Friday, February 29, 2008

Competing fitness clubs in trademark battle over being NAKED

The “Naked Cowboy” isn’t the only “naked” trademark dispute going on these days.

DB 85 Gym Corp. (“DB85”) is the owner of David Barton Gym, a luxury health club and spa with locations in New York City, Miami, and Chicago. DB85 also owns the registered word mark LOOK BETTER NAKED (for hats and activewear goods and for health club services) which was registered on August 5, 1997, and which claims first use in commerce back to June 1992. Over the last fifteen years, SB85 has been advertising its luxury health clubs using the LOOK BETTER NAKED mark on billboards, magazine and newspaper ads, promotional flyers, and the David Barton Gym website (see picture above). SB85’s LOOK BETTER NAKED mark, and the goods and services provided thereunder, have also received widespread publicity in such regional and national publications as Vanity Fair, The New York Times, USA Today, Newsweek, CNN, and NBC.

On February 28, 2008, DB85 filed an opposition with the Trademark Trial and Appeals Board against Body in Power, Inc. (“BIP”), the owner of two fitness centers in the Chicago, Illinois area operating under the name “Body Empowered Fitness.” See DB 85 Gym Corp. v. Body in Power, Inc., Opposition No. 91182711 (T.T.A.B. Feb. 28, 2008). A copy of the Notice of Opposition can be downloaded here.

DB85 is opposing a Section 1(a) use-in-commerce application filed by BIP on May 10, 2007, seeking to register the word mark HAVE YOU SEEN YOURSELF NAKED? for various services relating to physical fitness (physical fitness conditioning classes; physical fitness consultation; physical fitness instruction; providing fitness and exercise facilities). The mark was published for opposition on February 26, 2008. BIP’s pending application must have been on DB85’s radar screen given the immediacy of the filing of this opposition so soon after publication.

DB85 claims that BIP’s mark HAVE YOU SEEN YOURSELF NAKED? is confusingly similar to its LOOK BETTER NAKED mark.

DB85 argues that both marks are short phrases that include the dominant element “NAKED” at the end and which associate each “respective owner’s services with the concept of looking better when undressed; i.e., the perception that the services offered under the respective marks will improve consumers’ body physique and outward appearance.” As such, DB85 maintains that both marks create the same commercial impression of enhancing consumers’ body appearance when naked.

DB85 also notes the overlapping services – services relating to physical fitness – as likely to create a mistaken belief in the minds of consumers that the services emanate from the same source or that BIP’s services are sponsored by, approved by, or somehow connected with DB85 given that DB85 offers the same type of fitness services at its health clubs. In addition, the other services cited in BIP’s application are within DB85’s logical “zone of expansion” of its health club services.

Finally, DB85 argues that the services are promoted through similar channels of trade (DB85 and BIP both have gym facilities located in the Chicago area) and target similar customers (those looking to stay in shape through physical fitness).

Vegas™Esq. Comments:
DB85 does seem to have the advantage with respect to three of the relevant Du Pont factors, specifically the similar nature of the services, the similarity of trade channels, and the fame of DB85’s mark. In addition, there are also no other federal registered marks with the word NAKED in connection with fitness or health clubs, which favors SB85. (It is interesting, however, that there is one other federal registration on the trademark LOOK BETTER NAKED held by The Beauty Market, Ltd. for body masks, salt body scrub and body butter cream which was filed on May 25, 2005 and registered on April 10, 2007.)

As for buyer sophistication, while gym memberships are not typically bought on impulse (notwithstanding the aggressiveness of the sales people at such clubs), it’s not clear that the cost of the gym membership is so high that customers are likely to exercise a heightened degree of care so as to eliminate any potential likelihood of confusion. This factor does not seem to favor either side.

Finally, I do not agree entirely with DB85 about the similarity of the marks. A likelihood of confusion analysis considers the marks as a whole and not the marks as dissected; and the use of identical (even dominant) words in common does not automatically mean that the two marks are similar. In this case, the only similarities in the appearance of the mark is the single word NAKED -- BIP’s mark includes the additional words “HAVE YOU SEEN YOURSELF” and its mark is in the form of a question whereas DB85’s mark, with the word “LOOK BETTER” is more of an affirmative assertion.

While the marks are dissimilar in sight and sound, DB85 may have a valid point that the “meanings” of the two marks are nonetheless similar in a way that conveys similar overall commercial impressions such that there is probability that a reasonably prudent consumer may be confused as to the source of the services.

My initial impression was that BIP’s mark HAVE YOU SEEN YOURSELF NAKED? did convey a different message from DB85’s LOOK BETTER NAKED because it asks the consumer (with a hint of criticism) whether they have seen themselves naked lately as to suggest that out-of-shape consumers (key target customers for such a business) might realize that they are out-of-shape if they had seen themselves naked. However, on further reflection, this suggestion is ultimately similar to that of DB85’s LOOK BETTER NAKED – basically, each are trying to sell their fitness services with the suggestion that they can help the consumer look better when naked.

Because the other factors do tend to weigh mostly in DB85’s favor, the similarity of the marks need not be as strong in order for DB85 to make a successful case for likelihood of confusion.

One interesting endnote -- BIP may already be taking steps to try and further distinguish its slogan: BIP’s home page currently has the following slogan: “Have You Seen Yourself Naked LatelyTM” But based on the above analysis, even this addition may still not be enough.

Wednesday, February 27, 2008

Nuvio file trademark infringement lawsuit against Garmin over NÜVIFONE

Various news stories reported on the press release issued today by Nuvio Corp. (“Nuvio”), an internet telephone company based in Overland Park, Kansas, announcing that it had filed a trademark infringement lawsuit against GPS maker Garmin Ltd. (“Garmin”).

Nuvio holds a federal registration for the word mark NUVIO for internet telephony services (filed as a Section 1(b) intent-to-use application on January 14, 2004 and registered March 28, 2006). Garmin has its own federal registration on the word mark NÜVI for personal navigation devices (filed as a Section 1(b) intent-to-use application on July 11, 2005 and registered October 10, 2006).

Nuvio’s real issue, however, likely has more to do with Garmin’s recently announced product, the NÜVIFONE (pictured below).

On January 30, 2008, Garmin filed a Section 1(b) intent-to-use trademark application for the mark NÜVIFONE (for various goods and services across four different classes, including GPS navigation devices, wireless telephones, telecommunications and information technology services, and providing mapping and weather information via telecommunication networks, cellular telephones and wireless navigation devices).

According to Nuvio CEO Jason P. Talley, the lawsuit comes after attempts to reach a settlement were unsuccessful and was necessary to ensure that our customers and potential customers are not confused by any telephone related products created by Garmin since Nuvio’s customers “commonly refer to [Nuvio’s] service as the Nuvio phone.” Nuvio sent a cease and desist letter to Garmin on January 31, 2008, with which Garmin apparently did not comply. The lawsuit apparently seeks a permanent injunction as well as damages for past infringement.

Vegas™Esq. Comments
Past infringement? The Nüvifone isn’t even on sale yet. Is Nuvio trying to claim infringement by Garmin based on NÜVI on its GPSs? Not likely. I seem to recall reading at least one report where Nuvio even acknowledged that it had no issue with Garmin’s use of NÜVI on its GPS devices

As for likelihood of confusion between NUVIO and NÜVIFONE, based simply on the appearances of the marks and the goods involved, I give the advantage to Garmin, although it’s by no means a clear cut case. There are good arguments on both sides with respect to appearance of the marks (how much weight should be given to the umlat ü) and the similarity of the goods (telephone related on the one hand, but internet telephone versus actual hand-held cell phone).

Tuesday, February 26, 2008

Chicago Cubs go after clubs watching Wrigley Field home games from nearby rooftops

On February 15, 2008, Chicago National League Ball Club, L.L.C., the owner of the Chicago Cubs Major League Baseball team (the “Cubs”), filed a trademark infringement lawsuit in the U.S. District Court for the Northern District of Illinois against Thomas Gramatis as well as two companies owned and controlled by Gramatis -- Wrigley Rooftops III, L.L.C., d/b/a the Wrigley Field Rooftop Club (“Wrigley Field Rooftop Club”) and Rooftops IV, L.L.C., d/b/a the Sheffield Baseball Club (“Sheffield Baseball Club”). See Chicago National League Ball Club, L.L.C. v. Wrigley Rooftops III, L.L.C. et al, Case No. 08-cv-00968 (N.D. Ill.). A copy of the complaint can be downloaded here (HT to Marty Schwimmer’s Trademark Blog).

The Cubs also own and operate Wrigley Field, the second oldest Major League Baseball ballpark in the United States (Boston’s Fenway Park is the oldest), where the Chicago Cubs baseball team play all of its home games.

The Wrigley Field Marquee

The complaint notes that the Cubs, through years of investing substantial sums of money both in advertising and promotion as well as the baseball team itself, have built up substantial consumer recognition and goodwill with respect to its numerous trademarks relating to the “Cubs” and “Wrigley Field” including:

Both clubs are in the business of selling to the public rooftop seats which allow patrons to watch Cubs games played at Wrigley Field because of the close proximity of Wrigley Field to the building rooftops where the clubs operate (the Wrigley Field Rooftop Club operates at 3617 N. Sheffield Avenue and the Sheffield Baseball Club operates at 3619 N. Sheffield Avenue). Gramtis supposedly charges as much as $150 or more per person for admission to his rooftops.

Aerial Photo of Wrigley Field showing building rooftops in the distance.

(Photo Credit: Aerial Views)

Gramtis, through another company Annex Club, L.L.C. (“Annex”), also operates another rooftop club named the Ivy League Baseball Club from a facility that is adjacent to Wrigley Field. In 2004, the Cubs and Annex entered into a license agreement allowing Annex to operate the Ivy League Baseball Club and use the Cubs’ trademarks in exchange for an annual royalty payment. The Cubs have entered into similar licensing arrangements with 12 other rooftop operators.

According to the complaint, when Gramatis began operating the Sheffield Baseball Club in 2007, the Cubs attempted to enter into a similar agreement with Gramatis, but such agreement was never finalized. In late 2007, Gramatis apparently announced plans to operate the Wrigley Field Rooftop Club during the 2008 season. This month, the Cubs reiterated its offer to Gramatis regarding the Sheffield Baseball Club and also attempted to enter into the aforementioned license agreement with the Wrigley Field Rooftop Club, but Gramatis allegedly refused both.

The Cubs maintain that Gramatis is marketing his clubs using the Cubs trademarks, including the Chicago Cubs name, the Wrigley Field name, and other marks associated with the Cubs, on each clubs’ respective website ( and The Cubs also assert that Gramatis has advertised his clubs as being “Officially Endorsed by the Chicago Cubs.”

The Cubs’ single count (citing 15 U.S.C. §§ 1114, 1116(d) and 1125) argues that Gramatis’ marketing efforts are willful and wanton actions designed to trade off of the Cubs trademarks and goodwill and which are likely to cause confusion as to the affiliation, association or connection between Gramatis’ clubs and the Cubs and as to the sponsorship or approval of Gramatis’ business activities by the Cubs and adversely affect Cubs’ ticket sales as well as the ticket sales of the Cubs’ rooftop licensees.

The Cubs are asking for injunctive relief to stop Gramatis from using the Cubs’ trademarks and engaging in any marketing which is likely to cause consumer confusion regarding affiliation with or sponsorship or approval by the Cubs of Gramatis’ business. The Cubs also seek compensatory damages, Gramatis’ profits, treble damages, statutory damages under 15 U.S.C. § 1117(c) (for alleged counterfeiting), interest, costs and attorneys’ fees.

The Cubs have also apparently informed Gramatis that it intends on taking action to prevent him from providing his club members “with any guarantee that they will have an unobstructed view of home plate and other parts of Wrigley Field in 2008.”

Monday, February 25, 2008

Seventh Circuit affirms District Court dismissal of trademark infringement dispute between JAPONAIS restaurant founders

On February 22, 2008, the Seventh Circuit Court of Appeals affirmed a district court’s dismissal of a derivative trademark infringement claim brought by a co-founder of the Chicago restaurant Japonais against his fellow co-founders using the Japonais name and trade dress at additional restaurant locations outside Chicago. See Segal v. Geisha NYC, LLC, Appeal No. 06-2897 (7th Cir. February 22, 2008). A copy of the decision can be downloaded here.

Jonathan Segal was one of four founders of the Chicago restaurant Japonais Chicago, described as an up-scale restaurant and lounge serving a fusion of Japanese and European cuisine. Segal developed the concept for Japonais along with Rick Wahlstedt. They hired culinary expert Miae Lim and architect Jeffrey Beers to assist in developing the restaurant.

As part of the establishing of the first Japonais restaurant in Chicago, the four founders formed two Delaware LLCs -- Geisha Chicago, LLC (“Geisha Chicago”) and Hospitality Chicago, LLC (“Hospitality Chicago”). Geisha Chicago was set-up to own the Japonais Chicago restaurant and all intellectual property related to the Japonais name and design. In Geisha Chicago’s operating agreement, Hospitality Chicago is named as “Managing Member” and is the sole member listed on the agreement’s member schedule. The agreement also gives Hospitality Chicago complete authority to manage the business of Geisha Chicago and to utilize any asset of Geisha Chicago.

The four founders were the only named members in the operating agreement of Hospitality Chicago. The same agreement also included provisions which allowed at least two of the four founders to open a restaurant outside of Chicago using the Japonais Chicago restaurant concept provided that notice and opportunity to participate was given to the other founders.

In 2006, Wahlstedt, Lim, and Beers decided to open additional Japonais restaurants in New York City and Las Vegas which used the Japonais Chicago concept. When Segal discovered that his three co-founders had expanded the restaurant outside of Chicago (apparently without notifying him or allowing him to participate), he filed a lawsuit (on behalf of himself and derivatively on behalf of Geisha Chicago and Hospitality Chicago) stating ten state-law claims and one federal claim for trademark infringement under Section 43(a) of the Lanham Act (15 U.S.C. §1125(a)). Segal alleged that the defendants misappropriated the Japonais name and trade dress in violation of §1125(a).

In June 2006, the district court granted the defendants’ motion to dismiss the trademark infringement cause of action on the grounds that, as a matter of law, there could be no likelihood of confusion as to source or affiliation because of the clear language of the Hospitality Chicago operating agreement which allowed any two founders to use the Japonais Chicago concept and intellectual property in any expansion of the restaurant outside Chicago. After dismissing Segal’s federal claim, the district court dismissed the remaining state law claims under 28 U.S.C. §1367(c)(3) for lack of pendent jurisdiction. While Segal filed a separate action in Illinois state court, he also filed an appeal of the district court's dismissal of his trademark infringement claim.

The Court of Appeals affirmed the district court’s decision to dismiss the trademark infringement claim as well as the state law claims.

On appeal, Segal argued that Hospitality Chicago’s operating agreement was only meant to govern relations between the members and was not relevant to whether the defendant’s were authorized to use the Japonais Chicago’s intellectual property. The court, however, rejected Segal’s argument, finding that, under Delaware law, an LLC operating agreement allows the members to delegate control over the company by contract. See Del. Code Tit. 6, §18-1101(b). The court agreed that Geisha Chicago’s operating agreement gave Hospitality Chicago total control over Geisha Chicago’s assets, including use of the Japonais Chicago intellectual property. As such, it was relevant to review the provisions of the Hospitality Chicago operating agreement to determine how Geisha Chicago’s intellectual property could be controlled.

In reviewing the Hospitality Chicago operating agreement, the court agreed that the people who controlled the companies behind Japonais New York and Japonais Las Vegas, namely Wahlstedt, Lim, and Beers, were expressly authorized to use the Japonais Chicago intellectual property under such agreement for restaurants outside of Chicago.

Therefore, because Geisha Chicago, through its managing member, Hospitality Chicago, had authorized the three expanding founders to use the Japonais Chicago intellectual property owned by Geisha Chicago, the court agreed that Segal’s trademark infringement claim failed as a matter of law because Segal could not establish that use of the mark by Japonais New York and Japonais Las Vegas is likely to cause confusion with Japonais Chicago among consumers because they are authorized expansions of the same restaurant concept and share three of the same founders:
“[W]here the trademark holder has authorized another to use its mark, there can be no likelihood of confusion and no violation of the Lanham Act if the alleged infringer uses the mark as authorized. See ITOFCA, Inc. v. MegaTrans Logistics, Inc., 322 F.3d 928, 940 (7th Cir. 2003) (“A licensee infringes the owner’s copyright if its use exceeds the scope of its license.” (internal quotation marks and citations omitted)); Am. Legion v. Matthew, 144 F.3d 498, 499 (7th Cir. 1998) (“Without confusion about source, sponsorship, or affiliation, there is no possible claim under . . . § 1125(a).”); see also McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1307 (11th Cir. 1998) (“[I]n order to prevail on a trademark infringement claim, a plaintiff must show that its mark was used in commerce by the defendant without the registrant’s consent and that the unauthorized use was likely to deceive, cause confusion, or result in mistake.”).
Slip op. at 7-8.

Finally, the court agreed that since Segal’s pendent state law claims were based solely on the district court’s supplemental jurisdiction, the district court properly relinquished its jurisdiction over such state law claims under 28 U.S.C. § 1367(c)(3) once Segal’s sole federal claim was dismissed. See Williams v. Rodriguez, 509 F.3d 392, 404 (7th Cir. 2007) (citing Wright v. Associated Ins. Cos., 29 F.3d 1244, 1251-52 (7th Cir. 1994)).

Vegas™Esq. Comments:
The court seems to gloss over the fact that the Hospitality Chicago operating agreement apparently required notice be given to Segal as well as an opportunity to participate in order to be authorized to expand the restaurant outside of Chicago – and that Segal apparently never received such notice and opportunity to participate from the three expanding founders. Under the agreement, if such steps were not taken, then were the three expanding founders legitimately authorized under the agreement to have used the Japonais Chicago intellectual property in restaurants outside of Chicago?

This case serves as an important reminder of how trademark law and corporate law can become intertwined and how anyone becoming involved in a business venture with others should be careful in how the business is structured and the governing documents dictating the relationships among the business partners.

Thursday, February 21, 2008

Ninth Circuit amends decision in Jada Toys v. Mattel to apply current dilution law and likelihood of dilution standard

The Ninth Circuit Court of Appeals issued an amended opinion today in the appeal of Jada Toys v. Mattel, Inc., No. 05-55627 (9th Cir. February 21, 2008). For good summaries of the original decision, see blog posts by Seattle Trademark Lawyer and Filewrapper Blog.

While the court' s decision is the same, the primary difference between the two is that the court revised its discussion on dilution to apply the current federal dilution law (the Trademark Dilution Revision Act) instead of the pre-2006 federal dilution law (the Federal Trademark Dilution Act).

In the court’s original decision (link here), the court, in addressing Mattel’s dilution cause of action, applied the old federal dilution standard under the Federal Trademark Dilution Act, as described in the following footnote:

Because this action was filed in 2004, prior to the 2006 amendment of § 1125, see Trademark Dilution Revision Act of 2006, Pub. L. No. 109-312 § 2(1), 120 Stat. 1730, the previous version of § 1125 applies, codified at 15 U.S.C. § 1125(c)(1) (2000).

In the amended order, however, the court has revised its decision to apply the current dilution standard under the Trademark Dilution Revision Act. The court revised the above footnote to read as follows:

We note that in this case the district court applied the prior version of the Federal Trademark Dilution Act (“FTDA”), 15 U.S.C. § 1125(c) (2000), which required a showing of actual dilution. The actual dilution requirement was a product of the Supreme Court’s decision in Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 433 (2003), where the Court held that the federal dilution statute required a showing of actual dilution. However, since that time the FTDA has been amended so as to require only a likelihood of dilution to succeed. Trademark Dilution Revision Act of 2006 (“TDRA”), Pub. L. No. 109-312 § 2(1), 120 Stat. 1730. In this case, we choose to apply the standard currently in operation so as to adhere to our prior precedent established in Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1009-10 (9th Cir. 2004), in which we held that application of the FTDA to an alleged diluting mark that was in use before the statute’s passage was not retroactive because the FTDA authorizes only prospective relief.

We are aware that in Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007), we applied the FTDA retroactively, thereby creating an unintentional intra-circuit conflict with Nissan. In Horphag, however, neither party mentioned the TDRA in its briefs, nor moved for a petition for panel rehearing or to vacate the mandate in light of the TDRA’s passage. Moreover, the plaintiff in Horphag prevailed under the more stringent version of the federal dilution statute. Accordingly, recalling the Horphag mandate at this point would serve no purpose.

Slip op. at 1573, n.2.

The court went on to adjust its analysis of the degree of fame a mark retains to recite the non-exclusive list of four factors that a court may consider as stated in 15 U.S.C. § 1125(c)(2)(A) instead of the eight factors listed in the prior version of the statute. Slip op. at 1575.

Finally, the court’s original decision analyzed Mattel’s evidence under the actual dilution standard; however, because the standard under the revised dilution statute is likelihood of dilution, the revised order applies the statutory factors for making a determination of likelihood of dilution by blurring or tarnishment. Slip op. at 1575-76.

The court’s analysis of the evidence and its ultimate conclusion about the district court’s grant of summary judgment remain the same. In the end, the court decided that “a reasonable trier of fact could conclude that this evidence was sufficient to establish the existence of a likelihood of dilution,” (slip op. at 1577) and therefore reversed the district court’s entry of summary judgment based on genuine issues of material fact raised by Mattel’s evidence.

Wednesday, February 20, 2008

District Court finds money clip seller liable for Trademark Infringement based on Google AdWord Initial Interest Confusion

What is a blogger to do when there is nothing interesting to blog about? Simple -- link to somebody's else blog posting.

The E-Commerce and Tech Law Blog had a post today (link here) about a California district court decision last week finding trademark infringement based on "initial interest confusion" -- a topic of interest to many in trademark circles. The case is Storus Corporation v. Aroa Marketing Inc. et al, Case No. 06-cv-07376 (N.D. Cal. February 15, 2008). A copy of the decision can be downloaded here.

In this case, Storus Corporation, a money clip manufacturer and owner of the registered mark SMART MONEY CLIP, sued Aroa Marketing Inc., a company which sells money clips and which participated in Google's AdWord program so that a Google search for "smart money clip" would generate an advertisement for Aroa's website ( which prominently displayed the mark SMART MONEY CLIP.

While the court decided on summary judgment that Aroa was liable for trademark infringement, the court denied summary judgment with respect to the other defendant, Skymall, Inc., because Storus apparently had not shown sufficient evidence that Skymall's search results would be any different in response to a consumer search using the phrase "smart money clip" compared to the phrase "money clip."

Monday, February 18, 2008

A trademark dispute over Cheesecake

On February 13, 2008, Cheesecake Factory, Inc., a New Mexico corporation doing business in New Mexico as “Dee’s Cheesecake Factory” (“Dee’s Cheesecake”), filed a lawsuit against The Cheesecake Factory, Incorporated (“TCFI”), the owner of the restaurant chain “The Cheesecake Factory,” in the U.S. District Court for the District of New Mexico. See Cheesecake Factory, Inc. v. The Cheesecake Factory, Incorporated, Case. No. 08-CV-00167 (D. N.M.). A copy of the complaint can be downloaded here.

Dee’s Cheesecake Factory started in 1973 as a wholesale bakery and restaurant. Today, Dee’s Cheesecake is one of the largest producers of cheesecakes in the U.S. – distributing its cheesecakes both nationally and internationally. The company obtained a federal registration for the mark DEE'S FAMOUS CHEESECAKE EMPORIUM (for restaurant services) on October 11, 1988 (although first use in commerce was claimed on August 6, 1986, first use in another form was claimed back to 1973).

The Cheesecake Factory got its start in 1972 with the opening a wholesale bakery and a small retail component in Los Angeles. The company opened its first restaurant in 1978 in Beverly Hills, and today has over 120 locations throughout the U.S. TCFI, through its trademark holding company The Cheesecake Factory Assets Co. LLC, holds numerous trademark registrations on THE CHEESECAKE FACTORY mark (and variations thereon) with many others registration applications pending.

The current lawsuit stems from a trademark infringement lawsuit previously filed by Dee’s Cheesecake in 1997 over TCFI’s use of the name “Cheesecake Factory.”

According to the current complaint, a court decision in the 1997 case found that Dee’s Cheesecake held prior user rights to the CHEESECAKE FACTORY name in “certain parts” of the United States and that the marks DEE’S CHEESECAKE FACTORY and THE CHEESECAKE FACTORY were confusingly similar. The parties subsequently entered into a settlement agreement (which notably was not attached to the complaint) whereby Dee’s Cheesecake sold for cash its right in the CHEESECAKE FACTORY name to TCFI, but with Dee’s Cheesecake retaining an exclusive right to use DEE’S CHEESECAKE FACTORY as the name of her New Mexico-based restaurant and bakery and to use the DEE’S CHEESECAKE FACTORY name worldwide to designate wholesale bakery services (including mail order services). The settlement agreement apparently prohibited TCFI from using the CHEESECAKE FACTORY name in connection with a restaurant in New Mexico.

The complaint also states that the parties entered into a “license agreement” as part of the settlement agreement; however, the complaint characterizes this a “naked license” because TCFI has exercised no quality control over Dee’s Cheesecake’s services, and thus argues that TCFI has forfeited any trademark rights to the CHEESECAKE FACTORY name.

The complaint appears to be going after four particular trademark registrations held by TCFI:

Dee’s Cheesecake asserts in its complaint that TCFI a) never disclosed to the USPTO the settlement agreement that existed between Dee’s Cheesecake and TCFI, and specifically, that TCFI did not have right to use the name CHEESECAKE FACTORY in New Mexico, and b) falsely claimed in each respective application that it had the rights to use the above marks throughout the United States without restriction (Dee’s Cheesecake notes that two of the applications were filed in September 1997 at the very same time that the parties were completing the settlement agreement).

Dee’s Cheesecake argues that had TCFI properly disclosed the settlement agreement to the USPTO, the agency would not have issued registrations – at least not without some kind of geographic scope restriction. As such, Dee’s Cheesecake seeks a declaratory judgment that TCFI committed fraud against the PTO in obtaining the above registered marks, and an order cancelling such marks

Dee’s Cheesecake also alleges breach of contract – specifically, that TCFI, through its conduct in obtaining the above registrations, breached the parties’ settlement agreement. Finally, Dee’s Cheesecake states a claim for unfair competition under New Mexico’s Deceptive Trade Practices Act (N.M.S.A. §57-12-1 et. seq.).

In addition to seeking a court order cancelling the above registrations, Dee’s Cheesecake also requests an order enjoining TCFI from selling its gift cards anywhere in New Mexico. Although the complaint is not entirely clear as to the basis for this injunction, it is likely based on the assertion that TCFI is prohibited from using CHEESECAKE FACTORY in connection with restaurant services anywhere in New Mexico.

Without seeing either the license agreement or the settlement agreement, it is difficult to comment on the merits of Dee’s Cheesecake’s lawsuit. This appears to be the beginning of yet another battle in the so-called “Cheesecake Wars” (as Dee’s Cheesecake describes on its own website (link here)).

What is a Naked License?
While the Dee’s Cheesecake complaint does not go into details regarding TCFI’s alleged “naked license” as a grounds for cancelling the above registrations, the issue is an important one that deserves special mention.

A trademark holder who “licenses” a trademark to another party without maintaining some kind of control over the quality of the goods/services sold under the trademark may be engaging in the “naked licensing” of such trademark, in which case the holder’s rights to the trademark may be deemed abandoned (and any registration on such trademark cancelled). See Barcamerica International USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002) (registration for “Da Vinci” for wine was cancelled because licensing agreement that did not contain any quality control provisions was a “naked license” and the mark was thus deemed abandoned).

The rationale behind why “naked licensing” is an abandonment of a party’s trademark rights derives from the notion that trademarks are meant to serve as unique identifiers of the source and origin of goods or services for the benefit of the consuming public. The consuming public relies upon trademarks (and the goodwill and reputation attached thereto) to distinguish one party’s goods and services from those offered by another. As such, a party’s failure to exercise any kind of quality control over the use by others of the party’s trademark may result in the trademark no longer being recognized by consumers as a unique identifier of that party’s goods and services in which case the trademark rights associated thereto are deemed abandoned by the trademark holder.

Saturday, February 16, 2008

Yoko Ono speaks out about about LENNON service mark cancellation proceeding

I wrote on Wednesday (blog post here) about the cancellation proceeding initiated by Yoko Ono against Lennon Murphy, a heavy-metal musician who performs under the name LENNON and even registered the mark with the U.S. Patent and Trademark Office ("PTO").

Today several news outlets and blogs were reporting on the press statement (link here) put out by Ono late Thursday responding to the stories about her cancellation filing:

Dear Friends

A musician named Lennon Murphy is claiming that Yoko Ono has sued her and that Yoko is seeking to stop Lennon Murphy from performing under her name, Lennon Murphy. Both of these claims are untrue.

Several years ago, Lennon Murphy sought Yoko's permission to do her performances under her name, Lennon Murphy. Yoko, of course, did not object to her request. Subsequently, without Yoko's knowledge, Lennon Murphy filed an application in the United States trademark Office requesting the exclusive right to utilize the name “Lennon” for musical performances. Yoko's attorneys asked Lennon Murphy's attorneys and manager to withdraw her registration of exclusivity to the name LENNON for the trademark. Yoko also offered to cover all costs Lennon Murphy had incurred in filing for the trademark. But Lennon Murphy went ahead to register.

Yoko did not sue Lennon Murphy, but sought to stop her from getting the exclusive right to the name Lennon for performance purposes. For that, Yoko's attorneys, simply notified the Trademark office that Yoko did not believe it was fair that Ms. Murphy be granted the exclusive right to the “Lennon” trademark in relation to musical and entertainment services. As you can see, his is a very important issue for Yoko and the Lennon family.

Yoko says: “I am really hurt if people thought that I told a young artist to not use her own name in her performances and had sought to sue her. I did no such thing. I hope this allegation will be cleared.”

Thank you for your kind attention,


I’m not sure if the wording of this press release demonstrates a lack of familiarity with trademark matters or represents the efforts of a clever wordsmith (a lawyer, perhaps) to make Ono’s cancellation proceeding seem innocuous (while making Murphy look like she had it coming).

First, Ono is correct that Murphy and the media have wrongly characterized her action as a lawsuit, when it is actually a “cancellation proceeding.” However, only a lawyer could go on to characterize a “cancellation” as “simply notif[ying] the Trademark office that Yoko did not believe it was fair that Ms. Murphy be granted the exclusive right to the 'Lennon' trademark in relation to musical and entertainment services.” Or stated more accurately, Ono’s attorneys were simply notifying the PTO that Murphy’s registered mark should be cancelled because Ono believes its continued registration dilutes the fame of John Lennon’s name and because Murphy committed fraud on the PTO in obtaining the registration.

Second, when the press statement states that the complaint is trying to stop Murphy from being granted the exclusive right to the “Lennon” trademark in relation to musical and entertainment services, perhaps what Ono meant is that she is trying to stop Murphy from having “conclusive evidence” that she has the exclusive right to use the mark LENNON for musical performances. The very fact that Murphy obtained the registration for the LENNON mark in the first place already provided her prima facie evidence of her exclusive right to use the mark in commerce on or in connection with the services specified in the registration. See §7 of the Lanham Act (15 U.S.C. §1057(b)). However, after five years of continuous use from the date of registration, Murphy could have filed a §15 Declaration of Incontestability (15 U.S.C. §1065), after which the law states that her registration shall be conclusive evidence of the validity of her registered mark and of her registration of the mark, of her ownership of the mark, and of the her exclusive right to use the registered mark in commerce. See §33(b) of the Lanham Act (15 U.S.C. §1115(b)).

As noted in my prior post, if Murphy’s registration had become incontestable, then Ono could not have brought a cancellation based on dilution (although fraud is always grounds for cancellation; see 15 U.S.C. §1064(3) and 15 U.S.C. §1115(b)(1)). As it stands, however, Ono filed the cancellation just under the wire, which allows Ono to assert trademark dilution as a grounds for cancellation.

Third, while Ono is correct that technically the cancellation complaint is not trying to stop her from using her full name, Lennon Murphy, Ono is clearly trying to set a precedent to stop Murphy from continuing to perform under her first name only. Of course, Ono is also asserting that she only gave Murphy permission to use her entire name – not the name Lennon by itself (a claim that Murphy is likely to deny – although Murphy may need some evidence to back up that claim should she hope to prove acquiescence).

Fourth, can Yoko really claim that she had “no knowledge” that Murphy filed an application in the United States trademark Office requesting the exclusive right to utilize the name “Lennon” for musical performances? After all, this is why marks are published for opposition – to put the public on notice of an applicant’s claim to a trademark. The LENNON mark was filed April 11, 2001, and was pending in the PTO for 18 months before it was published for opposition on October 29, 2002 – Ono was free to oppose registration at that time. In her statement, Ono admits that she knew about the mark – her attorney apparently asked Murphy to withdraw the application (or maybe to withdraw the registration – Ono’s statement is not entirely clear whether the request was made before or after registration). Regardless, when Murphy refused, Ono was free to pursue an opposition or cancellation at that time.

And if Ono maintains that she only discovered the registration recently, this may actually hurt her argument that the registered mark is having any kind of dilutive effect on the John Lennon name – after all, if the great protector of John Lennon’s name, likeness, and memory did not notice this registered mark until recently, then could it really be causing any harm? Furthermore, if John Lennon’s name is truly that valuable, then it is difficult to believe that this registration could have gone unnoticed by Ono for so long.

Instead, it appears that Ono decided not to do anything in response to Murphy’s registration– until just five days shy of the deadline after which it would have been more difficult for Ono to pursue her cancellation action against Murphy’s registered mark. Meanwhile, during the last five years, Murphy has been using her registered mark in commerce and has spent a great deal of time and resources building recognition and goodwill around her name. Under the circumstances, Ono’s delay in bringing this cancellation does not seem reasonable – and that kind of unreasonable delay is what can amount to laches.

Finally, does anybody else find it strange that the press statement is apparently signed by Yoko personally, but includes several references to Yoko in the third person ("Yoko also offered" "Yoko states" etc.)?

Friday, February 15, 2008

The Naked Cowboy Sues Over Cartoon M&M Ad Featuring His Likeness

Numerous news stories over the past few days (New York Post, CNN, and MSNBC) summarize very well the trademark infringement lawsuit filed by Robert Burck (better known as "The Naked Cowboy") against Mars, Incorporated, the makers of M&Ms candy, and Chute Gerdeman, Inc., the alleged creator of the a cartoon M&M ad campaign, which included an M&M street performer that Burck alleges resembles his "Naked Cowboy" likeness (pictured above). See Burck v. Mars, Incorporated et al, Case No. 08 Civ. 01330 (S.D.N.Y. Filed February 11, 2008). The complaint can be downloaded here.

Burck obtained a registration for the mark NAKED COWBOY for various entertainment services on April 9, 2002. He obtained second registration on September 2, 2003, for a design mark resembling The Naked Cowboy’s likeness (pictured below) for various clothing items including, of course, underwear.

One thing I did learn from this lawsuit (although its probably well known to those living in New York City and other major metropolitan areas) – the term "busking" (the complaint calls "The Naked Cowboy" the most famous busker in the entertainment capital of the world).

Of course, the complaint does not answer the one question that we have always wondered – why does he call himself the "naked" cowboy? Shouldn’t he be named the "white underwear wearing" cowboy (admittedly, not as catchy).

Looks like "The Naked Cowboy" is going to be able buy some clothes with the nice monetary settlement that he will undoubtedly work out with Mars and Chute Gerdeman.

Wednesday, February 13, 2008

Yoko Ono seeks to cancel musician's registration of LENNON service mark reports on the effort by Yoko Ono to stop heavy-metal artist Lennon Murphy from performing her music under the name Lennon.

Murphy obtained a registration for the mark LENNON (for musical sound and video recordings and for entertainment services in the nature of live musical performances and providing online performances and information) on January 21, 2003 (claiming first use in commerce back to June 1997).

Nearly five years later (not a coincidence) on January 18, 2008, Ono – wife of the late John Lennon and ardent protector of the musician’s estate (just ask Paul McCartney) – filed a petition to cancel Murphy’s registration. See Yoko Ono Lennon v. Lennon Murphy, Cancellation No. 92048785 (T.T.A.B.). A copy of the Ono’s petition for cancellation can be downloaded here.

The petition describes the fame of John Lennon’s name as follows [feel free to begin humming “Imagine” here]:

The distinctive artistic brilliance that has come to be associated with the Lennon name, likeness, image and trademarks is of inestimable value to his successor: it represents Lennon’s inimitable genius and extraordinary talent.

Nonetheless, in addition to the general fame associated with John Lennon’s name, Ono cites to two registrations for the mark JOHN LENNON (stylized) (see below) – one for eyeglasses and the other for tote bags and address/date books.

Ono seeks cancellation of Murphy’s registration on the grounds of likelihood of dilution and fraud.

Without stating too many facts, Ono alleges that Murphy has been using her mark LENNON in a way that is likely to cause dilution by blurring and/or dilution by tarnishment that impairs the distinctiveness of John’s Lennon’s famous name.

With respect to Ono’s fraud allegations, Ono claims that when Murphy originally filed her trademark application on April 11, 2001, she filed it as a Section 1(b) intent-to-use application and did not disclose in such application that the mark “Lennon” was actually her first name. When the PTO finally rejected her application on the grounds that is primarily merely a surname (§2(e)(4) rejection), Murphy requested reconsideration of her application on the grounds of acquired distinctiveness under §2(f). On July 3, 2002, Murphy filed an Amendment to Allege Use which converted her application to a use-in-commerce application based on use of the name LENNON for the preceding five years (back to June 1997). The Amendment included a declaration by Murphy that she had been using the LENNON mark for over five years, and thus it had become distinctive of the services for which she applied.

While the petition cites little evidence for its claims that Murphy’s declaration of use was untrue and bases its claims upon information and belief, a short footnote notes that Murphy would have been fifteen years old in 1997, which is supposed to raise some doubts about her declaration that she was using the mark in commerce since that time.

However, Murphy, through her MySpace page (link here), addresses this particular point about when she began using the name in commerce:

When I first started playing music at 14, I was known for the most part as "The Lennon Murphy Band". Not a name I was very fond of, no one could ever agree on anything so it made sense. A few months later some of the shows started being marketed using my full name as well as some that just using "Lennon." There was never really any consistancy but there was well enough to justify stating that "Lennon" had been used in fact since 1997.

As for the allegations of dilution, Murphy recounts events prior to the trademark application being filed where she claim permission was sought and received by Ono to use the name:

In 2000 Arista Records addressed the issue of Yoko Ono potentially having a problem with our use of the name. My product manager at Arista was ironically the son of the lawyer who actually represents Yoko. So he approached Yoko, to make her aware of the use, evidently giving her blessing as Arista proceeded forward with the album release and at the same time filing for the trademark. Its takes time for all of the legal work to go through, but finally in 2003 I was granted by the United States Patent & Trademark office the ownership in the name Lennon for musical use.

The timing of Ono’s petition is not surprising – filed just under the five year time period in which most petitions for cancellation must be filed under §14(1) of the Lanham Act (15 U.S.C. §1064(1)) – although it should be noted that there is no time limit for petitioning for cancellation of a registration when the basis is that the “registration was obtained fraudulently” (see §14(3) of the Lanham Act (15 U.S.C. §1064(3))).

Nonetheless, by filing the petition just under the wire, Ono is able to assert trademark dilution in addition to fraud (15 U.S.C. §1064 specifically includes dilution as an adequate grounds for cancellation). But if dilution of her famous husband’s name is Ono’s concern, this begs the question – why did Ono take so long to seek cancellation of Murphy’s registration?

If Murphy does not have evidence to support her claims of use going back to 1997, her registration may be in jeopardy given the strong stance that the TTAB has taken lately with respect to fraud on the PTO. See prior blog post here on trademarks at risk for being canceled on the basis of fraud.

However, assuming that Murphy has sufficient evidence to overcome the allegations of fraud, Ono’s trademark dilution claim will come down to whether Murphy’s mark is likely to dilute Lennon’s famous name through blurring (i.e., whether the association arising from the similarity between a mark or trade name and a famous mark impairs the distinctiveness of the famous mark – where distinctiveness refers to the ability of the famous mark uniquely to identify a single source and thus maintain its selling power).

Ono has a viable case that the Lennon name is famous and has become distinctive (especially in the world of music), Murphy is using a mark in commerce that is allegedly is diluting the famous Lennon mark, and there is a similarity between the marks that gives rise to an association. This leaves only the issue of whether that association is likely to impair the distinctiveness of the famous mark (I choose to focus on blurring only and disregard allegations of dilution by tarnishment because its seems highly unlikely that Murphy’s use of the name Lennon has caused any tarnishment).

The Trademark Dilution Revision Act of 2006, 15 U.S.C. §1125(c), sets forth six non-exclusive factors for courts to consider in determining whether a junior mark is likely to dilute a famous mark through blurring: (i) The degree of similarity between the mark or trade name and the famous mark; (ii) The degree of inherent or acquired distinctiveness of the famous mark; (iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; (iv) The degree of recognition of the famous mark; (v) Whether the user of the mark or trade name intended to create an association with the famous mark; (vi) Any actual association between the mark or trade name and the famous mark. See 15 U.S.C. §1125(c)(2)(B).

There is a strong similarity between John Lennon’s name and mark and Murphy’s registered mark. The famous mark’s distinctiveness is not inherent, but rather acquired through John Lennon’s fame. As for exclusive use, the PTO does show one company using the mark LENNON for meats as well as a registration for the name LENNON for vinyl wallpaper, which was cancelled on January 7, 2006 for failure to file its 10 year §8 Affidavit of Use. There may be evidence of others businesses using the name Lennon given that it is a fairly common surname. The degree of recognition of the name is likely to be high -- a large majority of the population is at least aware of who John Lennon is and his place in our country’s pop culture. The evidence suggests that Murphy did not intend on creating an association with John Lennon – it is her own name after all and quite frankly, I doubt the association with John Lennon, known more for his Beatles’ tunes and folk music, would even help an aspiring heavy metal rocker. Finally, while Ono may not have any current evidence of an actual association between the two, Ono’s attorneys can probably conduct some study that will show that the participants associated the artist Lennon with John Lennon.

While Murphy has apparently spoken with some lawyers who say Ono has no case, from the above analysis, I would not be so quick to discount the validity of Ono’s dilution claim.

However, Murphy’s best defenses may be laches and acquiescence. Under the equitable defense of laches, Murphy can argue that Ono’s delay in bringing this action was unreasonable and that Murphy would be unfairly hurt by cancellation. As for acquiescence, if indeed Ono’s permission was sought and expressly or impliedly granted, then Murphy can argue that Ono acquiesced to Murphy’s use of the name. While Murphy has the burden of proof in establishing these defenses, her initial evidence seems compelling enough.

I would “imagine” (pun intended) that Murphy will ultimately prevail – based on a combination of Ono’s delay (whether intentional or unintentional) and the fact that it’s not so clear cut that Murphy’s use of the name impairs the distinctiveness of the Lennon name as it relates to John Lennon. But as Murphy recognizes on her MySpace page, she now has to hire a lawyer to fight this out.

All I can say is Ono should give peace a chance (isn’t that what John would have wanted?)

[02/16/08 Update: Click here for my subsequent post on Yoko Ono's response to the media reports about the cancellation complaint.]

Tuesday, February 12, 2008

Las Vegas’ World Market Center embroiled in another trademark battle over WORLD JEWELRY CENTER

After my lengthy post yesterday, I am opting for a more succinct post today.

I previously wrote about the lawsuit between the Las Vegas-based World Market Center (“WMC”) and Cost Plus World Market over the mark WORLD MARKET CENTER (link here). That post was based on an article authored by Las Vegas Business Press writer Valerie Miller. Yesterday, Ms. Miller wrote a follow-up piece (link here) over a new trademark battle involving WMC – only this time, it is WMC claiming trademark infringement.

Probity International Corp. (“Probity”), based in Beverly Hills, California, is developing a 1.1 million square foot jewelry mart modeled after WMC’s furniture marketplace (and even located within walking distance) designed to attract wholesale gem buyers and sellers. The jewelry mart is part of a $927 million mixed use project in downtown Las Vegas and will include a 125,000 square foot retail center and 50+ floor residential condominium tower.

Probity chose the name World Jewelry Center for its jewelry mart. On September 7, 2005, Heritage-Nevada VIII, LLC (“Heritage”), Probity’s Nevada-based subsidiary which owns the land being developed and will own the World Jewelry Center, filed a Section 1(b) intent-to-use trademark application for the mark WORLD JEWELRY CENTER (JEWELRY CENTER disclaimed) for various services including retail showroom and wholesale store services in the field of jewelry; real estate management services; health club services; restaurants, bars, and catering services; beauty salon and health spa services; and security guard services. When the mark was published for opposition on September 4, 2007, however, WMC filed an opposition opposing registration on the grounds of likelihood of confusion. See World Market Center Venture, LLC v. Heritage-Nevada VIII, LLC, Opposition 91181644 (T.T.A.B. Filed January 2, 2008).

Heritage filed a second Section 1(b) intent-to-use trademark application for WORLD JEWELRY CENTER (and Design) on August 22, 2006, for a variety of services including retail store services and jewelry trade shows and exhibitions (pictured above). The application is set to be published for opposition in the near future.

But instead of fighting with WMC at the Trademark Trial and Appeal Board, Heritage, on January 30, 2008, opted to file a lawsuit against WMC in the U.S. District Court for the District of Nevada seeking a declaratory judgment of non-infringemen based on its “reasonable apprehension of litigation” arising from WMC’s opposition. See Heritage-Nevada VIII, LLC v. World Market Center Venture, LLC, Case No. 08-CV-00130 (D. Nev.).

Monday, February 11, 2008

Tenth Circuit affirms district court decision favoring 1-800-SKI-VAIL against Vail Ski Resort Owner

On February 7, 2008, a divided three judge panel of the Tenth Circuit Court of Appeals upheld a district court’s decision in favor of Vend-Tel-Co, Ltd. and Eric A. Hansen (together, “VTC”), the owner of the vanity phone number "1-800-SKI-VAIL," in a service mark infringement lawsuit brought by Vail Associates, Inc., owner of the Vail Ski Resort, and Vail Trademarks, Inc. (together, “VA”),. See Vail Associates, Inc. et al. v. Vend-Tel-Co., Ltd. et al., No. 05-1058 (10th Cir. February 7, 2008). A news article on the lower court’s 2005 decision can be found here.

VA holds a service mark registration for the mark VAIL (for recreational services, namely downhill skiing facilities, ice skating facilities, cross-country ski trails and expeditions, hiking and back-packing trails, and horseback riding and educational services, namely skiing classes and for resort hotel and restaurant services, and retail store services in the field of recreational equipment) registered January 17, 1989. VTC holds a service mark registration for the vanity telephone number 1-800-SKI-VAIL (for marketing services related to the ski industry, namely providing an automated phone switching system to offer services available in or near Vail, Colorado and nearby resort locations) registered June 12, 2001 .

VA claimed that VTC's use of the term SKI and VAIL in its vanity telephone number infringed its registered VAIL service mark in violation of 15 U.S.C. §1114(1)(a) as likely to cause consumers to believe that VA and its Vail Ski Resort was the source of or affiliated with VTC’s phone service. VA also alleged false designation of origin under 15 U.S.C. §1125(a) and sought to cancel VTC’s registered mark under 15 U.S.C. §1064 for alleged fraud in the prosecution.

After a bench trial, the district court concluded VA failed to meet its burden of proof regarding likelihood of confusion between the two marks and that VA failed to establish by clear and convincing evidence that two alleged misstatements of fact were material to the PTO's issuance of the registration.

The majority of the three judge panel of the court of appeals, noting that it does not set aside a district court’s factual findings unless clearly erroneous (Fed. R. Civ. P. 52(a)) (i.e., only if the reviewing court is left with the definite and firm conviction that a mistake has been committed), decided that a review of the trial record, in the light most favorable to the district court’s ultimate findings, showed ample support for the court's judgment.

After a detailed review of the witnesses and testimony set forth by the parties at the district court level, the court stated:

Taken in a light most favorable to the district court's ruling, the only thing the preceding recitation of the evidence confirms is the district court's finding of no likelihood of confusion was not clearly erroneous. Based on our review of the trial record, we are satisfied the district court did not clearly err in finding that VA failed to prove the ordinary consumer, looking for winter recreation in and around the Town of Vail, Colorado, associates the word "Vail" exclusively, if at all, with VA or its ski resort. Rather, the ordinary consumer sees Vail as a place to ski, i.e., as a ski destination, without associating it with any particular entity or service provider. Simply put, the district court took a permissible view of the evidence to hold VA failed to prove a likelihood of confusion between 1-800-SKI-VAIL and VA's ski resort.

Slip op. at 15-16 (emphasis in original).

The court proceeds to discuss the evidence of record as applied to each of the six factors used in the Tenth Circuit to determine a likelihood of confusion (the Sally Beauty factors): (1) evidence of actual confusion between the marks, (2) the strength of the contesting mark, (3) the intent of the alleged infringer in adopting the contested mark, (4) the degree of similarity between the marks, (5) the similarity of the parties' services and manner in which they market them, and (6) the degree of care consumers are likely to exercise in purchasing those services. See Team Tires Plus, Ltd. v. Tires Plus, Inc., 394 F.3d 831, 833 (10th Cir. 2005); Sally Beauty Co. v. Beautyco, Inc., 304 F.3d 964, 972 (10th Cir. 2002).

The dissent, in concluding that the district court’s decision was clearly erroneous, undertakes its own analysis of the six factors, which results in some back and forth arguments (and footnotes) with the majority.

Actual Confusion
The court found that VA offered little evidence of actual confusion, initial interest confusion or otherwise, on the part of consumers phoning 1-800-SKI-VAIL. One piece of evidence relied upon by VA was the testimony and affidavit of a travel agent (Joyce Newton, owner of Vacation Coordination) who at one time served callers of the 1-800-SKI-VAIL number. The court recounted events surrounding the procurement of Newton’s affidavit by VA – she marked up an initial version of the affidavit in a way that worked against VA’s argument of actual confusion by callers of 1-800-SKI-VAIL. Newton signed a modified version of VA's original affidavit and agreed to testify on behalf of VA only after VA cut off her travel agency's ability to book reservations with VA, which, in turn, deprived her travel agency of the ability to earn commissions. Newton later testified that she felt coerced into signing the modified affidavit. Under such circumstances, the court found that the district court understandably discounted such evidence of actual confusion, and that the district court’s action in discounting such evidence was not clearly erroneous. The court also noted that the district court did not abuse its discretion in excluding VA’s survey evidence after concluding in a Daubert hearing that VA’s survey evidence contained methodology flaws and thus was unreliable.

One point of contention between the majority and the dissent is the extent to which source confusion existed despite consumers calling 1-800-SKI-VAIL not having knowledge of the particular company behind skiing in Vail because most people calling the phone line think of Vail as a place to ski, and not as a specific company offering ski services. While the majority recognized that consumers need not have knowledge of the particular company behind a service source before confusion may occur, the court stated that consumers nonetheless must associate the company's mark with its services. The court found nothing in Newton’s testimony suggesting that consumers phoning 1-800-SKI-VAIL thought they were calling the service provider behind the VAIL registered mark.

While some consumers calling 1-800-SKI-VAIL asked about ski passes, directions to Vail, weather, grooming, and ski rental, the court states that VA did not offer any evidence suggesting that consumers are more likely to call the VAIL ski resort than the chamber of commerce, a travel agency, or some other information source to inquire about such matters. In addition, other callers asked about things not related to a ski resort, which allowed the district court to conclude that callers recognized they were calling a general information number rather than the resort itself. Such consumer inquiries show that consumers knew they could ski in Vail; it does not say anything about whether those consumers identified the name VAIL with the ski resort or rather with Vail as a geographic designation.

The court also disregarded Newton’s testimony about redirecting calls from 1-800-SKI-VAIL to VA since such testimony did not offer any evidence into the subjective belief or knowledge of consumers calling the number.

The dissent, however, saw the evidence as showing that of the 10-20 calls per week that Newton received, most of the calls asked questions directed to VA's ski resort (i.e., directed to the one place in Vail to ski). Consumers contacting VTC about lodging were not necessarily directed to VA's accomodations, which puts VTC at competition with VA in this respect. By ignoring evidence that consumers calling 1-800-SKI-VAIL attempting to contact VA's ski resort who were then direct to competiting hotel accomodations, the dissent maintains that the district court committed clear error.

Strength of the Mark
The court also found that the district court did not clearly err in finding the VAIL mark to be weak. While recognizing that VAIL has acquired a secondary meaning with respect to VA’s ski services, the “presence of secondary meaning, however, does not provide the mark holder with an exclusive right to use the mark in its original descriptive sense. Secondary meaning provides the mark holder ‘an exclusive right not in the original, descriptive sense, but only in the secondary one associated with the mark holder's goods.’ KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 122, 125 S. Ct. 542, 160 L. Ed. 2d 440 (2004).” Slip op. at 21 (emphasis in original).

In response to VA and the dissent, both of whom argue that VAIL is a strong mark that has acquired secondary meaning associated with “world-class ski resort services,” the majoritymaintains that the very fact that VA does not have evidence of confusion suggests that the VAIL mark does not have a strong secondary meaning.

Furthermore, VA did not set forth any evidence that consumers actually confuse 1-800-SKI-VAIL with VA and its ski resort facilities. VA relied primarily on the registration and incontestability of the VAIL mark as evidence of secondary meaning, which the court, citing McCarthy, supra § 11:82, at 11-166, notes does not dictate the conclusion that a mark is strong with no further analysis.

VA also did not address how much it spent marketing the word VAIL apart from its stylized logo nor did VA provide any evidence that consumers associated the mark VAIL with VA’s ski resort services.

The court also noted that the geographically descriptive nature of the mark coupled with its extensive use by third parties substantially undermines the strength of the mark:

We find little in the record to support the view that consumers routinely associate the word "Vail" with VA's ski resort services. More importantly, we find no support in the record for the conclusion that the district court's contrary finding was clearly erroneous. The lack of actual confusion evidence, the geographically descriptive nature of the word Vail, and its documented use among numerous businesses in the Vail area, all support the district court's finding that the Vail mark is not particularly strong.

Slip op. at 24-25.

The dissent, however, found the district court's conclusion that VA's mark was weak clearly erroneous. The dissent argued that VA had established secondary meaning for its mark with respect to ski services and that VTC's own use of the term "ski" in conjunction with the word "Vail" proved such strength.

While the majority notes that the dissent relies on VA’s testimony that Ski Magazine ranked Vail as the #1 ski resort for many years, the majority notes that “VA presented no evidence as to the circulation of Ski Magazine, the regard in which likely consumers of VA's services hold the magazine, or the percentage of those consumers that read the magazine.” Slip op. at 22, n.12. In short, the court found that “the district court as the trier of fact properly found the Vail mark was not particularly strong because VA's evidence of secondary meaning was not particularly strong.” Slip op. at 22-23.

VTC’s Intent in Adopting Mark
The court found that the evidence amply supported the district court’s finding that there was nothing in the record to suggest VTC intended to trade on VA's service mark or deceive the public into believing that the operator of the Vail ski facilities provided VTC's marketing service.

Eric Hanson, a former shareholder and president of VTC who obtained the rights to the 1-800-SKI-VAIL mark during the pendency of the lawsuit, testified that neither he nor VTC intended to derive any benefit from VA's reputation or goodwill and VTC’s expert testified that he found no evidence that VTC intended to utilize VA's reputation in employing the 1-800-SKI-VAIL mark – noting that none of VTC's advertising materials, printed or electronic, referred to VA or its ski resort. The same expert also noted that the 1-800-SKI-VAIL mark was part of a portfolio of 1-800 ski numbers containing the word “ski” and a geographical designation (e.g., 1-800-SKI-ASPEN, 1-800-SKI-STEAMBOAT, 1-800-SKI-SUMMIT, 1-800-SKI-ASPEN, and 1-800-SKI-TAHOE).

The dissent notes that VTC admitted that it intended to procure 1-800 numbers with the names of major ski resorts -- and by incorporating the name of VA's ski resort, VTC hoped to capitalize on VA's reputation and goodwill. From the dissent's perspective, VTC stepped over the line of using "Vail" as a geographic descriptor when it added the word "ski" to its vanity phone number because by adding such word, VTC was informing consumers (consumers that are likely knowledgable about skiing in Vail) that its services were not just about the geograophic area of Vail, but rather skiing in Vail, which could only have intended to evoke the image of VA's ski resort. By ignoring the evidence of VTC capitalizing on VA's reputation, the dissent argues that the district court commiteed error.

In response to the dissent’s argument that VTC’s expert opinion ignores the fact that when one skis in Vail, it will be a VA’s resort, the majority noted that such point should have been addressed on cross-examination or during closing arguments – not at the appellate stage.

In response to the dissent’s argument that the district court clearly erred in refusing to infer a wrongful intent, the court notes that intent is a question of fact which lies within the purview of the fact finder:

And the district court, taking a permissible view of the evidence, found VTC, by incorporating the name Vail into a toll-free telephone number, hoped to capitalize, not on Vail Resort's reputation, but rather on Vail, Colorado's reputation as an attractive ski destination. See Baum v. Great Western Cities, Inc., 703 F.2d 1197, 1210-11 (10th Cir. 1977) ("Questions of intent which involve intangible factors, including witness credibility, are matters for consideration of [the] fact finder after a full trial."). In fact, the record reveals VA offered little direct evidence of VTC's wrongful intent. As the foregoing recitation of the evidence well illustrates, the record clearly supports the district court's view that 1-800-SKI-VAIL trades on Vail as a geographic ski destination, rather than on Vail as a mark identifying VA and/or
its ski resort.

Slip op. at 27-28.

Degree of Similarity Between the Marks
VA argued (and the dissent agrees) that VTC’s 1-800-SKI-VAIL is similar to VA’s VAIL mark because it merely adds the generic 1-800 prefix and the generic word SKI brings to mind VA’s skiing facilities. However, as the court notes, VA’s argument presupposes that (1) consumers calling 1-800-SKI-VAIL know that only one ski resort exists in Vail, and (2) those same consumers know the word Vail means that ski resort – neither fact of which VA established with any evidence:

A consumer unaware of those particular facts would not likely be confused when phoning 1-800-SKI-VAIL because that consumer could not be confused about facts of which he or she is unaware. In other words, consumers cannot dial an alphanumeric phone number believing it to be associated with VA and/or its ski resort facilities if they have no knowledge of VA's mark in any particularized sense.

Slip op. at 29. The majority criticizes the dissent for effectively relieving VA of its burden of proof by assuming that consumers possess such knowledge about VA’s ski facilities.

The dissent argues that in the specific market context at issue (skiing), the hypothetical consumers are sufficiently interested in skiing to be even considering a ski vacation. Thus, this type of typical consumer calling 1-800-SKI-VAIL would be calling the number becasue they are interested in skiing at VA's ski resort.

The majority also notes that VA and the dissent rely upon the word “ski” to support the argument that the marks are similar. The court reiterates that VA’s service mark is only for the word VAIL, and not “Ski Vail,” and notes that VA fails to cite any authority for truncating 1-800-SKI-VAIL to simply VAIL and then comparing the two marks. The court also found the marks to be visually dissimilar – VAIL is a single word whereas 1-800-Ski-Vail is four components, with the word “Vail” being only one component.

In total, the court found that the evidence did not establish that the marks were similar in sound, sight, or meaning.

The dissent argues that similarity between two marks is judged by the total impression created by the mark. While 1-800-SKI-VAIL may have dissimilar individual features, the total effect of the mark is an association with skiing in Vail, which can only be an association with VA's ski resort. VTC's use of the marks "ski" and "Vail" bring to mind an association between VTC's services and VA's ski resort -- the alphanumeric number indiates a means of contacting the only company in Vail that offers ski services.

Similarity of Products and Manner of Marketing
The court agreed that the nature of the parties' services and the manner in which they market them did not support the position that they compete with one another. The district court found that 1-800-SKI-VAIL serves as a conduit, much like a travel agency, to bring consumers wanting to visit Vail and the surrounding area together with service providers in the region. VTC does not offer ski resort services – and the services it does provide are at least one step removed from the services VA provide (and even benefit VA’s resort by helping bring consumers to the Vail area and directing them to VA’s resort).

In addition, the court agreed that the manner in which the parties market their services is not particularly similar – VTC never sought to pass off its services as the same type of high end ski services offered by VA, but rather promoted itself as a place to call for general travel information about Vail. “VTC's marketing of 1-800-SKI-VAIL portrayed the number as precisely what it was: an easy-to-use number that connected callers to a variety of services.” Slip op. at 32-33. VA, on the other hand, marketed its resort services world-wide in a sophisticated manner with a multi-million dollar marketing budget.

The court found that the district court was entitled to find the aforementioned differences outweighed the similarities in judging the similarity of the parties' services and the manner in which they market them in finding a likelihood of confusion.

The dissent maintains that the district court ignored evidence of the overlapping (and somewhat competitve) nature of their business and the similarity of consumers -- specficially, evidence of callers being diverted to competing hotels providing similar hotel accomodations as VA -- an area in which VTC's own expert acknoweldged VTC competes with VA:

Because VTC markets an overlapping product to the same pol of consumers as Vail Asccoiates, VTC's use of a mark virtually identical to Vail Associates' can only suggest to the typical consumer that 1-800-SKI-VAIL is affiliated with Vail Associates' ski resort business.

Slip op. at 55 (Tymkovich, J. dissenting).

Degree of Consumer Care
With respect to the degree of care the consuming public uses in selecting the various services at issue, the court noted that VA provides first class ski resort accommodations at first class prices. Because ski vacations to VA’s ski resort are not cheap, consumers will exercise a degree of care at the time of purchase.

The dissent focuses on initial interest confusion – “Initial interest confusion is a 'bait and switch' tactic that permits a competitor to lure consumers away from a service provider by passing off services as those of the provider, notwithstanding that the confusion is dispelled by the time of sale. See Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633, 638 (7th Cir. 1999).” Slip op at 34.

However, the majority notes that such initial interest confusion cannot be assumed, and must be still proven – and that VA simply failed to prove any initial interest confusion.

The court adds that while consumers exploring ski vacation options by dialing a toll-free number are not likely to exercise extraordinary care, those same consumers are unlikely to associate the word VAIL with VA's ski resort services, thus negating the possibility of any confusion. As for more sophisticated consumers, they are more likely to contact VA directly and would not likely phone 1-800-SKI-VAIL. And even if they were to phone 1-800-SKI-VAIL, any initial confusion is unlikely to result in sophisticated consumers booking services elsewhere.

In conclusion, the court found that the record showed a) little credible evidence of actual consumer confusion between the number 1-800-SKI-VAIL and the mark VAIL; b) that the evidence has not shown that VA’s VAIL mark is strong; c) that VTC did not intent to trade on VA's reputation; d) that the sight, sound, and meaning of the two marks are not irrefutably similar; e) that VA's and VTC's respective services and the manner in which they market them differ in important respects; and f) that consumers exercise a high degree of care when planning ski vacations, mitigating confusion that might initially exist between the marks.

The court found none of the six likelihood of confusion factors to favor VA to any significant degree, and thus, the district court's finding that VA failed to prove likelihood of confusion in this case was not clearly erroneous.

The court added that it was not willing to deprive VTC of the use of the descriptive word “Vail”:

We decline to extend unwarranted service mark protection to VA on what the record tells us is first and foremost a geographical term describing a ski destination in the Colorado Rockies. Such extension would imperil the countless number of retailers, merchants, and innkeepers in and around Vail who use the town's name to promote their wares and services.

Slip op. at 36. The court added that any minor confusion was a risk that VA accepted when it decided to identify its services with a single word that is primarily descriptive of a geographic location: “The law's tolerance of a certain degree of confusion on the part of consumers flows from ‘the undesirability of allowing anyone to obtain a complete monopoly on use of a descriptive term simply by grabbing it first.’” KP Permanent Make-Up, 543 U.S. at 122.

However, the court’s true feelings about the case are revealed in the majority opinion’s final paragraph:

In the end, VA's lack of evidence suggesting a likelihood of confusion could lead one to suspect VA's concern is really about "disconnecting" an alphanumeric phone line which provides easy access to VA's actual service competitors. The record evidence simply belies any notion that VA's Lanham Act claim is about the likelihood of confusion. Rather VA's claim appears more about limiting access to its competition by squelching a conduit which provides easy, free, and readily available access to that competition through use of a vanity or alphanumeric phone number. Because the factual record, viewed in a light most favorable to the district court's judgment, supports the court's finding that VA failed to prove a likelihood of confusion, the district court's judgment is AFFIRMED.

Slip op. at 36-37.

And to the extent that the court’s opinion of VA’s evidence was not clear, the court added one last snipe at VA’s evidentiary record when it states in a footnote that VA’s counsel at oral argument “no more wanted to talk about the record evidence than a hog wants to talk about bacon. . . .” Slip op at 36, n.14.

Friday, February 8, 2008

Agri Beef subsidiary wins summary judgment of no infringement in trademark infringement lawsuit brought by Allen Brothers over AB mark.

On March 8, 2006, Allen Brothers, Inc. (“Allen Brothers”) filed a trademark infringement lawsuit in the U.S. District Court for the Northern District of Illinois against AB Foods LLC (“AB Foods”) alleging that AB Foods’ use of the mark “AB” in connection with the sale of meat products infringed Allen Brothers common law trademark rights to the “AB” mark in connection the same goods in violation of §43(a) of the Lanham Act (15 U.S.C. §1125(a)) and Illinois common law.

On Wednesday, U.S. District Judge Wayne R. Andersen ruled in favor of AB Foods and granted its motion for summary judgment. See Allen Brothers Inc v. AB Foods LLC, Case. No. 06-CV-1269, 2008 U.S. Dist. LEXIS 8642 (N.D. Ill. February 6, 2008).

Founded in 1893, Allen Brothers is a nationwide supplier of high-quality, gourmet meat products to restaurants and to individual consumers with annual sales exceeding $75 million. Allen Brothers advertises its products through local and national magazines, newspapers, and radio shows; through a consumer catalog; and through such websites as and

Allen Brothers argued that it had been using the “AB” mark in connection with its meat products “continuously and exclusively” in its catalogs, marketing materials, and radio advertisements, as well as on its shipping materials and websites.

AB Foods is a subsidiary of Agri Beef, Co. (“Agri Beef”) – a vertically-integrated beef producer that has used the letters “AB” as a trademark since the mid-1970s. AB Foods was organized in 2006 as part of a corporate reorganization of Agri Beef and is responsible for the production, marketing, and sales of beef and beef-related products for Agri Beef, including selling meat products to restaurants (with plans to expand the business to individual consumer sales). Agri Beef granted a license to AB Foods to use Agri Beef's “AB” mark in connection with the sale of its goods.

In order to prove its §43(a) violation, Allen Brothers had to show (1) that it had trademark rights in the mark “AB” before AB Foods' began using the allegedly infringing mark, and (2) that AB Foods' use of “AB” would likely cause confusion among consumers in the marketplace about the identity or source of AB Foods' products. Johnny Blastoff, Inc. v. Los Angeles Rams Football Co., 188 F.3d 427, 436 (7th Cir. 1999).

The district court focused entirely on the second factor since it was dispositive of the case – noting that while likelihood of confusion is typically a question of fact, the issue may be resolved on summary judgment when the evidence is “so one-sided that there can be no doubt about how the question should be answered.” Door Sys., Inc. v. Pro-Line Door Sys., Inc., 83 F.3d 169, 171 (7th Cir. 1996).

The court set forth the seven factors used in the Seventh Circuit to determine whether a likelihood of confusion exists: (1) similarity of the marks; (2) similarity of the products; (3) area and manner of concurrent use; (4) degree of care likely to be used by consumers; (5) strength of the complainant's mark; (6) evidence of actual confusion; and (7) intent of the defendant to palm off his product as that of another. Int'l Kennel Club of Chi. v. Mighty Star, Inc., 846 F.2d 1079, 1087 (7th Cir. 1988).

The court found that the first factor – similarity of the marks – favored a finding of no likelihood of confusion. While both parties use a mark with the letters “AB”, the evidence showed that Allen Brothers' use of “AB” in its catalogs, marketing materials, and shipping materials was “almost always accompanied” by the words “Allen Brothers.” In addition, while Allen Brothers uses the “ab-” prefix in its domain names, the consumer is merely directed to Allen Brothers’ main website where the words “Allen Brothers” are predominantly displayed on the page. The court stated:

Thus, even if “AB” is the dominant portion of Allen Brother's mark, the evidence demonstrates that “AB” almost never appears alone on any of Allen Brothers' products. Therefore, a consumer will be likely to differentiate between Allen Brothers' products and those of AB Foods.
Id. at *9.

The court also commented on the visual dissimilarity of the “AB” marks used by each party:

Allen Brothers' mark is a sharp, slanted “AB” with horizontal bars cutting through the letters and is usually displayed in blue. In contrast, AB Foods' mark is a curved, connected “AB” with no sharp or angular lines and is usually displayed in maroon and white. Although restaurant buyers or individual consumers will not have the opportunity to compare the marks side-by-side, after arefully examining the marks we find that they are so visually dissimilar that there is no likelihood of confusion as to the source of the parties' respective products.
Id. at *9-10.

Allen Brothers tried to argue that confusion would exist because the marks are “aurally identical” when heard on radio advertisements. Nonetheless, the court found that, much like its catalogs, marketing materials, and shipping materials, Allen Brothers almost always references “AB” in radio advertisements in conjunction with the words “Allen Brothers” and the “” website mentioned in the ads directs consumers to Allen Brothers' website where the words “Allen Brothers” are predominantly displayed. Thus, the court found that this first factor favored AB Foods

As for the second and third factors, it was undisputed that the products sold by the parties are similar and that both parties are direct competitors selling their selling their meat products to restaurants and consumers (i.e., there is concurrent use among the parties), so these factors favored Allen Brothers.

As for the fourth factor – degree of consumer care – the court noted that “Allen Brothers furnishes high-quality, gourmet meat products to fine-dining restaurants and to connoisseurs of gourmet foods.” Id. at *12. The court also noted the high cost of Allen Brothers’ meat products. As such, the court inferred that “Allen Brothers' customers are sophisticated buyers who exercise a high degree of care before purchasing Allen Brothers' products” which favored AB Foods.

With respect to the fifth factor – strength of Allen Brother's mark – the court rejected Allen Brothers’ arguments that its “AB” mark was strong because a) its mark was arbitrary and thus automatically protected and b) it had used its mark for over 20 years. The court reiterated that the evidence does not show that consumers have come to identify Allen Brothers' products with the mark “AB” alone because Allen Brothers almost always uses “AB” in conjunction with the words “Allen Brothers”:

Therefore, although Allen Brothers' “AB” may be arbitrary in the sense that “AB” does not describe food products or services, it is not legally arbitrary because there is no evidence that it has retained distinctiveness as an identifier of Allen Brothers' products. See Id. at 497. Accordingly, we reject Allen Brothers' contention that it is entitled to trademark protection in “AB” as an arbitrary mark.
Id. at *15. In addition, while Allen Brothers may have used the “AB” mark in some form for 20 years, Allen Brothers did not produce sufficient evidence demonstrating that consumers have come to identify Allen Brothers' products with the “AB” mark by itself. As such, the court found this factor favored AB Foods, concluding that AB Foods' use of “AB” is unlikely to cause confusion among consumers in the marketplace as to the source of AB Foods' products.

With respect to the sixth factor – actual confusion – the court inferred from the absence of any evidence of actual confusion by Allen Brothers that there was also no likelihood of confusion, and thus found this factor to favor AB Foods.

As for the seventh factor – AB Foods’ intent to palm off its goods as those of Allen Brothers – the court observed that Agri Beef had used its “AB” mark for several decades, even before Allen Brothers began to use it mark, without any conflicts. As such, the court rejected Allen Brothers’ argument that Agri Beef chose to name its subsidiary AB Foods and to use the “AB” mark in connection with the sale of meat products in order to trade on the goodwill of Allen Brothers' name, and found this factor to favor AB Foods.

The court concluded that “Allen Brothers has failed to produce evidence that, if believed by a trier of fact, would show that consumers are likely to be confused as to the source of AB Foods' products because of AB Foods' use of ‘AB.’” Id. at *18. And given the lack of similarity in the marks, the sophistication of the consumers, the lack of strength in the mark “AB” alone, no evidence of actual confusion, and no evidence of palming off by AB Foods, the court concluded that “no rational trier of fact could find that AB Foods' use of ‘AB’ causes a likelihood of confusion and AB Foods' motion for summary judgment must therefore be granted with respect to Count One, the Lanham Act claim, as well as Count Two, the common law claim.” Id. at *18.