Unlike copyrights and patents, trademarks are supposed to embody all the good things about a good or service and help tell the story. That’s why from the beginning founders in particular are closely tied to their trademarks.

When a trademark dispute rears its ugly head, it can be difficult for trademark owners to look past the emotion and make decisions based on the facts of the case. But getting to the facts is key to making smart decisions. With every trademark dispute, the question must be asked “Is this other use harming me” or “could this use realistically harm me in the future”?

The word “salty” has multiple meanings and conveys different impressions depending on the context of the use. This means that – assuming no famous mark for dilution purposes exists – identical marks may be capable of peacefully co-existing in the marketplace. Not all publications are same for likelihood of confusion purposes.

This was the case with the SALTY publications. First, the two marks – while visually and phonetically identical – conveyed very different meanings because they were exploiting different meanings of the “salty” term. Second, their target audiences are very different because the subject matters of the publications are very different.

It is unlikely that any consumer would mistakenly believe that Mr. Bittman’s publication is associated with the first SALTY publication such that Mr. Bittman will unjustly benefit from more visitors, subscribers, or readers. Because the subject matters are so different, there is no way the first SALTY publication will lose readers or visitors because of Mr. Bittman’s publication. Mr. Bittman was a former New York Times columnist, so the likelihood that his publication would be so poor that it would negatively reflect on the first SALTY publication is highly unlikely. Finally, the publications both are new, so there is no potential loss of control of a reputation because Mr. Bittman’s publication is so large.

By getting through the emotion and looking at the facts, this isn’t a case that the first SALTY publication should spend the time pursuing. And hopefully, first SALTY does not pursue it because Mr. Bittman voluntarily rebranded his publication to MEDIUM X BITTMAN. However, the name change wasn’t enough, first SALTY is looking for a payday.

Bicycles and Snack Bars Related Because Some Retailers Sell Both

"TREK snack bar packaging related to bicycles"

Most bicycle manufacturers do not make bicycles and snack foods. In fact, in a recent Trademark Trial and Appeal Board decision there was no evidence presented of a bicycle manufacturer also owning a federal trademark registration for the same mark in connection with any type of snack food. Nevertheless, the Trademark Trial and Appeal Board held that bicycles and snack bars are related goods.

Natural Balance Foods Limited sought to register the mark TREK for a variety of snack bars. The Trademark Office approved the TREK mark for opposition and Trek Bicycle Corporation (“Trek”) timely opposed the registration of Natural Balance Foods’ mark. Trek alleged that the TREK mark for snack bars was likely to cause confusion with its prior registered marks for TREK in connection with bicycles, online retail store services, and powders used in the preparation of sports drinks and energy drinks.

Based on the goods descriptions alone, snack bars, bicycles, online retail store services, and sport drink powders are different goods. However, when no restrictions are identified in the goods or services descriptions, these different goods are deemed to travel in all normal channels of trade and appeal to all classes of consumers. Natural Balance Foods made it easy for Trek to win its case.

Trek offered several third-party websites that sold bicycles and snack bars. The snack bars sold by the retailers were a different brand owner from both the retailer and bicycle manufacturer. But the fact that these goods were sold by the same retailer was enough for the Board to conclude that the channels of trade overlapped. And because the marks were identical, this overlap was enough for the Board to conclude that a likelihood of confusion was likely.

This decision highlights the challenge for trademark searchers. It is not enough to rely on the good or services descriptions because on their face these descriptions may lead to an incorrect analysis. It is imperative to consider past decisions to determine whether a relatedness finding had been found.

Evidentiary Mistakes Haunt NABOSO Application

"NABOSO product packaging"

Naboso Technology, LLC filed a trademark application to register the mark NABOSO (in standard characters) for “orthotics for feet,” rubber flooring, and “yoga mats.” Naboso Technology identified in its application that the English translation of NABOSO is BAREFOOT. The Trademark Office refused registration of Naboso Technology’s mark on the ground that it was likely to cause confusion with prior registrations for the mark BAREFOOT in connection with orthotics, rubber flooring, and yoga mats.

Naboso Technology did not attempt to narrow its goods descriptions and make a corresponding amendment to the descriptions in the cited registrations. Therefore the goods were deemed to be related, travel in the same channels of trade, and appeal to the same class of consumer. Not a good start for Naboso Technology.

Naboso Technology decided to make the conceptual weakness argument, and was on the right path because it submitted 11 third-registrations for marks containing the term BAREFOOT. However, there was a cloud over what appeared to be sufficient evidence because Naboso Technology did not properly introduce its evidence.

To make third-party registrations of record, that status and title copy of the registration must be introduced. Offering the registration certificate is insufficient. Additionally, lists of third-party registrations are also insufficient. Nevertheless, Naboso Technology made both mistakes. The only reason any of its third-party registration evidence was considered was because the Examining Attorney did not object to it.

When it came to commercial strength, the Board did not give many of the third-party registrations any weight because Naboso Technology did not introduce evidence of use for most of these marks. This was a costly mistake because instead of having 11 third-party registrations to rely on the number dropped to four, which was well below the 10 minimum.

The Board next considered the third-party registrations with respect to the conceptual strength of BAREFOOT mark. The lack of use evidence negatively impacted the conceptual strength argument as well brining the number of third-party registrations below 10. The Board also found that the third-party registrations demonstrated that BAREFOOT was a suggestive. Overall, the Board found that the BAREFOOT mark was not weak.

Finally, the Board turned to the similarity of the marks. Applying the doctrine of foreign equivalents, the Board found the the marks were confusingly similar. The outcome may have been different if the strength factor had come out in favor of Naboso Technology because Czechoslovakian is not a common language in the U.S.

North Carolina Jury not Kind to Walmart in BACKYARD Lawsuit

"Woman counting money as jury orders Walmart to pay $95.5M"

About a month ago we talked about the trademark infringement loss Walmart suffered over its use of the BACKYARD GRILL mark. We reported that in the first case, Walmart was ordered to pay Variety Stores $32.5M. Walmart successfully appealed this decision and the case was retried before a jury. The jury found in favor of Variety Stores and the case entered the second phase where the jury would decide how much Walmart is obligated to pay Variety Stores.

The jury has spoken and has ordered Walmart to pay Variety Stores $95.5M. This is a little less than three times the $32.5M a judge ordered Walmart to pay Variety Stores in 2016. This is one of the larger damage awards involving trademark infringement, but million dollar and multimillion dollar damage awards are not uncommon in trademark infringement cases.

On August 22, 2018, DatabaseUSA.com, L.L.C. was ordered to pay Infogroup, Inc. $4M for the trademark infringement claim and $43.6M for the unfair competition claim. On July 31, 2017, iShow.com was ordered to pay Lennar Corp. $5.5M for its trademark infringement. On October 5, 2016, Costco Wholesale Corporation was ordered to pay Tiffany and Company $15.8M for trademark infringement.

Walmart made the decision to adopt a mark with known words and that shared the dominant term BACKYARD with another trademark owner. From a trademark searching perspective, marks comprised of known words generally exist to a certain degree in a crowded field. If you layer in international markets on top of it, the probability of finding a mark that is 100% in the clear in every jurisdiction is extremely low. When a trademark owner decides to adopt a mark with known words, the owner needs to accept some amount of risk and work to put himself and herself in the best defensible position should an issue arise.

A New Trend for the Relatedness of Goods or Services Factor?

"White Horse Auto dealership related goods or services to car washes"

A recent Trademark Trial and Appeal Board decision involving car dealerships and car washes may signal a change in how the Board will assess the relatedness of goods or services likelihood of confusion factor. White Horse Auto, LLC filed a service mark application to register the mark WHITE HORSE AUTO (in standard characters) for “automobile dealerships.” White Horse Wash, LLC opposed the registration of White Horse Auto’s application on the ground of priority and likelihood of confusion.

Not surprisingly, the Board found that the marks were virtually identical. And White Horse Auto failed to demonstrate that the WHITE HORSE phrase was diluted for automobile related goods and services. Ultimately, this case came down to whether the services at issue were sufficiently related to likely cause confusion.

The Board held that providing automobile-related services by the parties was not enough by itself to establish the services at issue were related. “A finding that the goods are similar is not based on whether a general term or overarching relationship can be found to encompass them both.” This a departure from cases the TTAB decided as early as last year. For example, in the SONIA SONI LIFE IS A RECIPE, the broad description “spices” was enough for the Board to conclude that the applicant’s goods covered the registrant’s goods. The only time the Board departed from this interpretation was when the goods or services descriptions at issue were vague or involved technical goods.

In the present case, there is nothing vague nor technical about “automobile dealerships” or “car washes,” nor is either description vague. Nevertheless, the Board looked at the real world marketplace to determine what the actual services were. And based on the similarities the Board found in the circumstances surrounding the marketing of the two marks, the Board concluded the services at issue were related. Unfortunately for White Horse Auto, its application was denied registration. But if at first you don’t succeed, it’s okay to try again.

More importantly for trademark searchers, could we be seeing a change in how the Board assesses the relatedness of the goods and services factor? This is definitely an issue to watch in 2019 as the Board decides more cases because the relatedness of goods or services factor is critical to not only conducting trademark searches but also assessing whether a likelihood of confusion exists between two marks.

Visual Similarity Sinks SEXIFIT Trademark Application

"Sexifit logo refused primarily because of visual similarity"

SEXIFIT is the name of a workout program primarily directed at women that focuses on strength and core. The workout was developed by a former NFL and NBA dancer. The name is a composite word comprised of a spelling variation of SEXY (i.e., SEXI) and FIT to form the unitary mark SEXIFIT. Unfortunately, the Board’s primary focus on visual similarity would lead to the downfall of a trademark application that included this term.

Procheer Fitness and Dance filed an application to register the mark THE OFFICIAL SEXIFIT & Design mark in connection with “providing fitness instruction services in the field of dance, and physical fitness.” The United States Patent and Trademark Office examined the application and finding no likelihood of confusion issue, published the mark for opposition.

During the 30 day opposition period, ICON Health & Fitness, Inc. opposed the registration of Procheer’s mark alleging it was likely to cause confusion with its prior registrations for IFIT. ICON Health & Fitness owns several fitness brands: Nordictrack, Freemotion, Proform, and iFit. The iFit brand is a mobile application combined with a virtual personal trainer. Although in the fitness or exercise field, a fitness class is different than personal training and definitely appeal to different classes of consumers.

Nevertheless, none of these limitations appeared in THE OFFICIAL SEXIFIT & Design application nor in any of the IFIT registrations. Accordingly, because the Trademark Trial and Appeal Board was forced to compare fitness and exercise with fitness and exercise, it had to conclude the services at issue were related. However, what was abnormal was the Board conclusion that ICON’s IFIT mark was famous for fitness instruction services when all the evidence presented demonstrated that IFIT may be famous for fitness equipment. Fame is not transferable this way.

When it came to the similarity of the marks, the Board gave no consideration to the difference in meaning between the THE OFFICIAL SEXIFIT & Design mark and IFIT mark. Likewise, it gave no consideration to the phonetic dissimilarity between SEXIFIT and IFIT. For trademark searchers, this is an example that visual similarity between two marks is generally the most important consideration when evaluating two marks.

The Board also ignored the design elements in the SEXIFIT & Design mark stating that the literal element is the most important because consumers use words to order and refer to goods and services. Focusing on the literal portion of the mark, the Board found that ICON’s entire IFIT mark was incorporated into the SEXIFIT portion of Procheer’s mark. This is another example for trademark searchers to pay attention to. If a prior registered mark is subsumed in its entirety in the mark you are searching and you can’t find dilution or have credible argument about the unrelatedness of the goods or services at issue, then the mark likely is unavailable.

Accordingly, primarily focusing on visual similarity, the Board granted ICON’s opposition and denied registration of Procheer’s THE OFFICIAL SEXIFIT & Design mark.

How Wild Card Symbols Can Improve Your Searching

"TEABLEE tea strainer would have been found using wild card"

Spend a little time learning how to use wild card symbols and logical operators in your search equations and you will improve the accuracy of your search results. And they really are not that complicated to use. Using truncation symbols is something that could have benefitted Lawrence Charles before he spent what had to be thousands of dollars on his failed attempt to register the TEABLY mark.

Mr. Charles sought to register the mark TEABLY (in standard characters) for “tea-based beverages” in International Class 30. The Trademark Office refused registration of this mark on the ground that it was likely to cause confusion with the prior registered mark TEABLEE for, among other goods, “tea infusers . . . tea strainers . . . tea balls . . . tea caddies . . . tea canisters . . . tea sets” in International Class 21. Mr. Charles never amended his goods description to reflect the actual nature of his tea-based beverage, and as a result it was an easy refusal for the Trademark Trial and Appeal Board to affirm.

Unfortunately for Mr. Charles, this refusal could have been avoided from the beginning with a proper trademark search. It is important to spend time considering the possible variations of a proposed mark. Once you have identified the possible variations, you can bet there is another variation out there that you did not identify. The way we guard against this possibility is through the use of truncation symbols.

Wild card symbols differ by the databases you are using, so it is important to review whatever key is available to explain the wild card symbols for that database. In the case of BOB’s database, the $$ wild card symbol will look for unlimited space and non-space characters. For Mr. Charles’ search, the mark would have looked like TEABL$$. Considering the similarity of the marks only, this search would have retrieved the prior registered TEABLEE mark.

Mr. Charles likely included in his search equation International Class 30 because that is where his tea-based beverage would be classified. This was his second mistake because focusing on International Classes instead of relatedness of goods is wrong. As we saw in his case, goods classified in International Class 21 were found to be related to his tea-based beverage in International Class 30. That’s why BOB focuses on relatedness of the goods not International Classes when it conducts a trademark search.

If the TEABLEE mark was returned as a potential knockout it does not mean that Mr. Charles could not move forward with his TEABLY mark. What it means is that he needs to be prepared for a refusal and start the application on the right foot.