Seattle Trademark Lawyer

The default judgment in Century 21 Real Estate, LLC v. Raritan Bay Realty, Ltd., illustrates that an officer can be personal liable for its employer’s trademark infringement.

All that’s needed is authorization and approval.

In Century 21, the defendant corporation entered into a franchise agreement with the plaintiff and continued to use the licensed trademarks after plaintiff terminated the agreement. Plaintiff sued the corporation and its officers; defendants did not answer; and plaintiff moved for entry of a default judgment against all of the defendants, including the officers.

Eastern District of New York Magistrate Judge James Orenstein found:

“An individual officer can be held personally liable for a corporation’s trademark infringement and unfair competition under the Lanham Act if the officer is a ‘moving, active conscious force behind [the corporation’s] infringement.’ Demonstrating that the officer ‘authorized and approved the acts of unfair competition which are the basis of the corporation’s liability is sufficient to subject the officer to personal liability.’ Moreover, a defendant’s belief that the products at issue were genuine and non-infringing is ‘irrelevant’ to the disposition of a Lanham Act claim for trademark infringement.”

In his report and recommendation, the magistrate reluctantly found that plaintiff had met this burden.

 “Century 21’s well-pleaded allegations and supporting evidence ultimately suffice to establish the personal liability of each of the individual defendants in this case for trademark infringement under the Lanham Act — although Century 21 has made arriving at that conclusion needlessly difficult. Indeed, Century 21’s default motion and accompanying submissions do not address individual liability in the context of the Lanham Act at all. Despite that significant shortcoming, a thorough review of the record compels the conclusion that each of the individual defendants was a ‘moving, active conscious force behind’ [the corporation’s] infringement.

“…. The record amply supports those allegations with respect to the individual defendants. Pursuant to the Franchise Agreement both individuals agreed personally to manage and supervise the business. The two individual defendants are [the corporation’s] only shareholders and the only corporate officers with supervisory responsibilities. That Century 21 specifically directed each of its letters regarding termination of the franchise and the defendants’ attendant obligations to [the individual defendants] is further evidence that both individuals had a direct hand in the acts of infringement at issue here.”

On Sept. 3, the Eastern District adopted the magistrate’s report and recommendation.

The moral of the story, of course, is that individual officers can’t sign off on a corporation’s trademark infringement without fear of being held to account personally for their hand in the infringement.

The case cite is Century 21 Real Estate, LLC v. Raritan Bay Realty, Ltd., 2008 WL 4190955 (E.D.N.Y.), No. 07-1455 (Orenstein, M.J.).

On Sept. 12, the District of Oregon explained the mysterious “juror letter” in the Adidas America, Inc. v. Payless Shoesource, Inc., trademark infringement case and found that it did not contain sufficient grounds for a new trial. (For background see STL post from June 25).

The court’s 29-page decision on Payless’ motions for a new trial also reduced Adidas’ $305 million award — said to be the largest ever in a trademark infringement case — to $65 million. (For additional background see STL post from May 6.)

The court confirmed the jury’s finding of $30,610,179 as damages in the form of a reasonable royalty and used its discretion under the Lanham Act to reduce the award based on disgorgement of profits to $19.7 million. It also denied Payless’ motion for a new trial if Adidas accepted a remittitur of the punitive damages award to $15 million.

Court’s cryptic docket entry three weeks after jury’s $305M verdict

While these decisions are noteworthy, the “juror letter” is what intrigued me. Ending three months of cryptic docket entries, emergency hearings, and sealed records, the court explained the situation as follows:

“Approximately three weeks after the jury returned its verdict, the court received a letter from Juror X requesting clarification of the ‘definition of the trial being over,’ because she ‘understood from [the court’s] instructions that we weren’t to actively engage on the Internet … in regard to the case until the trial was over.’ Juror X wanted to know, ‘[w]as that on Thursday, when everyone rested, or was it on Monday, after the verdict was read and we were excused as jurors?’

“On May 27, 2008, the court held a telephone conference to read Juror X’s letter to the parties. During the telephone conference, Payless’ counsel revealed that Juror X had contacted him by email on May 20, 2008 to ask if Payless was appealing the verdict. Payless’ counsel indicated that he also spoke with Juror X by phone for about twenty minutes. He answered some very general questions Juror X had about the appeal. Payless’ counsel asked if any outside influences or extraneous information found its way into the deliberations. Juror X was quite certain everybody followed the rules.”

Juror X nonetheless told the court in an evidentiary hearing the next day that she was concerned another juror may have violated the court’s instructions regarding out-of-court investigation by conducting research on the Internet.

On June 4, the court interviewed Juror Y, the juror who allegedly had done the research. Juror Y explained that he (or she — the court did not identify the juror’s sex) merely discussed prior knowledge from searching the Internet years before “about appeals and jury judgments and awards.” Juror Y denied looking up any material during the trial.

The juror said:

“I remember people were talking about award judgments, awarding — that [sic] wanted large amounts. They were getting real large, 7, 800 million. And I just said, from looking this up, from what I’ve seen before, if you get a real excessive amount, you’re just going to be shoved out.” 

Judge Garr M. King found that such comments “simply do not constitute the type of extrinsic information the Federal Rules of Evidence seek to prohibit.”

The court concluded: “[t]here is no reasonable possibility that Juror Y’s general statements about the likelihood of appeal and the reversal of excessive verdicts could have affected the jury verdict. The testimony of Juror Y and Juror X indicate that only a few members of the jury heard the comments. Any discussion that followed took less than one minute. Further Jurors Y and X indicated that Juror Y made the comments at the very beginning of the jury’s two-day deliberation. There is no indication that anyone discussed the issue again. Finally, the possibility of appeal was peripheral to the issues that were before the jury and did not relate to any material fact or substantive law applicable to the case.”

Mystery solved.

The case cite is Adidas America, Inc. v. Payless Shoesource, Inc., No. 01-1655 (King, J.).

Not surprisingly, the marketers of Hendrix Electric vodka have decided to appeal.

On Aug. 7, Electric Hendrix, LLC, and the other defendants lost cross-motions for summary judgment in which Western District Judge Thomas Zilly found their HENDRIX ELECTRIC, HENDRIX ELECTRIC VODKA, JIMI HENDRIX ELECTRIC, and JIMI HENDRIX ELECTRIC VODKA trademarks infringe the AUTHENTIC HENDRIX, EXPERIENCE HENDRIX, and JIMI HENDRIX marks owned by plaintiffs Experience Hendrix, LLC, and Authentic Hendrix, LLC. (STL post on the decision here.)

The notice of appeal, filed Sept. 5, is not surprising since the summary judgment order all but halted defendants’ ability to sell their product. Not to mention that the Hendrix family hasn’t exactly shied away from litigation, or even trips to the Ninth Circuit, on similar issues before.

The case cite is Experience Hendrix, LLC v. Electric Hendrix, LLC, No. 07-338 (W.D. Wash.).

On Aug. 27, Kirkland, Wash.-based video game maker Bungie, LLC, filed suit in the Western District against New Jersey-based energy drink maker Xtreme Beverages, LLC, and its owners for trademark infringement.

At issue are the beverages defendants market under the names “Bungie Energy Drink” and “Bungie Sugar-Free Energy Drink,” which plaintiff claims infringe its federally-registered BUNGIE trademark in connection with computer games.

Plaintiff also is unhappy that defendants use the drinkbungie.com domain name and have applied to register their own BUNGIE trademark in connection with energy beverages.

Plaintiff alleges confusion is likely because it promoted its video games on beverages sold by PepsiCo, Inc.

Defendant has not yet answered plaintiff’s complaint.

The case cite is Bungie, LLC v. Xtreme Beverages, LLC, No. 08-1287 (W.D. Wash.).

On Aug. 22, the American Automobile Association filed a trademark infringement suit in the Western District against Tacoma-based AAA Insurance Inc.

The mark at issue? Take a wild guess.

Plaintiff registered AAA as a trademark in 1967 for “automobile association services”; AAA LIFE INSURANCE COMPANY in 1978 for “underwriting of life and accident services”; AAA GUARANTEED LIFE in 1989 for “life insurance underwriting services”; and AAA and Design in 1998 for “adjusting and collecting insurance damage claims” and “insurance brokerage services.”

Plaintiff complains that defendant’s use of AAA in connection with competing insurance services, and the use of its aaainsure.com domain name to solicit customers, has caused actual consumer confusion and is likely to cause additional consumer confusion.

Defendant has not yet answered plaintiff’s complaint.

AAA started as a weak trademark but through the magic of secondary meaning and incontestability, I would say it’s now quite strong.

The case cite is American Automobile Association v. AAA Insurance Inc. (No. 08-5515).