Seattle Trademark Lawyer

Starbucks Corp. is opposing an Indian entrepreneur’s plans to start a 25-store coffee chain called “Starstrucks,” news services report.

“Why should I give it up?” Shahnaz Husain asked about her company’s name. “Hundreds of others are deceptively similar. What to do? They have opposed and we will fight.”

An insurer has a duty to defend its insured despite the presence of a trademark exclusion, even when most of the claims involve trademark issues, the Ninth Circuit has held. The case is Western Intern. Syndication Corp. v. Gulf Ins. Co., No. 05-55092, 2007 WL 625264 (9th Cir.) (unpublished) (no opinion online).

In December 2002, the Apollo Theater Foundation filed a lawsuit against Western International Syndication Corp. in the Southern District of New York. Apollo alleged that Western had embarked on a systematic campaign of misconduct, including making misrepresentations about Apollo’s TV show, “It’s Showtime at the Apollo,” and using Apollo’s trademarks in connection with a competing program. In March 2004, Western notified Gulf Insurance Co. about the action and requested defense and indemnity pursuant to its commercial insurance policy. Gulf refused, so Western filed a declaratory action in California state court, which Gulf removed to the Central District of California.

The Central District held that Gulf had a duty to defend Western against Apollo’s deceptive acts and practices claim under New York law. On February 26, the Ninth Circuit affirmed.

It found: “In the Underlying Action, Apollo alleged that Western requested extensions from the United States Patent and Trademark Office to oppose Apollo’s trademark registration applications; that it did so solely for the purpose of disrupting the production financing of the Apollo Show; and that Western, for the purpose of placing a cloud on the title of the Apollo Show trademark, informed banking institutions that the ownership rights of the trademark were contested. According to Apollo, Western’s actions succeeded in making it difficult for Apollo to obtain insurance necessary to secure production financing. Apollo further alleged that Western made ‘statements to television stations and broadcasters to the effect that … the Apollo Show w[ould] not be distributed for the 2003/2004 broadcast season.’”

Western’s policy excludes from coverage personal injuries regarding “infringement of copyright or trademark.” The Ninth Circuit nonetheless found: “While the vast majority of Apollo’s claims do involve trademark issues, the allegations that Western made disparaging statements are distinct….”

“Apollo alleges not only that Western contested Apollo’s ownership rights but also that it informed banking institutions of this dispute, creating the false impression that Apollo’s ownership was in doubt. Apollo also alleged that Western disseminated false information to advertisers regarding limited distribution of the Apollo Show. These factual allegations go beyond the elements of a trademark claim and exceed the scope of the trademark exclusion.”

As expected, the Western District has granted the parties’ joint motion for a 30-day stay of the Autodesk v. Open Design Alliance trademark infringement and false designation of origin case. The parties requested the stay so they can try to finalize their settlement. STL recently wrote about the parties’ request here. Terms of the likely settlement are not known (to me, that is).

Things are happening fast on the dilution front. On February 27, the Eastern District of California denied cross-motions for summary judgment on Nike’s dilution claim in Nike, Inc. v. Nikepal Int’l, Inc., No. 05-1468, 2007 WL 609864 (E.D. Calif). This appears to be the fifth case that either interprets or is controlled by the Trademark Dilution Revision Act. Unfortunately, it does not shed too much light on the statute’s new standards.

The well-known shoe manufacturer sued Nikepal Int’l, an importer, exporter, and distributor of syringes, valves and cardboard boxes, on a number of trademark theories stemming from the defendant’s use of NIKEPAL as a trademark. Both parties moved for summary judgment on Nike’s claim of dilution by blurring. In support of its motion, Nike submitted survey evidence allegedly indicating “a substantial majority of laboratory equipment purchasers think of NIKE” when encountering defendant’s website.

Defendant contended the survey was flawed “because it was only directed to Defendant’s website which is not ‘a service mark which is in issue in this action.’” Defendant also argued that since it was a telephone survey, it did not present defendant’s mark in the context in which it is used.

Judge Garland Burrell, Jr., refused to decide the matter on summary judgment because defendant’s criticisms of the survey “show that genuine issues of material fact exist as to the weight it should be given.”

In the court’s words: “[A] reasonable juror might ultimately [find] that the survey d[oes or does] not [support Plaintiff’s contention that its mark was diluted]. But the juror could only have done so after considering conflicting evidence and deciding what weight to accord the survey…. This understanding describes the proper role for a trier of fact; it is not the role of a district court at the summary judgment stage where the issue is whether a triable issue of fact even exists” (quoting Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1263 (9th Cir. 2001) (brackets in original).

Accordingly, the court found that genuine issues of material fact “as to factors bearing on” the dilution claim precluded summary judgment for either party.

The Second Circuit has vacated the Southern District of New York’s dismissal of Starbucks Corp.’s dilution claim against Wolfe’s Borough Coffee, Inc. In this case, Starbucks alleges that Wolfe’s sale of coffee under the names “Mister Charbucks” or “Mr. Charbucks” dilutes the STARBUCKS trademark for coffee. 

This appears to be the first appellate decision based on the Trademark Dilution Revision Act.

The Second Circuit found: “Subsequent to the district court’s order, Congress amended the [Federal Trademark Dilution Act] in response to the Supreme Court’s decision in Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 433 (2003), which had construed the FTDA to require a showing of actual dilution, as opposed to likelihood of dilution. The FTDA, as amended effective October 6, 2006, entitles the owner of a famous, distinctive mark to an injunction against the user of a mark that is ‘likely to cause dilution’ of the famous mark.” 15 U.S.C. § 1125(c)(1). The amended statute applies to this case to the extent that Starbucks has sought injunctive relief on the issue of dilution.”

“Here, the district court applied the pre-October 6, 2006 version of the FTDA, as construed by Moseley, and determined that Starbucks had failed to prove actual dilution. Although the district court also considered whether Starbucks had shown a likelihood of dilution under New York Gen. Bus. Law. § 360-1, it is not clear that that statute is coextensive with the amended statute. In addition, the district court’s treatment of the New York statute does not permit a review of whether the analysis is vacated and conforms with the amended statute.”

Based on these findings, the Second Circuit vacated the district court’s judgment and remanded for further proceedings consistent with its opinion and the Trademark Dilution Revision Act.