Seattle Trademark Lawyer

Preston, Washington, scooter maker CMSI, Inc., today stipulated to the dismissal with prejudice of its false designation of origin and unfair competition lawsuit against competing scooter maker Pacific Cycle, Inc. The case is CMSI, Inc. v. Pacific Cycle, Inc., No. 06-00488 (W.D. Wash.).

In its complaint, CMSI alleged that Pacific Cycle had approached it with an idea — CMSI would manufacture motorized scooters, which Pacific Cycle would distribute under its SCHWINN brand that Pacific Cycle previously had used only with bicycles. According to the complaint, CMSI disclosed that it used an exclusive foreign source that manufactured scooters that complied with U.S. Environmental Protection Agency and Department of Transportation regulations. Thereafter, CMSI alleged, Pacific Cycle ended negotiations, obtained scooters from CMSI’s source, and began selling competing scooters under its SCHWINN mark.

CMSI alleged this constituted reverse passing off, a form of false designation of origin. In a prototypical passing off case, a party purchases or otherwise obtains a second party’s goods, removes the second party’s name, and then markets the product under its own name. CMSI alleged that since it had developed precise manufacturing specifications for its scooters, Pacific Cycle had done exactly that.

Western District Judge James Robart disagreed. Last year, he denied CMSI’s motion for preliminary injunction, finding:

“If Pacific Cycle had acquired a CMSI scooter and brought it to another manufacturer with instructions to copy it and affix a Schwinn trademark, it would not have engaged in reverse passing off. 

“The question thus arises: if using another manufacturer to copy CMSI’s scooter is lawful, why is it unlawful to use the same manufacturer as CMSI to copy its scooter? CMSI correctly notes that Pacific Cycle’s use of [CMSI’s source] as its manufacturer permits it to gain the benefits of CMSI’s collaboration with [CMSI’s source] without expending its own resources. CMSI fails, however, to provide a reason that this practice is offensive under the Lanham Act.”

Therefore, the court found CMSI could not prevail on its reverse passing off claim. That finding later led CMSI to stipulate to the dismissal of its reverse passing off claim.

Today’s stipulated dismissal of CMSI’s remaining claims suggests that the parties have resolved their dispute.