Seattle Trademark Lawyer

More than nine months after the Trademark Dilution Revision Act (TDRA) became law, “niche market” fame under the Federal Trademark Dilution Act (FTDA) lives on — at least in one court. In Hodgdon Powder Co., Inc. v. Alliant TechSystems, Inc., the plaintiff sought damages and injunctive relief stemming from the defendant’s use of CLAY DOT for gunpowder, which plaintiff alleged diluted the fame of its CLAYS mark for gunpowder. Both sides moved for summary judgment. On July 20, the District of Kansas sided with the defendant on plaintiff’s dilution claim.

All of this is unremarkable except for the court’s analysis of the dilution claim under the Federal Trademark Dilution Act — the statute the Trademark Dilution Revision Act replaced last October. In a footnote, the court stated: “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.”

Why did the parties and the court agree that the FTDA applied? The order doesn’t say. What’s clear is the court went on to analyze plaintiff’s claim to “niche market” fame, a dilution theory the new statute expressly abolished.

I’d think by now everyone would be on the same page about the TDRA. At least seven courts have rejected the FTDA’s standard in favor of the new standard the TDRA imposed. See, e.g., Century 21 Real Estate LLC v. Century Sur. Co., 2007 WL 433579, *1 (D. Ariz.) (“On October 6, 2006, the Trademark Dilution Revision Act of 2006 was signed into law and became effective immediately.”) (discussed here).

The first court to address the TDRA, Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 464 F.Supp.2d 495, 504 (E.D. Va. 2006) (discussed here), analyzed whether the statute should be applied retroactively. Under Landgraf v. USI Film Products, Inc., 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d (1994), it found that when Congress has not proscribed an effective date, a court “must determine if the statute will ‘impair rights a party possessed when [it] acted, increase a party’s liability for past conduct, or impose new duties with respect to transactions already completed.’ If it does, then a court should not apply the new statute to the pending case. However, the Supreme Court also stated that ‘relief by injunction operates in futuro and the right to it must be determined as of the time of the hearing.’” Based on this authority, the Haute Diggity Dog court found: “[P]laintiff has pled for injunctive relief on the issue of dilution. Therefore, the amended statute will apply in this case.”

The plaintiff here likewise sought injunctive relief. Therefore, under the initial body of cases to interpret the new statute, it would seem that the TDRA would apply. Interestingly, the answer may differ with regard to plaintiff’s request for damages. See, e.g., Louis Vuitton Malletier v. Donney & Bourke, Inc., 2007 WL 1222589, *2 (S.D.N.Y.) (finding the TDRA is not retroactive for damages) (discussed here). With regard to plaintiff’s request for injunctive relief, however, niche market fame would seem to have no place in the analysis.

The case cite is Hodgdon Powder Co., Inc. v. Alliant Techsystems, Inc., No. 06-2100, 2007 WL 2079882 (D. Kan.).

On July 13, Microsoft Corp. obtained a default judgment and permanent injunction in the District of New Jersey against Julio Gonzales for distributing infringing Microsoft software through his company, JFG TEK Computers.

Microsoft obtained the monetary damages it asked for: $844,742.85 in “statutory” damages, attorney’s fees, and costs, though the order does not say whether the damages stem from violations of the Copyright Act, the Lanham Act, or both. Mr. Gonzales is now permanently enjoined from, among other things, “imitating, copying or making any other infringing use or infringing distribution of software programs, components, end user license agreements, certificates of authenticity, or items protected by Microsoft’s registered trademarks and service mark….”

Microsoft’s complaint reveals its m.o. was the same as in its other default judgment cases (such as those discussed here and here): it suspected that Mr. Gonzales was advertising, marketing, installing, and selling software covered by Microsoft’s registered copyrights and bearing Microsoft’s registered trademarks or imitations thereof; it notified Mr. Gonzales about its belief; Mr. Gonzales disregarded the notice; and Microsoft used an investigator to purchase a computer system that contained infringing WINDOWS XP PRO and OFFICE 2003 PRO software. Having confirmed its suspicions, Microsoft then brought suit, Mr. Gonzales did not respond, so Microsoft moved for and obtained a default judgment. It’s becoming a familiary story.

The case cite is Microsoft Corp. v. Gonzales, 2007 WL 2066363, No. 06-04331 (D. N.J.).

On July 19, Seattle Post-Intelligencer business columnist Bill Virgin wrote about the Western District lawsuit Cascade Financial brought against Issaquah Community Bank over the defendants’ use of the ISSAQUAH COMMUNITY BANK name and mark. STL discussed the filing here.

He did a nice job framing the dispute: “If you start a bank in Issaquah, can you name it after the town you operate in?

“Issaquah Community Bank, which opened for business this week, thinks it can.

“Cascade Financial Corp., which bought a bank in Issaquah three years ago, says the new bank can’t, because it still holds the name.”

Mr. Virgin quotes Issaquah Community Bank’s president, defendant Robert Ittes, as saying: Cascade’s attempt to hold the name hostage is entirely unwarranted. Whatever rights they may have had were abandoned three years ago. More importantly, our name is a clear and honest reflection of the community we serve. It’s hard to see this as anything other than a frivolous lawsuit designed to suppress local competition.”

He goes on to quote from the complaint Cascade’s countervailing position that while Cascasde “began changing the name on Issaquah Bank’s two branches to Cascade in 2005, it continued to use the Issaquah name ‘in commercial and non-commercial ways, including use of the mark in connection with various financial products and services, and in connection with its sponsorship of community and charitable events.’”

I love it when the mainstream media recognize how interesting trademark disputes can be.

The July issue of InsideCounsel magazine reviews the Second Circuit’s March 28 decision on famous foreign trademarks in ITC Limited vs. Punchgini, Inc., __ F. 3d. __, 2007 WL 914742, No. 05-0933 (2nd Cir.). In that case, New Delhi’s Bukhara Restaurant claimed it should be able to enforce its internationally-famous mark despite its abandonment of the mark here. The defendants were owners of a Manhattan Indian restaurant who called their establishment the “Bukhara Grill” because there was “no restaurant Bukhara in New York, and we just thought we will take the name.” The Bukhara Grill also copied the Bukhara Restaurant’s “logos, decor, staff uniforms, wood-slab menus, and red-checkered customer bibs.” Departing from the Ninth Circuit’s decision validating the famous marks doctrine in Grupo Gigante S.A. de C.V. v. Dallo & Co., 391 F.3d 1088, (9th Cir. 2004), the Second Circuit found that continuing international use of a famous trademark was not sufficient to sustain trademark or trade dress infringement claims under U.S. law. The Second Circuit certified to the New York Court of Appeals the question of whether such a right existed under New York state law. 

When InsideCounsel asked Prof. J. Thomas McCarthy about the decision, he did not hold back. “They were wrong,” he said. “There was a way to [implicitly] incorporate the doctrine into the federal trademark statute. But the 2nd Circuit wanted to see explicit words saying the doctrine is enforceable. They gave a narrow reading to the statute.”

Prof. McCarthy warned that the decision has international implications. “This decision can be used as a club to beat our trade negotiators, with foreign governments saying, ‘Who are you to criticize us? You are not living up to your treaty obligations.”

As he told InsideCounsel, the decision is “a great embarrassment for the U.S.”

On July 13, the Southern District of Florida granted a preliminary injunction in favor of one weight-loss doctor enjoining a competing weight-loss doctor from using the common law trademark “COOKIE DIET.” 

The court found in 1975, Dr. Sanford Siegal (pictured below left), president of plaintiff SM Licensing Corp., which obtained the injunction, created an 800-calorie diet in which the patient eats one meal a day, a prescribed dinner, and replaces all other meals with six specially-formulated cookies that suppress hunger. The diet has become known as the COOKIE DIET.

In 2002, defendant Dr. Sasson Moulavi (pictured right) and his company, U.S. Medical Care, Inc., entered into an agreement with Siegal Weight Management, Inc., a company that Dr. Siegal controls, which gave Dr. Moulavi an exclusive license to use Dr. Siegal’s diet and certain of his intellectual property throughout the United States and Canada in exchange for a fee and royalties. Included in the deal was Dr. Moulavi’s right to sell weight-loss products that he agreed to purchase exclusively from Dr. Siegal. Dr. Moulavi also licensed a number of trademarks from Dr. Siegal’s SM Licensing Corp., though none of the agreements mentioned the COOKIE DIET mark. 

The court sided with SM Marketing. It found: “The evidence is overwhelming that Siegel was the first to identify his weight-loss program and products as the Cookie Diet, and that he did so as early as 1975. The Court finds the testimony of Siegel, his staff and patients of many years credible, and specifically finds that Siegal and his staff routinely identified his services and products as the Cookie Diet in their daily interactions with patients, and that patients and other members of the dieting public came to associate them with the Cookie Diet.”

The court also found that Dr. Moulavi later adopted and used COOKIE DIET as a trademark, but that he failed to show that SM Marketing had abandoned its prior rights in the mark because Dr. Siegal continued to make “conversational” use of the mark. In the court’s words, “Siegal remained consistent in his use of the trademark, both before his agreement with Moulavi and during the four years of their contractual relationship; that is, he avoided its use in written materials, signage and advertising, but continued its conversational use with patients and participated in television news stories about ‘his Cookie Diet.’ Siegal did tell Moulavi on a number of occasions that he did not like the mark and did not want it used to promote his weight-loss program. During this same period of time, however, Siegal appeared on multiple television news programs knowing that the focus of the story would be the idea that cookies could lead to weight loss, and suggesting to the reporters that he be identified as the creator of the Cookie Diet.”

Finally, the court found that Dr. Moulavi’s use of the mark inured to the benefit of Dr. Siegal even though it was not licensed to him because “Moulavi chose to use the trademark Cookie Diet in close association with the Siegal marks” that he did license. As the court explained: “Moulavi appropriated the Cookie Diet from Siegal in an effort to benefit from Siegal’s good will. In the process, he clearly furthered the association in the public’s mind between the weight-loss program Siegal developed and the Cookie Diet, and extended the geographic scope of Siegal’s ownership of not only his Siegal trademarks, but also the Cookie Diet trademark throughout the United States.”

The case cite is SM Licensing Corp. v. U.S. Medical Care Holdings LLC, No. 07-20293 (S.D. Fla.).