Seattle Trademark Lawyer

The Seattle Post-Intelligencer recently ran a story about a Seattle venture capitalist’s strategy: acquire a good domain name, then build a business around it.

That’s Rob Monster’s idea, who the P-I says formed the Bellevue, Wash.-based Domain Strategies and joined the Boston-based Internet Real Estate Group as a partner.

“Between the 5,000 names at Domain Strategies (OrganicSeasonings.com, IdentityLock.com and Anonymize.com, to name a few) and 600 names at Internet Real Estate Group (Software.com, Jeans.com and Chocolate.com), Monster thinks a compelling business or two could be created. Instead of managing those businesses on his own, Monster wants to serve as the matchmaker who links talented entrepreneurs with high-quality names.”

He told the P-I: “I believe that for every business idea that correlates with a category-defining domain, there is a corresponding world-class management team and corresponding capital source that can come together to execute against the business opportunity. It is remarkable how many high-quality domains have yet to be developed.”

On Oct. 16, Western District Judge Ricardo Martinez awarded franchisor HomeTask Handyman Services, Inc., a preliminary injunction against its former franchisee, Paul Szewczyk, based on Mr. Szewczyk’s covenant not to compete. The court, however, denied HomeTask’s motion to the extent it was based on claims of trademark infringement, dilution, and false designation of origin. Since my firm is involved in the case, that’s all I’ll say.

The case cite is HomeTask Handyman Services, Inc. v. Szewczyk, No. 07-1283 (W.D. Wash.).

Plaintiff CommScope, Inc. of North Carolina and defendants Electro Products, Inc., and Daniel Edward Oberholtzer today agreed to a permanent injunction in the Western District enjoining defendants from using CommScope’s trademarks and from causing others to believe that defendants’ products are connected with CommScope when they are not. CommScope markets and distributes a SYSTIMAX- and PATCHMAX-branded patch panel that allows telecommunications cables used in high-speed voice and data networks to be connected and disconnected quickly. (STL’s previous discussion of Judge Ricardo Martinez’s refusal to stay the case pending an alleged criminal investigation of Mr. Oberholtzer here.)

In agreeing to the injunction, defendants did not admit “any liability for intentional wrongdoing.” However, they did agree that “CommScope is likely to succeed in showing that Defendants have used and are likely to continue to use copies of the CommScope Marks, registered on the Principal Register of the United States Patent and Trademark Office, in connection with the distribution, offering for sale and sale of patch panels with accompanying packaging and literature….”

The stipulation also states that that “Defendants have distributed and sold Counterfeit Products from their principal place of business in Kent, Washington. These Counterfeit Products were obtained from China from an entity holding itself out as ‘SGE Tek’ and an agent holding himself out as ‘Preston Zheng.’” Defendants agreed to provide CommScope with all information they learn about SGE Tek and Mr. Zheng for three years but are not obligated to seek out such information.

In exchange, CommScope agreed to dismiss its claims.

The case cite is CommScope, Inc. of North Carolina v. Electro Products, Inc., No. 06-577 (W.D. Wash.).

After seven days of trial, a Central District of California jury found on Oct. 11 that plaintiff/counterclaim defendant SLB Toys USA, Inc., had diluted defendant/ counterclaim plaintiff Wham-O, Inc.’s YELLOW color mark for “sliding surface of water slide toys.” The jury also found that SLB Toys had willfully infringed Wham-O’s YELLOW color mark, whether it was registered or unregistered, and engaged in false advertising. The jury awarded Wham-O $3.6 million and recommended that Judge Ronald Lew enhance their award by an additional $2.4 million. The jury found for SLB Toys on Wham-O’s claim that SLB Toys had infringed a separate “yellow/blue water slide” trademark. (See Vegas Trademark Attorney’s discussion of the decision here.)

With regard to dilution, a subject in which I am particularly interested, the jury found as follows:

CLAIM 4 — DILUTION

On the claim of Wham-O against SLB for dilution of the trademark (registered or unregistered) for the color YELLOW on the sliding surface of water slide toys, we, the jury, find in favor of (check one):

Wham-O    X    

SLB            

If you found in favor of Wham-O on claim 4, do you find that SLB diluted the YELLOW trademark willfully?

Yes:     X    

No:            

Thanks to TTABlogger John Welch for bringing this case to my attention.

The case cite is SLB Toys USA, Inc. v. Wham-O, Inc., No. 06-1382 (C.D. Calif.).

Courts have had a year to interpret the Trademark Dilution Revision Act. What have they decided? Here’s a survey of the decisions I have found most instructive.

What is the significance of the Trademark Dilution Revision Act?

In Dan-Foam A/S v. Brand Named Beds, LLC, 500 F.Supp.2d 296, 306 n.87 (S.D.N.Y 2007) (STL discussion here), the Southern District of New York summarized the TDRA’s significance as follows:

“The TDRA became effective on October 6, 2006, replacing the Federal Trademark Dilution Act of 1996 (‘FTDA’). Specific changes to the federal dilution law under the TDRA include the establishment of a ‘likelihood of dilution’ standard for dilution claims, rather than an ‘actual dilution’ standard; a provision that non-inherently distinctive marks may qualify for protection; a reconfiguration of the factors used to determine whether a mark is famous for dilution purposes, including a rejection of dilution claims based on ‘niche’ fame; the specification of separate and explicit causes of action for dilution by blurring and dilution by tarnishment; and an expanded set of exclusions.”

How does the statute impact cases that were filed before the statute went into effect?

Whether the statute affects already-pending cases appears largely to depend on whether the plaintiff seeks an injunction or seeks damages. In Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 477 F.3d 765, 766 (2nd Cir. 2007) (STL discussion here), the Second Circuit found “[t]he amended statute applies to this case to the extent that Starbucks has sought injunctive relief on the issues of dilution.” Based on this finding, the court vacated the Southern District of New York’s dismissal of Starbucks’ dilution claim because the district court had “applied the pre-October 6, 2006 version of the FTDA, as construed by Moseley, and determined that Starbucks had failed to prove actual dilution.”  Id.  Accord, AutoZone, Inc. v. Strick, 466 F.Supp.2d 1034, 1044 (N.D. Ill. 2006) (STL discussion here).

With regard to pending cases seeking monetary relief, in Louis Vuitton Malletier v. Dooney & Bourke, Inc., 500 F.Supp.2d 276, 283 (S.D.N.Y. 2007) (STL discussion here), the Southern District of New York found the FTDA standard of “actual dilution” still governs:

“The second sentence of subsection 1125(c)(5), entitling owners of famous marks to dilution damages, contains an unambiguous date restriction that authorizes the application of the ‘likelihood of dilution’ standard as a basis for recovering damages to civil actions where the dilution mark or trade name was first introduced in commerce after October 6, 2006.”

The court added for pending claims for monetary relief, “the controlling standard is that which governed prior to the TDRA,” namely, actual dilution. Accord, Dan-Foam A/S v. Brand Nme Beds, LLC, 500 F.Supp.2d 296, 306 (S.D.N.Y. 2007); AutoZone, Inc., 466 F.Supp.2d at 1044 (“The damages provision of the amended statute apply only to offending marks first used after the Act went into effect.”).

Unfortunately, however, courts have not consistently applied this approach. Without explanation, some courts in the Ninth Circuit have continued to apply the actual dilution standard to claims that sought, or probably sought, injunctive relief. See, e.g., Horphag Research Ltd. v. Garcia, 475 F.3d 1029, (9th Cir. 2007) (applying the actual dilution standard to plaintiff’s dilution claim even though plaintiff previously had moved for a preliminary injunction and the TDRA was enacted three months before the court’s decision) (STL discussion here); Nautilus Group, Inc. v. Icon Health & Fitness, Inc., 2006 WL 3761367 (W.D. Wash.) (applying actual dilution standard two months after TDRA became effective) (STL discussion here). See also, Hodgdon Powder Co., Inc. v. Alliant Techsystems, Inc., 497 F.Supp.2d 1221, 1232 n.3 (D. Kan.) (“The parties agree that the Trademark Dilution Revision Act does not apply to plaintiff’s claims. The parties, and the court, rely on the law prior to the TDRA.”) (STL discussion here). In Jada Toys, Inc. v. Mattel, Inc., 496 F.3d 974, 981 n.2 (9th Cir. 2007), the Ninth Circuit applied the actual dilution standard because the case had been “filed in 2004, prior to the 2006 amendment of § 1125….” (STL discussion here).

Though I would expect most courts to follow Starbucks and AutoZone, I still am glad this issue will resolve itself naturally over time.

Does dilution apply to marks that are famous in a niche market?

The TDRA establishes that “[a] famous mark is one that ‘is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.’” Nike, Inc. v. Nikepal Int’l, 2007 WL 2782030, *5 (E.D. Cal.) (STL discussion here) quoting the TDRA. This would seem to clarify that the TDRA does not extend to trademarks that are famous only in a “niche market.” See, e.g., Vista India v. RAAGA, LLC, __ F.Supp.2d __, 2007 WL 2257665, *15 (D.N.J.) (“Under the standard of whether a mark is famous, the question is whether the mark is well-known throughout the country by the general consuming public, regardless of the relevant consuming public….”). However, niche market fame in some instances still lives on — at least in those cases that continue to apply the FTDA standards after the TDRA was enacted. See, e.g., Arkansas Trophy Hunters Ass’n, Inc. v. Texas Trophy Hunters Ass’n, Ltd., __ F.Supp.2d __, 2007 WL 410930, *6 (W.D. Ark.); Hodgdon Powder Co., Inc., 497 F.Supp.2d at 1232.

In what cases have courts found a likelihood of dilution?

It’s been interesting to see whether lessening the standard of proof from “actual dilution” to “likelihood of dilution” and raising of the standard (in some jurisdictions) from “niche market” fame to nationwide fame on balance would favor plaintiffs or defendants. No clear answer has yet emerged. To see what the TRDA protects, one must look at the TDRA itself and cases in which courts have found dilution. See, e.g., Nike, Inc., 2007 WL 2782030 at *8; Diane Von Furstenberg Studio v. Snyder, 2007 WL 2688184, *4 (E.D. Va.); Eldorado Stone, LLC v. Renaissance Stone, Inc., 2007 WL 2403572, *5 (S.D. Calif.) (STL discussion here); Pet Silk, Inc. v. Jackson, 481 F.Supp.2d 824 (S.D. Tex. 2007) (STL discussion here).

In what cases have courts found no likelihood of dilution?

Again, it’s hard to generalize about courts’ findings of no likelihood of dilution. Take a look at cases in which courts found no likelihood of dilution: Pan American World Airways, Inc. v. Flight 001, Inc., 2007 WL 2040588, *18-19 (S.D.N.Y.); Century 21 Real Estate, LLC v. Century Ins. Group, 2007 WL 484555, *18 (D. Ariz.) (STL discussion here); and Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 464 F.Supp.2d 495, 505 (E.D. Va. 2006) (STL discussion here).

Hopefully, a second year of decisions will provide more clarity.