PopSockets Tries to Convert Bona Fide Sellers Into Counterfeiters

In an interview for Vox, David Barnett – the founder of PopSockets – said that he saw the first counterfeit product in about 2016. In 2017 and 2018 he claims to have been Amazon’s best takedown customer because his company was taking down 1,000 – 2,000 listings every day from marketplaces around the world. PopSockets claims to have 40 lawyers around the world and has spent over $7 million in 2018 fighting alleged counterfeits.

We say “alleged” counterfeits because not all PopSocket targets are counterfeiters selling or offering for sale a counterfeit PopSocket. Some of the listings on Amazon and other marketplaces are selling authentic PopSockets. However, PopSocket attempts to transform these bona fide sales into counterfeits through the quality control program it established.

Under the first sale doctrine, also known as the exhaustion doctrine, a branded product may be bought and resold without change, assuming that there is no deception present in the resale process. Therefore, once the trademark owner authorizes the initial sale of the product under the trademark, the trademark owner cannot ordinarily prevent or control subsequent sales of goods bearing the mark. For example, down-the-line retailers can display and advertise the branded goods, and secondhand dealers can advertise the branded merchandise for resale in competition with the sales of the trademark owner, provided they do not misrepresent themselves as authorized agents.

However, the first sale doctrine does not apply if the goods differ materially from the authorized goods. One way a brand owner can differentiate authorized goods from unauthorized goods is to adopt a quality control procedure because this program gives consumers ongoing benefits after the point of sale that is not available from the unauthorized product. However, superficial differences between the quality controls of the authorized product and the unauthorized product do not allow the trademark owner of defeat the first sale defense.

The PopSocket is not a complicated product. It is a circular disk that attaches to the back of a cell phone and extends when pulled making it easier for the cell phone user to hold the phone in certain situations. To suggest that a rigorous quality control program conveys a meaningful benefit to consumers beyond the point of sale is a stretch especially when the PopSockets being resold were from authorized retailers, to begin with.

But PopSockets is not distinguishing these legitimate resellers from the true counterfeiters. This is the case in a recent lawsuit filed by PopSockets against Lora Suzanne Wilcox. PopSockets were purchased from authorized retailers and then resold on Amazon. This act is squarely within the defendant’s rights, yet PopSockets’ is attempting to argue that its rights were not exhausted when it sold a PopSocket to the first authorized reseller because of its quality control program.

PopSockets will likely lose this case because it is likely the case that no quality issues exist with the PopSockets being resold on Amazon by Ms. Wilcox. She is not one of the counterfeiters PopSockets should pursue. What PopSockets should be more concerned about is potentially losing its trademark rights altogether.

Trademarks should never be used as nouns. They should always be used adjectives. If consumers start using a trademark as a noun, congratulations you have just lost your trademark rights because the trademark is now a generic term. PopSockets appears to be heading in this direction.

At the beginning of the Vox article, the journalist states “[e]very time some asks me, ‘What’s that?” there’s about a 70 percent chance I know exactly what they are referring to. It’s my PopSocket.” Throughout the article PopSockets is used as a noun:

  • I love PopSockets
  • Without a PopSocket
  • PopSockets were originally invented . . .
  • PopSockets sell really well

With the Federal Circuit’s decision in Coke Zero finding that a generic term can exist for sub-categories of the generic term like “no sugar soda pop,” PopSocket should be concerned that it may meet the same fate.

Counterfeiting is bad and counterfeiters should be aggressively pursued by brand owners. But any enforcement campaign must be thoughtfully designed to pursue the actual wrongdoers. Not individuals that are legally reselling branded goods. Otherwise, the label of a trademark bully is fitting.

The Chilling Effect Trademark Bullying Can Have on Speech

The National Collegiate Athletic Association has and continues to aggressively enforce its trademark rights in the MARCH MADNESS trademark. In fact, its reputation for trademark enforcement is so well known that the KFANN sports radio station in Minneapolis, MN will not use the entire phrase MARCH MADNESS in an advertising spot for a local restaurant chain for fear of being sued by the NCAA. Instead, the word MADNESS is replaced with the sound of buzzer to indicate that the NCAA Men’s Basketball Tournament can be watched at this particular restaurant. This is a prime example of the chilling effect that trademark bullying can have on speech even when the speech is legal.

The NCAA’s first Trademark Trial and Appeal Board proceeding was commenced on May 24, 2007 against the University of Kentucky’s BIG BLUE MADNESS trademark application. Since then, NCAA has opposed:

  1. MOJO MADNESS for “prepared potatoes,” which is it ultimately lost when Shakey’s USA, Inc. voluntarily amended its description to “MOJO brand potatoes prepared at Shakey’s restaurants.” As an aside, this is a good example of how details a broad goods description may have to become in order to win a likelihood of confusion battle.
  2. MARCH RADNESS for a variety of clothing articles, which the NCAA won.
  3. LIVE THE MADNESS for a variety of clothing articles, which the NCAA won.
  4. APRIL MADNESS for sweepstakes, which the NCAA won.
  5. MARKDOWN MADNESS for automobile dealerships, which the NCAA lost.
  6. MARCH MATNESS for a website featuring entertainment information, which the NCAA won.
  7. MARCH IS ON! for coordinating and promoting athletic events, which the NCAA lost.
  8. MUNCH MADNESS for dips, processed vegetables, and chips, which the NCAA won.
  9. BASKETBALL MADNESS for downloadable video games, which is ongoing but suspended in light of a lawsuit filed in the United States District Court of the Eastern District of Kentucky. As an aside, the NCAA also petitioned to cancel the mark XOOKER, which is owned by the same owner of the BASKETBALL MADNESS mark. Hard not to construe that action as clear trademark bullying.
  10. And the most recent proceeding against MARCH MULLIGANS for sweepstakes, games of chance, and contests.

These are just the actions taken by the NCAA before the Trademark Trial and Appeal Board, but the NCAA has a reputation for also firing off demand letters. Some of these actions are legitimate, but several of them are not. It’s this overreaching that creates a trademark bully.

Not every use of another party’s trademark amounts to infringement. Under the doctrine of nominative fair use, a party – even a competitor – can use another party’s trademark to refer to that party provided only so much of the trademark is used to refer to the trademark owner. In other words, don’t use the full logo if the words are enough to refer to the trademark owner. In the case of the KFANN advertising spot, the radio station can legally use MARCH MADNESS to refer to the NCAA Men’s Basketball Tournament and should fear reprisal from the NCAA because of its overly aggressive trademark enforcement behavior.

4 Characteristics Trademark Bullies Generally Have in Common

Although there seems to be less publicity recently about trademark bullies, that does not mean they have gone away. Trademark bullying is alive and well, and the Associated Press recently published an article pointing the finder at universities as the newest members to this disfavored group. A few examples the article highlighted are:

  • Duke University opposed the registration of DUKE’S FOLLY for “wine” and “custom production of wine for others; providing information about wine-making”;
  • North Carolina State University objected to the use of WOLFPACK – the nickname for its sports teams – by a convenience store in Raleigh, NC called Wolfpack Mini Mart, and a California brewery’s use of Wolfpack to promote its wolf themed beers; and
  • Texas A&M University objected to Erik Nolte’s plans to produce a beer called the 12TH CAN.

The United States Patent and Trademark Office once defined a “trademark bully” as “a trademark owner that uses its trademark rights to harass and intimidate another business beyond what the law might be reasonably interpreted to allow.” Despite this definition, most people believe a trademark bully is any large company that is picking on a smaller company, but this is not always the case.  And while most “trademark bullies” do not have a specific intent to harass the other party, they do have an intention to intimidate their opponent.

The problem with bullies is that they cause their opponent to unnecessarily spend money and sometimes money they don’t have. Here are some characteristics to be on the lookout for to avoid a party that is likely a trademark bully:

  1. Does the person or party own numerous trademark registrations for the same mark?
  2. Do those marks exist in a crowded field?
  3. Does the correspondent information at the USPTO for the trademark owner’s marks identify a solo practitioner, small firm, or large firm with a reputation for aggressive litigation tactics? A common problem in the trademark bully area are lawyers that do not have a deep understanding of the likelihood of confusion factors.
  4. Has the trademark owner been involved in several proceedings before the Trademark Trial and Appeal Board?