Western District Denies Preliminary Injunction Against Amazon

Last summer, The Comphy Co. sued Amazon.com, Inc., for using its trademarks on Amazon’s store platform even though company doesn’t do business with Amazon.

Comphy alleged that Amazon’s search engine makes it look like the luxury bedding maker offers products through Amazon and then diverts potential customers to bedding providers that do.

Comphy filed a motion for preliminary injunction in the U.S. District Court for the Western District of Washington seeking to put a stop to that practice. Among other things, it sought to enjoin Amazon from “[p]romoting, supporting or allowing third parties’ unauthorized use of the COMPHY trademark (or highly similar marks such as COMFY) to promote bedding, sheets, pillows and related products not made by or under the authority of The Comphy Co.”; and “[a]utomatically suggesting searches for “Comphy”, “Comphy Sheets”, “Comphy Company” and “Comfy Sheets” when users begin to type a first few letters of those marks.”

On March 12, the court denied Comphy’s motion. In doing so, it wrote: “This is not an easy decision. Many of Defendant’s actions toe exceedingly narrow legal and equitable lines. But, on the record presented by Plaintiff, there are simply too many pitfalls for the Court to map an equitable course.”

At the outset, the court noted that Amazon had stopped doing the things that Comphy had complained about. But since Amazon did not stipulate to a preliminary injunction, the court considered the motion on the merits.

Comphy persuaded the court with its evidence of actual consumer confusion:

“There is no question that Plaintiff presents evidence of actual confusion that is often compelling, including written reviews by verified purchasers,” the court wrote. “Defendant has little retort for the fact other than to point out that the evidence is only that a small percentage of purchasers indicate they were confused.”

However, based on the limited record presented, the court found it was not clear that Comphy had a protectable trademark in its name; that Amazon had been using a confusingly similar mark; and that irreparable harm was likely. Therefore, it concluded that preliminary relief was not appropriate.

The case cite is The Comphy Company v. Amazon.com, Inc., No. 18-1460 (W.D. Wash. March 12, 2019) (Martinez, J.).

TTAB Offers Pilot Program to Expedite Cancellation of Abandoned Registrations

Last March the U.S. Trademark Trial and Appeal Board rolled out a pilot program to expedite the cancellation of abandoned registrations. 

The U.S. Patent and Trademark Office’s administrative law arm now randomly selects over half of all cancellation petitions that allege abandonment or nonuse as a claim. Participation is voluntary, but if the parties opt in, they can get a decision in about 50 days. They also enjoy streamlined discovery and a decision on summary judgment-style briefs.

Here’s how the TTAB describes the program:

“Under the pilot, the TTAB identifies newly-filed cancellation proceedings limited to abandonment or nonuse claims that may benefit by some form of the Board’s existing Accelerated Case Resolution (ACR) procedures. The TTAB has an established practice of offering ACR in inter partes proceedings to simplify and speed up proceedings, allowing the parties to save time and expense. The standards of proof in an ACR proceeding remain the same as those in a traditional proceeding, and a final decision rendered under ACR may be appealed in the same manner and under the same time frames as non-ACR decisions.”

If the only issue is whether the registrant is not using the mark in the marketplace, the process should be easy, right? That’s the TTAB’s thinking, and it’s smart. The normal process to test whether a registrant is entitled to maintain its registration is often too cumbersome and expensive to be useful.

The standard for abandonment is three years of consecutive nonuse of a trademark, coupled with an intent not to resume use. If a company is out of business or its branded product has been permanently shelved, the trademark owner’s registration shouldn’t block others. It’s a zombie that should be quickly cancelled when attacked.

The high cost of the usual process drives abandoned claims to the sidelines. In the TTAB’s words, the overall default rate is “fairly high.” That’s my experience as well. While that’s not necessarily a bad thing, it would be better to have as many claims as possible decided on their merits. Making the cancellation process quicker and easier should help more parties to do so.

How You Sign a USPTO Application can be Crucial

It’s an innocent mistake. 

You sign your company’s application for trademark registration in your individual name, rather than in the name of your company. Innocuous, right? Yet, if your company is the one that uses the trademark, that mistake could be fatal to your application.

The USPTO clarifies: “If an applicant is not the owner of (or entitled to use) the mark at the time the application is filed, the application is void and cannot be amended to specify the correct party as the applicant, because the applicant did not have a right that could be assigned.” Trademark Manual of Examining Procedure § 803.01, citing 37 C.F.R. § 2.71(d).  

In particular, the USPTO notes that an officer who applies to register his or her organization’s trademark in his or her individual name commits a fatal error in the filing that cannot be corrected:

Non-Correctable Errors. The following are examples of non-correctable errors in identifying the applicant:

(1) President of Corporation Files as Individual. If the president of a corporation is identified as the owner of the mark when in fact the corporation owns the mark, and there is no inconsistency in the original application between the owner name and the entity type (such as a reference to a corporation in the entity section of the application), the application is void as filed because the applicant is not the owner of the mark.

Id. at § 1201.02(c).

So whether you seek an advantage by keeping the trademark in your personal name, or because you don’t know any better, listing yourself as the owner when the trademark is actually owned by your entity can be dangerous. It can render your application void — as well as any registration that later issues.

Study Links Trademark Filings to Innovation and Growth

An interesting new study from researchers at the USPTO, Center for Economic Studies, and the US Census Bureau explores who makes trademark filings and why they do so. 

The paper, “An Anatomy of U.S. Firms Seeking Trademark Registration,” was published in September by the nonprofit, nonpartisan, National Bureau of Economic Research.  

It links USPTO data of trademark filings with census data about the filers. It concludes that companies that make trademark filings are more likely to grow, and more likely to make patent filings, than companies that do not.

Following are some highlights: 

  • The average trademark filer makes about two filings.
  • “When firms successfully leverage trademarks to differentiate goods or services and insulate themselves from copying and competition by registering trademarks, they can achieve faster growth.”
  • “[Y]ounger firms may have more incentive to apply for trademark registration relative to older counterparts.”
  • On average, companies that make a trademark filing upon inception as a company more than triple in size, from roughly two-to-five employees to nearly ten, by year one.
  • Companies that apply to register a trademark tend to grow much faster than companies that do not.
  • “In the period following first trademark filing, treated firms have, on average, approximately 34% higher employment and 24% greater revenue compared to the control group.
  • Almost 50% of firms with both patent and trademark applications filed for their first patents and trademark registrations within a five-year window, which “strongly supports the notion that the two activities are intertwined.”
  • “[W]hile most of the firms that applied to register a trademark did not engage in innovative activity as measured by patent filings or grants, the proportion of trademark filing firms with a patent application is significantly higher than that of all firms.”

The paper also noted that less than three percent of all trademark filings are opposed. While this is small number, the fact that it is not zero demonstrates the perceived value of trademarks. If they weren’t seen as valuable, no one would spend the time and money to oppose someone else’s filing.

Minor Changes to a Trademark Usually Don't Avoid a Likelihood of Confusion

The U.S. Patent and Trademark Office will deny an application for federal trademark registration if the trademark is “likely to cause confusion” with a prior registration. This inquiry mainly boils down to whether the marks and associated goods or services are sufficiently similar that ordinary consumers would mistakenly believe that the applicant’s goods or services come from the registrant, or vice-versa.

There are strategies that can minimize the chance of drawing this objection. For one thing, you can be smart in describing your goods or services. Describing them in narrow terms can avoid an appearance of being closer to a prior filing than you need to be. That sometimes works.

One thing that doesn’t work is adding or deleting a space between tradmark elements (TRADEMARK vs. TRADE MARK) or adding a “.COM” suffix to the dominant part of the mark. The USPTO largely ignores spacing and domain name extensions when evaluating likelihood of confusion. As it should — consumers don’t focus on such small details when deciding which product to buy.

Hats off to trademark owners who think about these things. But when a target trademark is close to a registered mark, a meaningful change — like adding a distinctive trademark element — is usually required to avoid a likelihood of confusion objection.

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