Seattle Trademark Lawyer

The Seattle Times reported that Robert Soloway, 27, was arrested in Seattle this morning for allegedly illegal acts connected with spamming campaigns. He was indicted by a grand jury last week. The 35-count indictment states that Mr. Soloway and his company, Newport Internet Marketing Corp., engaged in mail fraud, wire fraud, fraud in connection with email, aggravated identity theft, and money laundering.

Among other things, the indictment stated that Mr. Soloway and Newport Internet Marketing (NIM) “created and published a series of websites on the World Wide Web during the period from November 28, 2003, until May 23, 2007, using a variety of ‘company’ names, and hosted with dozens of different domain names. The content of the websites created and published by ROBERT ALAN SOLOWAY and NIM consisted of commercial advertisements for ‘broadcast email’ services and products (that is, SOLOWAY was offering, for a price, to either send out a high volume of e-mail messages on behalf of a customer, or to sell a software product to the customer that would enable them to send out their own high volume e-mail messages).”

The indictment also stated: “The ‘broadcast email’ services advertised and sold by ROBERT ALAN SOLOWAY and NIM also did not perform as advertised. The ‘broadcast email’ that ROBERT ALAN SOLOWAY and NIM did transmit on behalf of paying customers constituted “spam”; i.e., bulk and high volume commercial e-mail messages that contained false and forged headers and that was relayed using a proxy computer network. Customers who had purchased the ‘service,’ and who complained thereafter or asked for refunds were threatened by ROBERT ALAN SOLOWAY and NIM with additional financial charges and referral to a collection agency.”

The Seattle Times noted: “In 2005, Microsoft won a judgment against Soloway for spamming. Soloway’s company, Newport Internet Marketing, allegedly sent e-mails that appeared to have come from MSN and Hotmail addresses, both of which are owned by Microsoft.

“Also that year, an Oklahoma businessman won a $10 million default judgment against Soloway in a claim he violated the federal CAN-SPAM Act and Oklahoma’s anti-spam laws.”

I can’t tell if Microsoft Corp. is being more aggressive or I’m just paying more attention. On May 18, it got a default judgment against an Ohio counterfeiter. (STL coverage here.) On May 24, it got a default judgment and injunction against a California counterfeiter. Not a bad week for Microsoft’s enforcement folks.

In Microsoft Corp. v. Ricketts, Judge William Alsup of the Northern District of California granted the default judgment against Denise Ricketts, who does business as Mydencom. The court found: “Rickets advertised and distributed counterfeit Microsoft products on the auction website ioffer.com. Plaintiff allegedly warned defendant several times that the products she offered might be counterfeit by posting takedown notices on the auction website. After defendant continued to sell allegedly counterfeit products, Microsoft’s investigators placed an order with defendant. Upon receipt of three units of software, Microsoft analyzed them and determined that the software was counterfeit.”

Microsoft sued for trademark infringement, copyright infringement, and false designation of origin. Ms. Ricketts did not appear in the lawsuit or answer the complaint. Therefore, the court granted Microsoft’s subsequent motions for default and for entry of default judgment.

Microsoft sought more than $3 million in statutory damages. However, the court only awarded $12,500 in damages and $2,000 in fees and costs. The court explained its decision by stating: “Plaintiff asks for the maximum enhanced statutory damages for the infringement of each of seven copyrights and two trademarks. At $150,000 per copyright and $1,000,000 per counterfeit trademark, the tab comes to $2,050,000. Plaintiff has identified a grand total of three units of counterfeit software that defendant sold. It is true that Microsoft could not conduct discovery to determine its damages, but that in itself does not support levying a statutory damages award in excess of three million dollars. … Statutory damages are intended to serve as a deterrent, but that does not justify such a windfall.

“A court has wide discretion to determine the amount of statutory damages between the statutory maxima and minimal. In calculating statutory damages, some courts have looked to estimates of actual damages. Here, plaintiff has presented no estimate of how much defendant profited from her infringing activity. Accordingly, the Court thinks it just to award statutory damages in the amount of $1500 per copyright and $1000 per trademark infringed, for a total of $12,500. These damages, coupled with the permanent injunction against defendant, will adequately serve the purpose of deterrence.”

The case cite is Microsoft Corp. v. Ricketts, No. 06-06712, 2007 WL 1520965 (N.D. Cal). 

At a time when many companies plead with the public to make proper use of their trademarks, it’s almost shocking to see one company encourage the public to do just the opposite — to use its trademark as a verb instead of as an adjective.

Here’s what Zappos.com is telling potential customers: “Ok, so I Zappos at work. Check out our outstanding service and massive selection of shoes and apparel and you’ll Zappos too.”

Contrast that message with what Tivo Inc. tells its customers:

“The TiVo logo and trademarks are some of our most valuable assets and it is essential that they be used correctly in writing and are protected or they will be lost.

“A trademark is lost when it becomes generic, i.e. when it has come to mean the product as distinguished from a certain brand of the product. If our trademarks become generic, they could be used by competitors to describe their goods or services. Consider the following now-generic nouns that were once trademarks: Escalator, Linoleum, Kerosene, Lonolin, Cellophane, Thermos, Aspirin, Yo Yo and Bikini. The importance of correct trademark use cannot be emphasized enough.”

Tivo goes on to warn: “Trademarks are always proper adjectives. They should never be used as a verb.

Example:

Correct: I want to record ‘Desperate Housewives’ on the TiVo® DVR.

Incorrect: I want to TiVo ‘Desperate Housewives.’”

As Tivo’s efforts correctly suggest, Zappos.com’s ad campaign is fatally flawed. If it succeeds and convinces consumers to associate ZAPPOS with buying shoes online in general — rather than the online shoe seller Zappos.com in particular — the company will lose its rights in the very trademark it is trying to promote. Even worse, campaigns like this hamper the efforts of other trademark owners who spend advertising dollars encouraging proper trademark use. Consumers are left with the mixed message that it’s ok to “zappos” but not ok to “tivo.” That hurts all trademark owners.

So is Zappos.com ignorant of trademark law? Or is it knowingly seeking a short-term benefit at the expense of others?

On May 18, Microsoft Corp. obtained a default judgment against Mark McGee, the owner and operator of the Ohio-based ComputerMe.net, for selling counterfeit Microsoft software. The Southern District of Ohio found that in August 2006, “Defendant distributed to an investigator counterfeit and infringing Office 2000 Pro software. This willful infringement was not an isolated incident, but rather is part of a continuous and ongoing business practice of Defendant in blatant violation of Microsoft’s copyrights and trademarks.”

Judge Michael Barrett entered the default judgment because Microsoft served Mr. McGee with a copy of its summons and complaint but Mr. McGee failed to answer.

In doing so, the court found that Mr. McGee’s violations of the Lanham and Copyright Acts were willful. Nonetheless, Microsoft sought only the maximum amount of statutory damages available for non-willful infringement. Specifically, it asked for statutory damages of $100,000 for each of the five trademarks at issue and $30,000 for the seven copyrights at issue, for a total of $710,000. The court gave Microsoft what it asked for, plus costs and attorney’s fees.

The lessons here? First, don’t traffic in counterfeit goods. Second, don’t allow a default judgment to be taken against you. The cost of a lawyer will amount to far less than the judgment the court will award if you don’t participate in the case.

The case cite is Microsoft v. McGee, No. 06-611, 2007 WL 1469397 (S.D. Ohio).

On May 22, the Ninth Circuit vacated the Central District of California’s denial of Abercrombie & Fitch Co.’s motion for preliminary injunction against Moose Creek, Inc. At issue is the allegedly confusing similarity between the parties’ moose logos used in connection with their competing lines of apparel.

This is the parties’ second trip to the Ninth Circuit. In the first case, Moose Creek sued Abercrombie over a different set of moose logos. During the pendency of that suit, Abercrombie developed a new moose logo. Thereafter, Moose Creek developed two new moose logos of its own. The parties’ new moose logos are at issue in the present case (two of which are depicted below). 

Abercrombie’s and Moose Creek’s (inset) logos

In the first suit, Abercrombie persuaded the district court that Moose Creek’s mark must be classified as weak due to the “crowded field” of similar marks. Therefore, the district court estopped Abercrombie from arguing the field was not crowded in the second litigation. The Ninth Circuit disagreed, finding “the district court failed to recognize that the relevant ‘fields’ in the two litigations differ in both scope and size. Previously, when Moose Creek was the senior mark holder, the field included competitors using both marks including moose images and marks including the word ‘moose.’ As Abercrombie is now the senior mark holder, however, the field includes only competitors whose marks incorporate moose images. In light of this reduction in scope of relevant competitors and marks, the corresponding field is less crowded.” The Ninth Circuit found the district court’s contrary holding and estoppel of Abercrombie’s arguments constituted an abuse of discretion.

The Ninth Circuit also found the district court erred in estopping Abercrombie’s arguments regarding the degree of care likely to be exercised by the purchaser. In the previous litigation, Abercrombie argued that Moose Creek’s buyers were sophisticated and exercised a high degree of care. On that basis, the district court estopped Abercrombie from arguing the relevant purchasers exercise a lesser degree of care. Yet, “[d]ifferent purchasers were relevant to each suit. In the prior litigation, the relevant purchasers were Moose Creek’s, who were ‘professional commercial clothing buyers.’ Here, the relevant purchasers are not professional buyers, but Abercrombie’s ordinary customers,” who are likely to exercise less care. Therefore, the Ninth Circuit found it was error to hold the two positions were clearly inconsistent.

The Ninth Circuit then found fault with the district court’s decision to estop Abercrombie from arguing post-purchase confusion. “The district court described the doctrine in terms of purchasers: ‘once people have purchased these competing products, though from different sources, from different channels, and under different circumstances, they are going to put them in the same drawer and hang them on the same shelf and fail to distinguish between them.’ The court’s later correction — that it meant not identical purchasers but ‘the ultimate wearers’ — did not sufficiently expand the court’s focus, as it continued to exclude those who ‘simply see [ ] the item after it has been purchased.’”

“In addition to reliance on this legal error, the district court abused its discretion by estopping Abercrombie’s arguments on this issue since neither Moose Creek nor Abercrombie raised it in the prior litigation.” The Ninth Circuit found: “The court’s determination that Abercrombie’s assertion of post-purchase confusion differed from its former position that the parties have different marketing channels was improper.”

The Ninth Circuit then found error in the district court’s conclusion that the marks were more different than similar. It found: “The similarities between the marks are striking. Both sets of marks face left, are realistic monochromatic silhouettes, and share near-identical proportions. Both are used as the only outward indication of origin or certain apparel. Of particular moment is that Moose Creek’s marks share the distinctive ‘swivelled antlers’ feature of Abercrombie’s marks. Moose Creek’s outline mark also shares an additional unique feature of Abercrombie’s mark — ‘the second diagonal strip in the lower part of the neck near the shoulders,’ a line devised by the creator of Abercrombie’s outline mark because although unrealistic, he thought it looked good.”

“In light of the principle that ‘similarities are weighed more heavily than differences,’” the Ninth Circuit found the comparison of the marks left it “‘with a definite and firm conviction that [the district court’s] conclusion is incorrect.”

The Ninth Circuit remanded rather than reversed because it could not conclude from the record that Abercrombie will necessarily be able to show a probability of success on its infringement action once the district court corrects its errors.

The case cite is Abercrombie & Fitch Co. v. Moose Creek, Inc., No. 06-56774, 2007 WL 1469667 (9th Cir.).