Mystic Lodge Loses Trademark Battle with Mystic Lake

Mystic Lake Casino Hotel in Minnesota

[Post by Mark Borghese]

As first reported by Steve Green, Mystic Lodge casino in Henderson ("Mystic Lodge") lost its trademark dispute with the Mystic Lake Casino Hotel in Minnesota ("Mystic Lake"). This case was first discussed on this blog here. In a July 25, 2011 order, U.S. District Judge James Mahan issued a Final Judgment and Permanent Injunction against Mystic Lodge ordering it to change its name.

Mystic Lodge Casino in Henderson, Nevada

The chips were stacked against Mystic Lodge from the beginning of this case. Not only are the two marks, Mystic Lodge and Mystic Lake substantially similar, but both marks are for the same services. Moreover, the senior user, Mystic Lake has been using its servicemark for almost twenty years and has multiple federal registrations.

Although a small Henderson, Nevada casino with no hotel and a large Minnesota Indian hotel casino resort may seem worlds apart, the Minnesota tribe which runs Mystic Lake argued in its Motion for Summary Judgment that both casinos operate on a national level and compete for the same customers.

[T]he undisputed evidence supports the conclusion that Mystic Lake Casino and Mystic Lodge Casino operate in a market that includes a nation-wide consumer base. First, more than 100 of the same individuals appear in both Mystic Lake Casino and Mystic Lodge Casino’s respective player databases… Mystic Lake and Mystic Lodge also have player databases that include residents of all 50 states… Both Mystic Lake and Mystic Lodge casino services expressly cater to travelers and tourists… In fact, both parties have thousands of customers in Nevada alone…. Simply put, [Mystic Lake] and [Mystic Lodge] compete for the same discretionary consumer dollar—Mystic Lodge is a competitor of Mystic Lake.

Mystic Lodge attempted to argue the Dawn Donut rule as a defense to the issuance of an injunction against it. That rule, first set out in the case Dawn Donut Co., Inc. v. Hart’s Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959) provides a defense to the issuance of an injunction against a good faith junior user of a trademark which adopts the mark without knowledge of the federally registered mark and which operates in a geographically separate and distinct trading area to the senior user.

Judge Mahan however, ruled that the Dawn Donut defense was not applicable to the facts before the court because Mystic Lodge had actual knowledge of the federal registration for Mystic Lake, but decided to adopt the mark anyway.

The defendants argue under Dawn Donut that when two marks are confined to sufficiently distinct and geographically separate markets, without evidence that the registrant will expand to the defendant’s market, the plaintiff is not entitled to enjoin the junior user’s mark. See 267 F.2d at 364. Further, the “injunctive remedy does not ripen until the registrant shows a likelihood of entry into the disputed territory.” McCarthy, supra, at § 26:33. In the alternative, the defendants’ assert that there is a presumption of good faith since an opinion letter from counsel permitted the use of the mark. The court disagrees.

Here, the Dawn Donut defense does not apply to the plaintiff’s ability to receive injunctive relief due to the bad faith shown. The defendants received actual knowledge of the plaintiff’s registered mark through counsel, ignored requests for alternate names, and disobeyed express recommendations on how to limit the possibility of infringement. Although the final opinion letter by counsel timidly approved the use of the mark with certain limitations, the email from counsel advising that the mark was already registered and the senior user would aggressively protect it disallows the final opinion to serve as a rubber stamp for the defendants’ actions. “The Ninth Circuit does not . . . insulate the defendant from a finding of willful infringement based on advice of counsel of noninfringement.” Monster Cable Prods., Inc. v. Discovery Commn’s, Inc., No. C 03-03250, 2004 WL 2445348, *9 (N.D. Cal. Nov. 1, 2004) (citing Wolfe v. Nat’l Lead Co., 272 F.2d 867, 871 (9th Cir. 1959).

The lesson, of course, is to follow the recommendations of your attorney. Moreover, if you are willing to spend the money to get an attorney’s opinion about potential trademarks, use the advice to pick a name that (1) not federally registered and (2) is not the name used by a competitor in the United States for the same goods and services you want to sell.

The Final Judgment and Permanent Injunction prevents Mystic Lodge from,

(a) Distributing, displaying, marketing, promoting, offering for sale, and/or selling any goods or services using the mark Mystic Lodge Casino, or any other phrase, slogan, or business name that incorporates the word “Mystic” (a “Mystic Mark”);

(b) Affixing a Mystic Mark to any product, advertisement, point of sale material, interior/exterior signage or other promotional material;

(c) Disseminating any product, advertisement, point of sale material, signage or other promotional material containing or incorporating a Mystic Mark;

(d) Registering any domain name which includes the word “mystic” or any Mystic Mark; and

(e) Registering and/or applying for any trademark registration for a Mystic Mark.

The Judgment also gives Mystic Lake sixty (60) days to provide written confirmation that it is no longer using the Mystic Lodge mark and transfer all domain names which include the Mystic Lodge Mark to Minnesota casino.

Mystic Lodge has now filed an emergency motion to stay the ruling pending it’s appeal to the Ninth Circuit. In the motion, Mystic Lodge argues,

If a stay is not granted, Defendants face the risk of being put out of business complying with a permanent injunction before having been ultimately found by a jury not to have infringed upon Plaintiff's mark. Equally important, Plaintiff will not be harmed by a temporary stay of the permanent injunction pending appeal.

Of course Mystic Lodge can simply change its name and re-brand its business. While such a move may be expensive, so is an appeal to the Ninth Circuit Court of Appeals. This case once again highlights the importance of local Las Vegas businesses obtaining national trademark protection for their brands.

About the author
Mark Borghese is a Las Vegas business attorney with the law firm of Borghese Legal, Ltd.

Dairy Queen Denied Preliminary Injunction Against Blizz Frozen Yogurt

In late July, there was a flurry (pun intended) of new reports (here and here) on the trademark dispute between American Dairy Queen Corp. (“DQ”), the company behind the ice cream chain Dairy Queen and its popular BLIZZARD ice cream treat, and a California yogurt company named Yogubliz Inc., which obtained a trademark registration for the mark BLIZZBERRY and sought to register the mark Blizz Frozen Yogurt. Morris Turek, a trademark attorney who blogs at www.yourtrademarkattorney.com/blog/, has a detailed post on the dispute here.

The lawsuit actually originated back on May 17, 2010, soon after Yogubliz received a cease and desist letter from DQ regarding Yogubliz’s use of BLIZZBERRY and BLIZZ FROZEN YOGURT. Yogubliz filed the action in the United States District Court for the Central District of California seeking a declaratory judgment that its BLIZZBERRY and BLIZZ FROZEN YOGURT marks did not infringe DQ’s BLIZZARD marks. See Yogubliz Inc. v. American Dairy Queen Corp., Case No. 10-cv-03677 (C.D. Cal.). DQ subsequently filed counterclaims for trademark infringement as well as cancellation of Yogubliz’s BLIZZBERRY trademark registration. Yogubliz’s complaint and DQ’s Answer and Counterclaims can be viewed here.

DQ also initiated two proceedings with the Trademark Trial and Appeal Board -- an opposition against Yogubliz’s pending trademark application for BLIZZ FROZEN YOGURT (see American Dairy Queen Corporation v. Yogubliz, Inc., Opposition No. 91195789) and a cancellation proceeding against Yogubliz’s trademark registration for BLIZZBERRY (see American Dairy Queen Corporation v. Yogubliz, Inc., Cancellation No. 92052818).

In the federal court litigation, DQ subsequently filed a motion for preliminary injunction. Reuters reported yesterday that the federal court denied DQ its motion for a preliminary injunction on the basis that DQ failed to show a likelihood of success on the merits of any of its claims. See Yogubliz Inc. v. American Dairy Queen Corp., Case No. 10-cv-03677 (C.D. Cal. September 3, 2010). A copy of the court’s order denying DQ’s Motion for Preliminary Injunction can be viewed here.

The primary Sleekcraft factors where DQ apparently lost its argument on likelihood of confusion were similarity of the marks, relatedness of the goods, and marketing channels.

With respect to “similarity of the mark,” the court stated as follows:

[T]he Blizz Frozen Yogurt and Blizzard marks are relatively dissimilar. When considered as they appear on their respective products, the marks share nothing in common besides the spelling of the initial syllable. The font, color, and surrounding graphics of the two marks is different. The word Blizzard in Dairy Queen’s mark presented in all caps, in blue, using a straight lined font. It is topped with a depiction of snow, and backed by a red band that reads “THE ORIGINAL ONLY AVAILABLE AT DQ.” In contrast, Yogubliz’s frozen yogurt cups read “Blizz Frozen Yogurt.” The word Blizz is emphasized, appearing in pink, capitalized but not in all caps, using a stylized wavy line font. A pink and purple spiral appears next to the word Blizz on the cup. Even emphasizing similarities over differences, little connects the two marks as they appear on their respective products.
. . . [DQ] correspondingly devotes the bulk of its argument to the similarities between the words Blizz and Blizzard. Blizz and Blizzard do sound alike in that blizz is the initial syllable of the word blizzard. However, it is not clear that the word blizz, encountered independently, brings to mind the word blizzard. There is no indication that blizz is an abbreviation of blizzard in common usage. Dairy Queen’s contention that blizz has no meaning other than as an abbreviation of blizzard is unavailing. It could just as easily be associated with the word bliss. Further, products often are marketed under names that are nonsense or invented words. Thus, like Pez, Pringles, or a host of other brand names, it is unclear that Blizz has any independent meaning aside from the product it is attached to. Therefore, this critical factor weighs against Dairy Queen’s case.

As for relatedness of the goods, the court found that soft serve ice cream and frozen yogurt, while similar in that they “serve the same overall purpose for a consumer (a sweet treat),” they are not complementary goods and not closely related especially “given the health and taste differences between the two.” While the court recognized that similar marks can still cause confusion even when products are not closely related, the court found this factor to tip in favor of Yogubliz, but not dispositive.

As for the marketing channels used, while the court acknowledged that both products reach consumers through retail outlets,

the products are not marketed at a common retail location. Blizzards are sold at Dairy Queen restaurants, while Blizz Frozen Yogurt is sold through Yogubliz’s frozen yogurt shops. There is little possibility that a consumer could mistakenly seek a Blizzard in walking into a Blizz Frozen Yogurt or Blizzberry store if the consumer was aware that the Blizzard is a Dairy Queen product. There is also a distinction between the two retail locations where the products are available. While Dairy Queen operates fast food restaurants where Blizzards are offered alongside hamburgers, french fries and other food, the Yogubliz stores sell only desserts.

In response to DQ argument’s that a consumer might still think that Dairy Queen owned or sponsored Yogubliz’s shops, the court stated the following:

It is unclear, however, what would cause a consumer to believe that the stores operated by Yogubliz were owned by or affiliated with the Dairy Queen stores. There is some similarity, however weak, between the marks of Dairy Queen and Yogubliz’s respective products. But, there is no similarity alleged between the name or overall appearance of a Dairy Queen Restaurant and a Blizz Frozen Yogurt store. The argument for affiliation would thus turn on the idea that Blizzard is such an iconic brand that a store bearing some weak similarity to the name of that product would be assumed by customers to have some affiliation with the Dairy Queen company. This argument is strained, and cannot be accepted without supporting evidence. Overall, this factor weighs against Dairy Queen.

The court also rebuffed DQ’s trademark dilution claim on the grounds that the BLIZZ FROZEN YOGURT mark is not “nearly identical” to DQ’s BLIZZARD mark.

Having found no likelihood of success on the merits of any of DQ’s claims, the court denied DQ’s motion for preliminary injunction.

Of course, the court’s denial of a motion for preliminary injunction, while signaling to DQ that its case might be weak, does not bring this dispute to an end. It merely means that DQ failed to present sufficient evidence at this early stage that it would ultimately success on its claims such that it was entitled to a preliminary injunction at this early stage of the litigation.

Whether DQ will continue the fight after suffering this initial defeat is anybody’s guess. In the end, like most David and Goliath litigations, it may come down to how long can the relatively small Yogubliz do battle with the behemoth DQ (which is owned by Warren Buffett’s Berkshire Hathaway Inc.) – and how important this particular battle is to both sides.

And is anybody else out there surprised that Pinkberry, well known for its aggressive stance against any frozen yogurt store using any type of mark ending in “berry” (see prior blog post here) never went after Yogubliz's use of BLIZZBERRY?

Court Concludes No Likelihood of Confusion between AutoZone and OilZone/WashZone and AutoZone’s Claims Barred by Laches

I previously blogged (link here) about the trademark infringement lawsuit brought by automotive parts retailer AutoZone against Illinois businessman, Michael Strick, doing business under the service marks Oil Zone and Wash Zone. The Seventh Circuit reversed a district court’s decision finding no likelihood of confusion as a matter of law between the AUTOZONE mark and Strick’s use of OILZONE and WASHZONE. See AutoZone, Inc. et al v. Strick et al., Appeal No. 07-2136 (7th Cir. September 11, 2008). The decision sent the case back the lower court for trial.

After a bench trial was held on November 2 and 3, 2009, U.S. District Court Judge John Darrah on March 8, 2010, issued findings of fact and conclusions of law which rule in favor of Strick and against AutoZone. The court concluded that Strick's use of the OIL ZONE and WASH ZONE names and marks was not likely to cause consumer confusion with AutoZone’s mark, and, in the alternative, AutoZone’s lawsuit was barred the doctrine of laches. See AutoZone, Inc. et al v. Strick, 2010 U.S. Dist. LEXIS 21928, Case No. 03-cv-8152 (N.D. Ill. March 8, 2010).

Because there was no issue regarding the protectibiliyt of AutoZone’s marks, the decision came down to likelihood of confusion. The court went through an analysis of the seven likelihood of confusion factors set forth in CAE, Inc. v. Clean Air Engineering, Inc., 267 F.3d 660, 677-78 (7th Cir. 2001).

Regarding the similarity of the mark, while they all three contained the word “zone” (preceded by a short one or two syllable word), the court found that the marks have significant differences, including color, letter capitalization, the appearance of the individual letters altogether and even the graphical elements conveying movement or speed, that made the marks only somewhat similar. The court also took into account the retail context in which the marks appeared to find that confusion was even less likely:

Furthermore, confusion between the marks is even less likely when the marks are considered in the physical retail context in which they are displayed by the parties and perceived by the consumer. Specifically, the exterior appearance of the Oil Zone facilities significantly diminishes the probability of consumer confusion by associating either location with AutoZone. The Wheaton Oil Zone location is a simple concrete building with a green Oil Zone sign. The Naperville Oil Zone/Wash Zone location is a white building with a blue roof. Neither has an appearance even slightly resembling a typical AutoZone store, which has the standardized, uniform look consistent with a retail store operated as part of a nationwide chain. In contrast, the Oil Zone locations present the appearance of two small, independent businesses, not associated with any national commercial entity.

Regarding similarity of the products and/or services offered, while the businesses may generally relate to care and maintenance of automobiles, the court found that Oil Zone and Wash Zone primarily provide automotive services while AutoZone primarily sells automotive products. The court rejected as unsupported by any evidence AutoZone’s claims that consumers would believe these are service-only centers of AutoZone.

Regarding the “area and manner of concurrent use” factor, the court found differences in the customer bases of the two businesses (65% of Strick's customers are women while 20% of AutoZone customers are women; AutoZone has a very high percentage of DIY customers while Strick’s facilities provide basic automobile maintenance services to automobile owners). The court also noted that AutoZone customers generally seek to purchase products for use by the customer in performing maintenance and repair on an automobile whereas Oil Zone/Wash Zone customers are seeking to purchase both the part and the installation and repair or maintenance service. The court also found that the physical appearance of the interior of Strick's facilities make it unlikely that a consumer would believe that the business sold auto parts. Similarly, the typical AutoZone store is a retail facility with large glass windows but no car bays with an interior that contains aisles of shelves stocked with automobile parts and accessories. The court also noted that there is no significant concurrent use of the marks in advertising because AutoZone’s ads are mostly nationwide through television, radio, newspapers, and sponsorship of professional teams, while Strick’s primary means of advertising is through direct mail -- a method not used extensively by AutoZone.This factor favored no likelihood of confusion.

As for the degree of care likely to be exercised by consumers, the court rejected AutoZone’s arguments that customers are likely to exercise a low degree of care because most of the products and services sold by Autozone and Strick are inexpensive in light of the “distinct difference in essentially the sale of services offered by Strick and the sale of products offered by AutoZone.”

Sidenote: The court could not resist pointing out that AutoZone, in its own proposed findings of fact and conclusions of law, stated that “Strick's customer base consists largely of individuals who live or work within a three-mile radius of one of its two locations, which suggests that those customers are drawn to Strick's business because they are convenient to customers' homes and offices, and that these customers would continue to frequent Strick's business regardless of the names used to identify those operations,” which the court took as an admission by AutoZone that Strick's customers are drawn from a limited surrounding area, familiar with his business and not dependent on Strick's use of any particular mark. [ed.--Oops!]

There was no dispute that AutoZone’s marks were strong, and thus the “strength of the mark” factor favored AutoZone. AutoZone admitted that it had no evidence of actual confusion. While the court acknowledged that evidence of actual confusion is not required to show likelihood of confusion, lack of such evidence over an extended period of time may indicate lack of actual confusion. In this case, Strick had been using the OIL ZONE mark for over 13 years and AutoZone had no evidence of any incident of confusion between the marks during this time period – even though AutoZone had two facilities located within a mile of Strick’s locations. “Therefore, the absence of actual confusion, particularly when considered in the context of these facts, fails to support AutoZone's claim.”

The final factor was Strick’s intent. The court found credible and persuasive Strick’s testimony that he had not heard of AutoZone at the time he created the OIL ZONE name and mark in 1996. The court also rejected AutoZone's evidence that its Chicago-area advertising somehow put Strick on notice when he opened his business: “AutoZone did not provide specific evidence as to what advertising was done in Chicago prior to 1996. Considering the evidence presented, it is reasonable to conclude that Strick created OIL ZONE before AutoZone had fully developed its Chicago advertising campaign.” In addition, the two AutoZone stores nearest to Strick at the time he opened his first location were forty miles away, which the court found could not have reasonably provided notice of the AUTOZONE mark. The court found no persuasive evidence that Strick intended to "palm off" his business as AutoZone

Weighing all of the factors above, the court found that AutoZone had failed to establish by a preponderance of the evidence that Strick's use of the OIL ZONE and WASH ZONE marks were likely to cause confusion among consumers (finding that only the strength of the mark weighed in favor of AutoZone, which was significantly outweighed by the dissimilarity of the marks and the products and services offered by the parties).

The court also addressed Strick’s alternative argument that the doctrine of laches bars AutoZone's claims. AutoZone became aware of Strick's use of OIL ZONE and WASH ZONE in December 1998, but did nto contact Strick until a cease and desist letter was sent in February 2003. This four year delay was outside the three-year statute of limitations found in the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/10a(e), and therefore, there was a presumption of unreasonable delay applied.

AutoZone attempted to argue that its delay was not unreasonable and was excusable due to AutoZone's other ongoing enforcement actions between 1998 and 2003 (even having in-house counsel testify regarding AutoZone’s procedures for monitoring and prioritizing trademark enforcement actions). But the court shot down AutoZone quite directly stating “It is clear that the actual reason AutoZone did not pursue this case in a reasonably timely manner was not that it was too busy with other enforcement actions but, rather, that for whatever reason, it gave the case file no attention for nearly four years. This does not excuse AutoZone's delay. Therefore, AutoZone has not overcome the presumption that its four-year delay was unreasonable.” (footnote omitted).

After determining unreasonable delay, the court turned to the question of whether Strick has shown prejudice due to AutoZone's inaction. While AutoZone tried to argue that Strick had presented no concrete evidence that he has built up good will or customer loyalty over the last four years, the court rejected the need for such evidence in showing prejudice: “It is undisputed that Strick spent four years and a substantial sum promoting the Oil Zone name. Forcing him to change that name now would obviously cause a loss in terms of both time and money. Thus, Strick has shown that he has been prejudiced by AutoZone's delay.” While AutoZone argued that that Strick had not shown that he relied on AutoZone's delay and that AutoZone's action induced Strick to adversely change his position, the court rejected the argument that such a showing was required (citing recent Seven Circuit case law) and held that Strick did not need to make any further showing with respect to prejudice.

Accordingly, the court held that AutoZone unreasonably delayed in bringing this suit, and Strick would be prejudiced by allowing AutoZone to now assert its rights and applied the doctrine of laches to bar AutoZone’s lawsuit.

Minnesota Indian Casino Sues Local Henderson Casino Over MYSTIC name

Mystic Lake Casino Hotel in Minnesota

Las Vegas Sun reporter Steve Green reports on the trademark infringement lawsuit filed in Nevada District Court by the Shakopee Mdewakanton Sioux Community (“Shakopee”) against Templeton Gaming Corporation (“Templeton”) and its owner Hugh Templeton (link to story here) [I am quoted in the article]. See Shakopee Mdewakanton Sioux Community v. Templeton Gaming Corporation et al., Case No. 10-cv-00010 (D. Nev). A copy of the complaint can be viewed here.

Shakopee owns the Mystic Lake Casino Hotel in Scott County, Minnesota (near Minneapolis). Templeton owns a local video poker bar in Henderson, Nevada going by the name Mystic Lodge Casino.

Mystic Lodge Casino in Henderson, Nevada

While Shakopee appears to promote its services primarily using the mark MYSTIC LAKE, it also happens to own a trademark registration for the word mark MYSTIC in connection with “entertainment services, namely providing casino facilities” registered January 6, 1998. While Shakopee also owns numerous other registrations containing the word MYSTIC in connection with goods and services related to its casino/hotel operations (a “family of marks” as Shakopee would likely describe it), this single registration alone gives Shakopee some strong ammunition against companies that wish to use the word MYSTIC in connection with a casino related business.

While Shakopee appears to have the upper hand in making a legal argument against Templeton for likelihood of confusion based on the Sleekcraft factors, all I could think about with this case was that it looked like a “Dawn Donut” situation. See Dawn Donut Co., Inc. v. Hart’s Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959). As described recently by the Nevada district court in Kerzner Int'l, Inc. v. Monarch Casino & Resort, Inc., 2009 U.S. Dist. LEXIS 116622 (D. Nev. December 14, 2009) (blog post here):

Under the Dawn Donut rule, even if a federal registrant has rights in a mark, it is not necessarily entitled to an injunction against an unauthorized user: “if the use of the marks by the registrant and the unauthorized user are confined to two sufficiently distinct and geographically separate markets, with no likelihood that the registrant will expand his use into the defendant’s market, so that no public confusion is possible, then the registrant is not entitled to enjoin the junior user’s use of the mark.” Dawn Donut, 267 F.2d at 364 (footnote omitted); see also Fairway Foods, Inc. v. Fairway Markets, Inc., 227 F.2d 193, 198 (9th Cir. 1955) (vacating injunction issued to prevailing plaintiff on essentially the same basis as later became known as the Dawn Donut rule). Only once the federal registrant has expanded its use of the mark, so that the market areas of the two users are no longer separate and distinct, will the registrant be entitled to an injunction. Mister Donut of Am., Inc. v. Mr. Donut, Inc., 418 F.2d 838, 844 (9th Cir. 1969) (citing Dawn Donut).

Given that the tribe’s operation of its casino is certainly bound by its Indian territory boundaries and not likely to expand its use of the Mystic mark into the into the Henderson, Nevada area where this small locals casino operates, should Shakopee be allowed to stop them from using the name until such time as Shakopee expands into the Las Vegas market?

Of course, any discussion of “Dawn Donut” would not be complete without raising the issue of whether in this day and age of nationwide commerce through the Internet, whether “Dawn Donut” is relevant any more. The following are two excellent articles focusing on this particular issue:

• Stephen Quigley, “Is 'Dawn Donut' Dead in Internet Age?”. New York Law Journal, May 19, 2008
• Jessica Amber Drew, “Death of Dawn Donut: The Demise of Concurrent Trademarks,” 2007 U. Ill. J.L. Tech. & Pol'y 145 (Spring 2007).

Indeed, Shakopee's argument would certainly be that while its casino business is limited to its tribal area in Minnesota, its reputation (thanks to its traditional and Internet marketing) is nationwide and thus, consumers visiting the Henderson, Nevada area who come across this locals place may believe that there is an affiliation between this "Mystic Lodge Casino" and that other "Mystic" casino in Minnesota with which they are familiar or about which they have heard.

Budweiser wins preliminary injunction against Buttwiper dog toy

Anheuser-Busch, Inc. (“Anheuser-Busch”), the famed brewer of “Budweiser” beer, brought a lawsuit for trademark infringement, unfair competition, and trademark dilution against VIP Products LLC (“VIP”) over VIP’s beer bottle-shaped dog squeeze toy called “Buttwiper.”

Anheuser-Busch sought a motion for preliminary injunction to stop VIP from further selling its dog toy. The court granted Anheuser-Busch’s motion on the basis that Anheuser-Busch was likely to succeed on the merits of its trademark infringement claim, but rejected Anheuser-Busch’s claim that it was likely to s succeed on the merits of its trademark dilution claim. See Anheuser-Busch, Inc. v. VIP Products LLC, Case No. 08-cv-0358, 2008 U.S. Dist. LEXIS 82258 (E.D. Mo. October 16, 2008)

While best known for its beer, Anheuser-Busch sells various non-beer items displaying the famed Budweiser logo including a dog bed and other pet products (food/water bowls, frisbees, balls, leashes, collars, and pet mats), but does not sell or license any type of dog squeeze toy.
VIP sells high-end, high quality, durable dog toys under the brand names "Tuffy," "Mighty," and "Silly Squeakers." The Buttwiper toy is part of the Silly Squeakers's line of products and is packaged together with another beer bottled-shaped toy called Cataroma (designed to look like a “Corona” bottle). VIP also sells another set of beer-shaped dog toys named “O’Drools” (O'Doul's) and “HeinieSniff’n” (Heineken).

Anheuser-Busch discovered VIP’s Buttwiper toy while doing an internet word search using the term "Budweiser Beer" on a Sears & Roebuck Company website in search for a new ice chest product with the "Budweiser" name. Anheuser-Busch hired a survey research firm to conduct a survey to determine if VIP’s Buttwiper was likely to cause confusion with Anheuser-Busch’s Budweiser. The results of the survey were that one in three people interviewed mistakenly believed that VIP’s Buttwiper was somehow affiliated with Anheuser-Busch.

The parties stipulated that the "Budweiser" label is distinctive and was in use before VIP’s Buttwiper; moreover, the court found the label was clearly nonfunctional.

The only likelihood of confusion factors at issue were degree of customer care and evidence of actual confusion. The court agreed that a $10 dog toy was no so high-end that customers would exercise a large degree of care. As for actual confusion, the court accepted the 30% confusion rate found by the survey, which the court found was conducted in a technically proper manner using relevant and non-confusing questions.

Under the circumstances, VIP turned to “parody” as a factor for the court to consider in the likelihood of confusion analysis.

VIP cited last year’s “Chewy Vuitton” decision in Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 263 (4th Cir. 2007) as well as the New York district court’s decision in Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F. Supp.2d 410 (S.D.N.Y. 2002).

However, the court was able to distinguish both of these cases from the instant case. With respect to the Louis Vuitton case, that case was different because “there was no evidence that Louis Vuitton sold dog toys with its brand; there was no evidence by Louis Vuitton of any survey or of confusion; and there was an appreciable difference in the cost of any Louis Vuitton product and the dog toy at issue.” In the instant case, Anheuser-Busch presented evidence that it does sell pet-related items using its brand, evidence of confusion in the form of the survey, and evidence that the items sold are similar in cost. As for the Tommy Hilfiger case involving a defendant who invoked parody in a case involving a dog perfume sold under the name “Timmy Holedigger,” the court noted that in that case, the parties products did not compete nor was there any evidence of confusion (survey or otherwise).

Once the court found that Anheuser-Busch had at least a “fair chance” of prevailing on the issue of likelihood of confusion, the court proceeded quickly to find a presumption of irreparable harm, that the balancing of the harm favored Anheuser-Busch’s longtime mark, and that the protection from confusion was in the public interest – and granted Anheuser-Busch’s motion for preliminary injunction.

The court then proceeded to analyze the dilution claims and concluded that Anheuser-Busch had failed to show a likelihood of success on the merits for its dilutions claims. [Comment: I opted not to include a discussion of the court’s analysis on the likelihood of success of the dilution claim because it wasn’t even necessary given the court’s decision to grant the preliminary injunction based on the trademark infringement claim, but also because for reasons that are not entirely clear, the court appears to be applying a pre-TDRA analysis even though this is certainly a case that would fall under the TDRA.]

Seventh Circuit reignites AutoZone's trademark infringement claims against OilZone and WashZone

The Seventh Circuit reversed a district court’s decision finding no likelihood of confusion as a matter of law between the large automotive parts retailer AutoZone and an Illinois businessman, Michael Strick, doing business under the service marks Oil Zone and Wash Zone. See AutoZone, Inc. et al v. Strick et al., Appeal No. 07-2136 (7th Cir. September 11, 2008).



AutoZone, in business since 1987, became aware of Strick's two businesses in December 1998, but did not take any legal action against Strick until November 14, 2003 (a cease and desist letter was sent to Strick in February 2003). On cross-motions for summary judgment, the district court found that AutoZone's claims of trademark infringement and unfair competition failed as a matter of law because AutoZone had failed to produce sufficient evidence to show a likelihood of confusion between AutoZone's marks and Strick’s Oil Zone and Wash Zone marks – the district court found that the AutoZone mark and the Oil Zone and Wash Zone marks were "not similar enough for a reasonable finder of fact to find that there is a likelihood of confusion."

The Court of Appeals, reviewing de novo the district court's decision to grant summary judgment, found that the evidence was not so one-sided that it was proper for the district court to determine the issue of likelihood of confusion at the summary judgment stage, and thus reversed the district court’s decision. The Court reached this conclusion by doing its own analysis of each of the seven likelihood of confusion factors adopted by the Seventh Circuit. See Packman v. Chicago Tribune Co., 267 F.3d 628, 642 (7th Cir. 2001).

Regarding similarity of the marks, because the marks are all comprised of two words in the same font, slanted in the same direction, with “Zone” as the second word and the first letter of both words larger than the other letters in the marks, and feature bar designs that suggest movement or speed, the Court found that the marks in this case were similar enough that a reasonable finder of fact could find that a consumer would believe that the marks are connected to the same source. While the Court acknowledged some dissimilarities, “viewing the facts in the light most favorable to AutoZone, as we are required to do at this stage of the litigation, the prominent similarities between the marks may very well lead a consumer cruising down the street to believe, after driving past both parties' businesses, that Oil Zone and Wash Zone represented AutoZone's entry into the oil-change and car wash-services market.”

Regarding similarity of the products, the court stated that:

in light of the similarity of the marks, a reasonable consumer may very well be led to believe that Oil Zone and Wash Zone are AutoZone spinoffs. A retailer or manufacturer with a strong mark venturing into a related service industry would not be that surprising. And the automotive services provided by Strick's businesses are related to the automotive products sold at AutoZone stores. Indeed, there is even some direct overlap between AutoZone's products and the services provided by Strick's businesses: Strick provides car washes and oil changes while AutoZone sells car-wash and oil-change products. A reasonable consumer, taking into account the similarity of the marks, could therefore conclude from the relatedness of the goods and services provided by AutoZone, Oil Zone, and Wash Zone that the marks are all attributable to a single source. Thus, AutoZone has shown that a genuine dispute exists here as well.

Regarding the relationship in use promotion, distribution, or sales between the services of the parties, the court found that the evidence of record showed that both parties sell and promote their automotive goods and services in the Chicago area. Strick tried to argue that the nationwide scale of AutoZone’s services was different than his very localized offering of services, but the court noted that “trademark law makes no exception for the localized infringer.” As for differences in customers, the court held that “the record before us does not rule out the reasonable inference that a substantial congruence exists between the potential customer base in Naperville and Wheaton for AutoZone and Strick's businesses. AutoZone has therefore created a genuine factual dispute for this factor as well.”

Regarding customer degree of care, the district court had found this factor to support AutoZone’s argument for confusion and the Court agreed. AutoZone presented evidence that many of its automotive products are inexpensive and Strick did not present any evidence that his customers are particularly sophisticated. As such, a reasonable trier of fact could conclude that this factor favors AutoZone.

Regarding the strength of AutoZone’s mark, the Court found the evidence of record more than sufficient to support AutoZone’s argument that its AutoZone marks was strong. “The AutoZone mark is displayed prominently on more than 3,000 stores nationwide, and it has been the subject of hundreds of millions of dollars' worth of advertising since 1987.” Strick attempted to argue that the AutoZone mark is weak based on evidence that the word "Zone" is commonly found in other marks. However, Strick did not actually produce any evidence to show how extensively any of the third party marks that use the word "zone" have been promoted or become recognized by consumers in the marketplace, and thus evidence of such marks does not raise any question about the strength of AutoZone's mark. In addition, Strick’s argument fails to note that a mark must be viewed as a whole, and while the word “zone” by itself may be common, the same is not necessarily true for a composite mark like AutoZone, and a trier of fact could reasonably conclude that AutoZone's mark is strong and thus the factor of confusion would favor AutoZone.

Regarding the factor of Strick’s intent to palm off his services as those of AutoZone, while Strick testified that he was not aware of the AutoZone mark when he created the Oil Zone mark, the Court noted that in some circumstances, an intent to confuse may be reasonably inferred from the similarity of the marks where the senior mark had already attained great notoriety. In this case, “a reasonable trier of fact could conclude from Strick's experience in the industry, AutoZone's extensive marketing of its mark in the area where Strick did business, and the close similarity in design between the marks that Strick designed the Oil Zone mark with the intent to mislead consumers into believing that Oil Zone was somehow affiliated with AutoZone.” Whether Strick was honest in not being aware of the AutoZone mark was a decision for the trier of fact to decide.

The Court concluded that based on its own analysis of the likelihood of confusion factors, “a reasonable finder of fact could have found that consumers might be led to believe that AutoZone and Strick's Oil Zone and Wash Zone are affiliated with each other. AutoZone has therefore presented sufficient evidence to create a triable issue of fact on the issue of likelihood of confusion.” As such, it was improper for the district court to grant summary judgment with the existence of so many unresolved genuine issues of material fact, and the Court remanded the case back to the district court for trial.

Finally, Strick had argued at the district court and again a the Court of Appeals, that AutoZone’s claims were barred by the doctrine of laches – based on the delay between the time when AutoZone first became aware of Strick’s businesses in 1998 and when AutoZone finally took action in 2003. However, because a district court's decision to apply the doctrine of laches is discretionary and the district court declined to rule on the issue in its decision, the Court opted to let the district court determine on remand how it will exercise its discretion in this case.

Trademark Dispute over the “Plaza” in Las Vegas Headed to Trial in Nevada State Court

I must admit that I had missed this local story about an interesting and ongoing Nevada state court trademark battle pitting two billionaires against each other over the hotel name “Plaza.”

Reporter Brian Miller has an article appearing today on GlobeSt.com (link here) about the lawsuit filed last year by the Tamares Group (“Tamares”) – the owner of the Plaza Hotel & Casino in Downtown Las Vegas – against the El-Ad Group, Ltd. (“El-Ad”), the owner of New York’s famed “Plaza Hotel,” which it purchased in 2004 for $675 million. Tamares is owned by billionaire Poju Zabludowicz while El-Ad is a subsidiary of the Derek Group which is owned by billionaire Yitzhak Tshuva.

El-Ad (through its IP holding company Plaza IP Holdings, LLC) owns the federal registration for THE PLAZA design mark (pictured above) for hotel and restaurant services, which was registered on September 1, 1987 with claimed date of first use dating back to December 31, 1906. El-Ad also has several other pending applications for both the word mark THE PLAZA and THE PLAZA design mark for such services as condominium hotel services and casinos – most of which were filed in February 2007.

New York City's Plaza Hotel

In May 2007, El-Ad announced (click here) its acquisition from Phil Ruffin of a 34.5 acre parcel of land located on the Las Vegas Strip for an estimated $1.25 billion on the site where The New Frontier & Casino used to be located. El-Ad’s planned to develop the site for a $5 billion Las Vegas Strip resort project that was apparently going to use El-Ad’s “Plaza” brand name (LA Times story here).

In March 2008, El-Ad formed a joint venture (El-Ad IDB Las Vegas LLC) with a subsidiary of Israel’s largest business group, IDB Development Corp., in order to develop its “Plaza” project, which is currently slated to begin excavation sometime by the end of 2008 (click here the announcement of the approval of the project by the Clark County Commission).

Artist's rendering of The Plaza - Las Vegas

The only problem is that Las Vegas already has its own “Plaza” hotel – The Plaza Hotel & Casino located at the end of Fremont Street in downtown Las Vegas for the last 30 years. And while Las Vegas’ Plaza Hotel may not be as luxurious as the more well-known Plaza hotel in New York, fans of downtown Las Vegas will agree that this property has become a long-standing fixture of downtown Las Vegas and has held its own over the years amongst the hotel/casinos along “Glitter Gulch” and even amongst those on the Las Vegas Strip.

Las Vegas' Plaza Hotel (and Casino)

Of course, it should also be noted that when the hotel/casino originally opened in 1971, it was known as Union Plaza (changed from Union Hotel) because it was built on the site of the old Union Pacific Railroad Station (if you go back and watch the James Bond film Diamonds are Forever you can even see the Union Plaza under construction). When exactly the “Union” name was dropped is unclear -- in 1992 it was renamed Jackie Gaughan's Plaza and when it was sold to Barrick Gaming Corp. in 2004, the hotel appears to have been rebranded Plaza Las Vegas.

In addition to its common law usage of the “Plaza” name over the years, Tamares holds several Nevada state service mark registrations – although all of them were filed shortly after El-Ad announced its intended “Plaza” project:

• PLAZA (for casinos) – filed June 6, 2007, claiming first date of use back to 1/1/1977
• PLAZA (for hotels) – filed June 6, 2007, claiming first date of use back to 1/1/1977
• PLAZA HOTEL AND CASINO (for casinos) – filed June 6, 2007, claiming first date of use back to 12/31/1982
• PLAZA HOTEL AND CASINO (for hotels) – filed June 6, 2007, claiming first date of use back to 12/31/1982
• PLAZA LAS VEGAS (for casinos) – filed May 31, 2007, claiming first date of use back to 3/24/2004
• PLAZA LAS VEGAS (for hotels) – filed May 31, 2007, claiming first date of use back to 3/24/2004

In addition, on June 1, 2007, Tamares filed two federal servicemark applications for the mark PLAZA LAS VEGAS (for casinos and “Hotel, bar and restaurant services provided in Las Vegas, Nevada” [Comment: Interesting limitation of services]). Then on June 6, 2007, Tamares filed two additional service mark applications for PLAZA HOTEL AND CASINO (and design) for casinos and hotel, bar and restaurant services. Because El-Ad’s applications were earlier filed and because of the potential likelihood of confusion, the PTO suspended prosecution of Tamares’ applications pending disposition of El-Ad’s applications.

So, naturally, when El-Ad’s applications started getting published for opposition, it is no surprise that Tamares filed oppositions to registration. See Tamares Las Vegas Properties, LLC v. Plaza IP Holdings LLC (USA), Opposition Nos. 91181304, 91181273, 91181266, and 91181236 (T.T.A.B. Filed December 12, 2007). Of course, all of these oppositions have been suspended pending the outcome of the civil action.

While the lawsuit was initially filed in Clark County District Court, El-Ad removed the case to federal court; however, Tamares succeeded in having the case remanded back to state court (background article from Haaretz.com). After deciding various summary judgment motions brought by both parties, the court scheduled the case for jury trial beginning next week.

Vegas™Esq. Comments:

This should be an interesting case. Without the benefit of any pleadings, I can only speculate as to the claims and counterclaims -- other than the obvious claims by Tamares that El-Ad's use of the “Plaza” name for its “Plaza Las Vegas” hotel will cause reverse confusion.

El-Ad is probably trying to argue that consumers will not confuse its famed high-end luxury “Plaza” brand with Tamares’ downtown hotel and casino, which explains why the jury will actually be touring the Plaza Hotel & Casino during the trial. However, I think most consumers encountering just the marks alone “Plaza Las Vegas” and “Plaza Hotel & Casino” would believe they are affiliated – and moreover, would associate “Plaza Las Vegas” with the Plaza Hotel & Casino given the long-standing use of the “Plaza” name in connection with this Las Vegas hotel and casino.

While El-Ad could try to argue that “plaza” is so widely used in conjunction with hotels nationwide that the word doesn’t serve as a source identifier (do a Google search for the words "plaza" and "hotel" and see what you find after you get past the obvious hits), that kind of argument would seem to go against El-Ad’s own trademark interests in the “Plaza” brand name.

El-Ad may also try to argue that it actually has superior senior rights to “The Plaza” name for hotel services due to the long-standing use and fame of the name in connection with its New York hotel; however, El-Ad will have a tough time trying to explain away Tamares’ long-standing open and notorious use of the “Plaza” name in connection with its Las Vegas hotel/casino (although the Las Vegas hotel/casino may have only been known just by the words “Plaza” since 2004 which gives El-Ad some argument that its rights are superior -- and also helps should Tamares attempt to assert a laches defense to any counterclaim of infringement by El-Ad). In addition, “The Plaza” is famous for hotels, but can the same be true for “casino services.”

However, if El-Ad cannot stop Tamares’ use of the “Plaza” name, I would think that El-Ad would be more concerned that consumers might actually think that the Plaza Hotel & Casino is somehow affiliated with El-Ad’s Plaza Las Vegas and be disappointed when the Plaza Hotel & Casino is not as upscale as they would have expected from the owners of “The Plaza Las Vegas” – which ultimately harms El-Ad’s goodwill in its own “Plaza” brand. But I guess if you pay $675 million for an old piece of New York property with a well-recognized name, you might be eager to try and exploit that name to get your money's worth on your investment.

KRED faces Opposition by Kellogg’s

On August 7, 2008, Kellogg North American Company (“Kellogg”) filed a Notice of Opposition against a company named Sunshine City, LLC (“Sunshine”), which hosts a website called Ghetto University. See Kellogg North American Company v. Sunshine City, LLC, Opposition No. 91185683 (TTAB August 7, 2008).

Kellogg's, the maker of such well-known cereals as Special K, Frosted Flakes, Froot Loops and Rice Krispies, holds a plethora of trademark registrations for the marks KELLOGG’S, the letter “K”, and SPECIAL K.

Ghetto University’s Motto is Knowledge, Respect, and Diversity. From that concept came the mark KReD. On January 30, 2007, Sunshine filed an intent-to-use trademark application for the design mark KRED for various clothing items.


The heart of Kellogg’s Opposition is that because no color is claimed as a feature of the mark, the letter “K” in the KRED logo could be displayed in Red (as pictured above), and thus likely to be confused with Kellogg’s famous “K” logo. Kellogg’s further argues that because “of the jumbled appearance of the lettering and the likelihood that ‘KRED’ has no meaning to consumers, it could be understood by consumers as representing the phrase ‘K RED,’ which would trigger a connection with Kellogg and its famous ‘Red K’ equity.”

Kellogg’s maintains that that the use of the KRED mark in connection with goods that are directly competitive with or closely related to Kellogg’s goods [Ed. – Kellogg’s does sell various clothing items displaying its famous logos here] is likely to cause consumers to be confused as to origin and sponsorship of Sunshine’s clothing goods or misled into believe that such goods are approved of by Kellogg’s. Kellogg’s also argues that the KRED mark is likely to dilute the distinctiveness of Kellogg’s famous K mark.

All of the other cyclists will be green with envy when

you're riding in your cool Apple Jacks® Cycle Jersey

If Sunshine opts not to fight this opposition and wants to choose an alternative slogan, what would Kellogg's think about “Ghetto University. It’s GUR-R-REAT!”

THEY'RE GR-R-REAT!

Intel Files Opposition Against INTELLEQUITY service mark application

A New Jersey company named Business Development Partners, LLC (“BDP”) is seeking to register the mark INTELLEQUITY for “consulting services in the field of managing intellectual properties.”

On July 23, 2008, however, Intel Corporation (“Intel”) filed a Notice of Opposition against BDP arguing that registration should be denied because the mark is likely to cause confusion with and/or dilution of Intel’s famous family of INTEL marks. See Intel Corporation v. Business Development Partners, LLC, Opposition No. 91185394 (T.T.A.B. Filed July 23, 2008).

The crux of the likelihood of confusion argument comes down to this: “The marks INTELLEQUITY and INTEL share the first five letters such that the first two syllables of both marks are pronounced exactly the same.” So, what Intel seems to be arguing is that no one else can ever register a trademark or service mark that begins with a suggestive reference to the word “Intellectual” (because any such mark will naturally begin with “intel-“) even if the mark is used on services different from anything in which Intel involved – unless Intel has branched out into the business of consulting on how to manage IP portfolios).

As for dilution, there is no doubt that the INTEL mark is famous. However, I think there is a serious question as to whether the similarity between the INTELLEQUITY mark and the INTEL mark which gives rise to an association between the marks that impairs the distinctiveness of the Intel mark. If anything, most consumers seeing the INTELLEQUITY mark would see it as suggestive of the Intellectual Property services being offered – a unitary composite mark joining the first part of the word Intellectual with the word Equity which makes one think of monetary value of property.

It will be interesting to see if BDP opts to fight this battle. While I think the chances of success for BDP are good, it may cost a good deal of money in legal fees in order to mount a fight against a behemoth like Intel. And since the application was filed as a Section 1(b) intent-to-use application, the cheaper route may just be to switch to another name – although I hope they don’t because I personally think it’s actually a pretty good name for the services they intend to offer.

Does Intel have any plans for filing a cybersquatting action against the owners of http://www.intellequity.com.

First Circuit Reverses Lower Court Injunction in the Boston “Duck Tours” Battle

In a lengthy opinion by the First Circuit Court of Appeals, the court of appeals reversed a district court’s decision granting a preliminary injunction in favor of Boston Duck Tours LP (“Boston Duck”) enjoining Super Duck Tours, LLC (“Super Duck”) from using the term “duck tour” in its name and using a logo of a duck after finding that the district court committed clear error in finding the phrase “duck tour” to be non-generic for such sightseeing tours, and thereby according it too much weight in its likelihood of confusion analysis. See Boston Duck Tours, LP v. Super Duck Tours, LLC, Case Nos. 07-2078, 07-2246 (1st Cir. June 18, 2008). For a copy of the lower court decision, see Boston Duck Tours, LP v. Super Duck Tours, LLC, Civil Action No. 07-11222-NMG (D. Mass. July 13, 2007) (courtesy of The TTABlog®, which has a write-up on the district court decision here).
Boston Duck and Super Duck both offer sightseeing tours via land and water in the Boston area, using amphibious vehicles commonly referred to as “ducks” (DUKWs are amphibious army vehicles which function as both trucks and boats). Similar amphibious vehicle land/water tours are found in many other cities throughout the U.S. and many use the phrase “duck tour” and have various logos featuring a cartoon duck.

Boston Duck has been offering its sightseeing tour since 1994 using old World War II DUKWs painted with a rainbow of colors and marked with the Boston Duck logo.

Boston Duck's "Duck Tour" Vehicle

Super Duck began offering similar services in 2001 in the Portland, Maine area using custom-made, modern amphibious vehicles called Hydra-Terras. The company adopted the name Super Duck Tours to play on the fact that its vehicles were bigger, stronger and newer than old DUKWs and adopted a logo of a white cartoon duck with an orange bill, muscular arms, and a cape parodying Superman and the slogan “It's a bus. It's a boat. It's a Super Duck!” Super Duck entered the Boston market after purchasing an existing tour company. The company began offering its tours in May 2007 – concentrating on the Boston waterfront area and avoiding the Back Bay area which is the focuse of Boston Duck’s tours.

Super Duck's "Duck Tour" Vehicle

On July 2, 2007, Boston Duck filed a complaint against Super Duck, alleging federal trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114, federal and state unfair competition, tortious interference with prospective business relationships, and a other state and federal claims. Boston Duck also sought to enjoin Super Duck from using its name and logo, or any similar mark confusingly similar to Boston Duck’s marks.

Boston Duck owns several federal trademark registrations for the word mark BOSTON DUCK TOURS as well as the design mark pictured above (duck and tour disclaimed) for “conducting sightseeing tours.” Super Duck has one federal registration for the word mark SUPER DUCK TOURS on the Supplemental Register in connection with its tour services.

In granting Boston Duck’s motion for a preliminary injunction, the district court found the term “duck tours” to be non-generic for amphibious sightseeing tours in the Boston area, and therefore capable of trademark protection. The district court further determined that Boston Duck had established a likelihood of success on the merits of its trademark infringement claim and enjoined Super Duck from using the term “Duck Tours” or a “cartoon duck” in association with sightseeing tour services in the greater Boston area.

Interestingly, on appeal, Super Duck conceded that that the BOSTON DUCK TOURS mark was entitled to trademark protection. Instead, Super Duck challenged the district court's conclusion that Super Duck's use of its mark SUPER DUCK TOURS is likely to cause confusion among the relevant consumer public with Boston Duck's use of its mark BOSTON DUCK TOURS. As such, the court, in addressing the generic arguments, focused on the likelihood of confusion analysis instead of whether the was entitled to trademark protection in the first place.

In coming to a contrary conclusion, the court, citing the eight factor test used by the First Circuit for determining likelihood of confusion set forth in Pignons S.A. de Mecanique de Precision v. Polaroid Corp., 657 F.2d 482, 487 (1st Cir. 1981), focused primarily on the first factor, the strength of the mark, because the claims of genericism directly implicate the strength of Boston Duck's mark and the ultimate scope of protection afforded the mark.

The court concluded that the district court committed clear error in finding that the phrase “duck tours” was non-generic by relying solely on one dictionary definition of the word “duck” without considering any other evidence for how the public perceives the term and for focusing on the separate terms “duck” and “tours,” and not the unified phrase.

The court stated that the district court failed to consider certain evidence showing that the phrase “duck tours” had become generic (i.e. commonly used with no effective alternative), including media and third party use, use by other companies within the sightseeing industry, and use by Boston Duck itself which provided strong evidence against its claim that the term was primarily associated with its company rather than the services it provides.

The court, noting that trademark law is designed to prevent consumer confusion between inherently distinctive marks or descriptive marks that have acquired secondary meaning and not between two similar, but generic marks, dismissed Boston Duck’s evidence of actual consumer confusion as suggesting little about whether the term is generic.

In light of the fact that the phrase “duck tours” is generic for the parties' services, the court concluded that BOSTON DUCK TOURS is highly descriptive of the services Boston Duck offers. Nonetheless, the court noted that Boston Duck’s use of the mark had made it a strong identifier of Boston Duck's tour services in the Boston area, even though part of the mark (“duck tours”) was not entitled to trademark protection at all.

As for similarity of the marks, with the “duck tours” part of the marks no longer a factor, the similarity came down to BOSTON vs. SUPER, which the court found reasonably dissimilar. There was no challenge by Super Duck regarding similarity of the goods and similar channels of trade. For the reasons stated above, the evidence of actual confusion was not weighted as heavily. As for Super Duck’s intent in adopting the mark, Super Duck’s use of a generic phrase “duck tours” for its sightseeing tours cannot be faulted.

In the end, the court, finding no likelihood of confusion, concluded that the district court was clearly erroneous in finding that Boston Duck was likely to succeed on the merits of its trademark infringement claim.

Regarding the likelihood of confusion between Boston Duck’s composite design mark and Super Duck’s logo, the court again applied the Pignons factors. In analyzing strength of the Boston Duck’s mark, while the court did not go so far as to accept Super Duck’s argument that the image of a duck splashing in water was generic for duck tour services, the court did conclude that such an image was highly descriptive of such services, and thus would be a weak source identifier, even though Boston Duck’s overall design mark was reasonably strong. As for similarity of the marks, the court found the designs as a whole -- while both contained a cartoon duck in water -- to be significantly different in overall appearance, especially when the marks other elements used in conjunction with the duck are substantially dissimilar. The court dismissed any evidence of actual confusion, finding that it could not be traceable specifically to the parties' logos. In the end, the court, finding no likelihood of confusion with respect to the parties’ logos, concluded that the district court was clearly erroneous in finding that Boston Duck was likely to succeed on the merits of its trademark infringement claim.

The court reversed the district court’s injunction and remanded the case for further proceedings.

A concurring opinion was filed by Judge Diclerico, who felt that the majority’s use of a genericism analysis in ascertaining the strength of Boston Duck’s mark “conflated the first and second elements of the trademark infringement standard, which in my opinion should be treated separately.”

Battle of the Wolfgangs Part II – The “other” Wolfgang Strikes Back

I previously wrote here about the lawsuit filed by Wolfgang Puck against Wolfgang Zwiener over the latter’s use of the name “Wolfgang’s Steakhouse by Wolfgang Zwiener” in connection with Zwiener’s recently opened Beverly Hills steakhouse which is close in proximity to Puck's own Beverly Hills steakhouse restaurant, Cut. See also BusinessWeek.com’s article on the dispute here.

Yesterday, Zeiener announced in a press release that he had filed an answer to Puck’s initial complaint which also asserted a breach of contract counterclaim against Puck claiming that Puck, by challenging Zwiener’s chosen name for his steakhouse, breached a March 2007 settlement agreement reached between the two which purportedly allowed Zwiener to open steakhouses outside New York City using the disputed name.

Puck, however, claimed in the original lawsuit that the deal was that Zwiener agreed to display his name prominently alongside any future restaurant – and Puck agreed to do the same should he establish a restaurant in Manhattan. Puck’s issue is with the fact that the “by Wolfgang Zwiener” is in much smaller font than the Wolfgang’s Steakhouse.

The press release attempts to dispute Puck’s claims of surprise by noting that the development process for the restaurant was publicly conducted and involved the direct and extensive involvement of the Beverly Hills City Council which approved Zwiener’s restaurant to occupy the location owned by the City of Beverly Hills and even approved the signage used by Zwiener. [Comment: I don’t think a city council’s approval of signage is going to carry any weight in a trademark infringement likelihood of confusion analysis.]

The release quotes the following from the answer filed by Zwiener’s attorneys:

Despite Puck’s melodramatic effort to paint Defendants as villains straight out of “Casablanca,” . . . the actual evidence reflects not a creative Hollywood movie plot, but only a more mundane and entirely legitimate business decision. Defendants expanded into Beverly Hills, as they had an absolute right to do under the Settlement Agreement with Puck, and conducted themselves in complete accordance with that agreement. Defendants sought to build on their own reputation developed as a result of their successful introduction of other “Wolfgang’s Steakhouse” restaurants in New York. While Puck may envision an imaginary world filled with sinister plots to take advantage of his good name, the record evidence simply does not support the Hollywood fiction he seeks to create.

Personally, I liked the “likelihood of confusion” analysis performed by Jessica.Gelt, a Los Angeles Times food critic, who puts her own unique spin on the controversy in her article “Steak-off! Wolfgang's vs. Cut.”

Tenth Circuit affirms dismissal of trademark infringement lawsuit by LDS Church critic against parody website

The Tenth Circuit Court of Appeals affirmed a lower court decision denying claims of trademark infringement, unfair competition, and cybersquatting by an organization critical of the Church of Jesus Christ of Latter-day Saints (LDS Church). See Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research et al., Appeal No. 07-4095 (10th Cir. May 29, 2008). A copy of the decision can be downloaded here.

Jerald and Sandra Tanner founded the Utah Lighthouse Ministry (UTLM) in 1982 as an organization dedicate to critiquing the LDS Church. UTLM sells books critical of the LDS Church both at its Utah bookstore and online through its website (http://www.utlm.org/).

The Foundation for Apologetic Information and Research (FAIR) is an organization dedicated to responding to criticisms of the LDS Church. In November 2003, Allen Wyatt, the vice president and webmaster for FAIR, created a website (the “Wyatt website”) parodying the UTLM website which was similar in appearance (image of a lighthouse with black and white barbershop stripes), but with “different, though suggestively parallel, content”:

Prominent text on the Wyatt website consists of a slight modification of the language located in the same position on the UTLM website. For example, the UTLM website states: "Welcome to the Official Website of the Utah Lighthouse Ministry, founded by Jerald and Sandra Tanner." In comparison, the Wyatt website states: "Welcome to an official website about the Utah Lighthouse Ministry, which was founded by Jerald and Sandra Tanner." (emphasis added.) The Wyatt website does not have any kind of disclaimer that it is not associated with UTLM.

Slip op. at 3.

The Wyatt website did not contain any advertising or offer any goods or services for sale, and included hyperlinks to an organization at Brigham Young University, articles on FAIR’s website criticizing the Tanners, and links to FAIR’s website and the LDS Church. In addition, Wyatt, through his company Discovery Computing, Inc. (“Discovery”), registered ten domain names -- combinations of the words “Utah Lighthouse Ministry," "Sandra Tanner," "Gerald Tanner," "Jerald Tanner," and ".com" and ".org." Wyatt’s website was first publicized to FAIR members in April 2004. Presumably in response to UTLM’s complaint, Wyatt later shut down the website and began transferring the domain names to UTLM in April 2005.

UTLM’s complaint against FAIR, Wyatt, and Discovery asserted six causes of action—federal trademark infringement, federal unfair competition, federal trademark dilution, cybersquatting, federal trade dress infringement, and unfair competition under Utah state law. The parties filed cross-motions for summary judgment, and the district court denied Plaintiff's motion and granted Defendants' motion on all six counts. See Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research et al., Case No. 05-CV-00380 (D. Utah). UTLM appealed the district court’s decision on all claims except dilution, but only briefed the issues of trademark infringement, unfair competition, and cybersquatting, so the court only addressed those three claims on appeal.

Trademark Infringement & Unfair Competition
Addressing the trademark infringement and unfair competition claims together, the court started its analysis by noting that UTLM, to make out a case for trademark infringement, must show that the mark is protectable, must demonstrate the Defendant’s use of the mark in connection with any goods or services, and must establish that such use is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person. See 15 U.S.C. § 1125(a).

Protectable Interest
UTLM argued that it was entitled to a presumption of protectability because the UTAH LIGHTHOUSE is a registered trademark/servicemark. However, as the district court noted, the mark was registered on July 25, 2006 – after UTLM had filed its lawsuit – and thus not entitled to the presumption of validity afforded to registered marks under 15 U.S.C. § 1115(a). [The court, in a footnote, stated “It is not clear that a mark must be registered at the time the suit is filed to benefit from the statutory presumption, but it is not necessary to decide that issue on this appeal.” Slip op. at 8, fn. 3.] The district court further found that UTLM had failed to show evidence that its mark had acquired a secondary meaning.

While UTLM argued on appeal that its mark is distinctive by virtue of it being arbitrary, and thus no showing of secondary meaning is necessary, UTLM did not raise this argument at the district court level, instead relying entirely on its federal registration. The court declined to exercise its discretion to consider UTLM’s arguments raised for the first time on appeal. The court also noted that UTLM’s evidence to the district court, which could be construed as an argument of acquired secondary meaning, consisted solely on the number of "hits" generated by searches for UTAH LIGHTHOUSE on the Yahoo and Google search engines and on the websites of other organizations associated with the LDS Church. The court found such evidence lacked any accompanying evidence showing that the relevant market of consumers had visited the websites containing these hits, and thus was insufficient to show that the mark had acquired a secondary meaning.

Commercial Use
The court next addressed UTLM attempts to prove the second factor – Defendant’s use of the mark in connection with any goods or services, specifically, that Wyatt’s website was “commercial” and thus his use of UTLM’s mark was “in connection with any goods or services." 15 U.S.C. § 1125(a)(1)).

UTLM first argued that Wyatt’s website was commercial because it hyperlinked to the FAIR website, which contains an online bookstore. While the issue of when hyperlinking renders an otherwise noncommercial website subject to the Lanham Act was one of first impression for the Tenth Circuit, the court cited favorably to the Ninth Circuit’s decision in Bosley Med. Inst., Inc. v. Kremer, 403 F.3d 672, 677 (9th Cir. 2005) (defendant’s gripe website was not in connection with the sale of goods or services where the “roundabout and attenuated” commercial use connection was that the defendant’s website contained a link to a second website by the defendant, which linked to a newsgroup which in turn contained advertisements for plaintiff’s competitors). The court further noted that Wyatt’s use of UTLM’s mark was not in connection with a sale of goods or services, but rather in connection with the expression of an opinion about UTLM’s goods and services. The court also noted that none of Wyatt’s hyperlinks linked directly to the FAIR bookstore, but rather to specific articles on the FAIR website and to the FAIR homepage, which the court stated was “overwhelmingly noncommercial in nature.” As such, the court found the district court’s decision that the Wyatt website was not a commercial use because it "provided no goods or services, earned no revenue, and had no direct links to any commercial sites” consistent with the Bosley case as the court found the connection to commercial use to be “roundabout” and “too attenuated,” and thus

UTLM’s second argument was that the Wyatt website and use of the UTLM mark was commercial because it prevented consumers from accessing UTLM's own goods and services – the so-called “interference” theory of commercial use where a party’s use of a trademark is in such a way that it frustrate users and prevents them from reaching the goods and services of the trademark owner. The court commented that such a theory of commercial use (i.e., use in connection with the trademark owner's sale of goods or services is commercial use) eliminates the requirement of an economic competitor and thus is inconsistent with Lanham Act’s purpose of protecting the ability of consumers to distinguish among competitors. The court also stated that this theory was criticized by the Ninth Circuit in the Bosley case on the basis that it would subject otherwise protected critical consumer commentary to the provisions of the Lanham Act.

UTLM’s final argument was that Wyatt’s use of the trademark on the Internet itself constituted commercial use. However, the court rejected UTLM’s argument that any use of a trademark on the Internet is a use "in connection with goods or services." The court, responding to UTLM’s arguments, clarified that while use of a trademark on the Internet may be sufficient use in interstate commerce to satisfy a jurisdictional requirement, such use does not automatically satisfy the “commercial use” necessary for liability under the Lanham Act.

In the end, the court found that Wyatt’s use of UTLM's UTAH LIGHTHOUSE mark was not in connection with any goods or services, and thus such use could not be the basis for UTLM's trademark infringement and unfair competition claims.

Likelihood of Confusion
In order to cover all its bases, the court went on to conduct a likelihood of confusion analysis “even if” Wyatt’s use were determined to be commercial and UTLM were found to have a protectable interest. The court first cited Sally Beauty Co., Inc. v. Beautyco, Inc., 304 F.3d 964 (10th Cir. 2002) for the six factors used by the Tenth Circuit to determine likelihood of confusion, but also noted that parody is an additional factor (and not an affirmative defense that must be asserted) to consider – one which “casts several of the above-cited six factors in a different light.”

The district court had found no likelihood of confusion based on its analysis of the six factors and its determination that the Wyatt website was a parody of the UTLM website. The court, in balancing the six Sally Beauty Co. factors, found the factors weighed in favor of a finding of no likelihood of confusion.

There was no dispute regarding similarity of the marks, which favored UTLM. As for the intent on Wyatt’s part in choosing the UTLM’s mark, no inference of confusion could be drawn from Wyatt’s intentional use of UTLM’s mark since his use was that of a parody and the benefit derived by Wyatt in using UTLM’s mark was the benefit from the “humorous association, not from public confusion as to the source of the marks. . . .” Slip op. at 19. The court agreed that there was no credible evidence of actual confusion.

Regarding similarity of goods/services offered and of marketing channels, the court noted some similarity between the goods sold by UTLM and FAIR, but that “any potential for confusion created by the similarity in goods and manner of marketing is mitigated by the lengthy path a consumer must take to reach the goods offered for sale. The FAIR bookstore does not use UTLM's trademark, and a searcher must click through a website that does not resemble the UTLM website in order to reach FAIR's bookstore.” Slip op. at 20.

As for degree of consumer sophistication, the court held that one could infer that potential customers of the UTLM bookstore are discerning and sophisticated about where they purchase books on controversial religious subjects. While the district court found the factor irrelevant, the court found the factor to favor FAIR because, much like with the fourth factor, “the absence of the UTLM trademark on the FAIR website or the FAIR bookstore lessens the chance that a consumer would be mislead into believing that she is visiting the UTLM online bookstore. Therefore, this factor does not weigh in favor of a finding of likelihood of confusion.” Slip op. at 21.

Finally, with respect to the strength of the mark, UTLM had not submitted any evidence to the district court regarding the strength of the mark and the district court determined that UTLM's evidence of search engine hits did not demonstrate that the mark had significant recognition in the marketplace. The court found the evidence to support a finding that the commercial strength of the mark weighed against a finding of confusion. The court noted that even if it were to consider UTLM’s arguments of strength made for the first time on appeal, this alone would not suffice to find a likelihood of confusion.

The court added that while it concluded no likelihood of confusion based on the conventional balancing of the factors, the fact that Wyatt’s website was a parody website provided “an even more convincing explanation of why consumers are unlikely to be confused.” Slip op. at 22. The court found no error on the district court’s part in finding that the Wyatt website was a parody because it would be immediately apparent to anyone visiting the Wyatt website that it was not the UTLM website due to the differences in content. The court noted that there were sufficient differences between the content and style of the two websites to avoid the possibility of confusion.

In the end, the court found that UTLM had failed to produce sufficient evidence to support a finding that its UTAH LIGHTHOUSE mark is protectable, that Defendants' use of the mark was in connection with any goods or services, and that Defendants' use of the mark was likely to cause confusion among consumers as to the source of the goods sold on the FAIR online bookstore.

Cybersquatting
In analyzing UTLM’s claim under the Anti-Cybersquatting Protection Act (ACPA), 15 U.S.C. § 1125(d), the court first cited the three elements that UTLM must establish to prevail on its cybersquatting claim:

1) that its trademark, UTAH LIGHTHOUSE, was distinctive at the time of registration of the domain name, (2) that the domain names registered by Wyatt, including utahlighthouse.com and utahlighthouse.org, are identical or confusingly similar to the trademark, and (3) that Wyatt used or registered the domain names with a bad faith intent to profit.

Slip op. at *24.

The second element had been established because Wyatt admittedly registered utahlighthouse.com and utahlighthouse.org, which are confusingly similar to the UTAH LIGHTHOUSE mark. However, based on the court’s determination above that the UTAH LIGHTHOUSE was not distinctive, the court found that UTLM had not established the first element.

In addition, UTLM failed to demonstrate the third element – a bad faith intent to profit. The court, looking at the nine nonexclusive factors set forth in the ACPA (see 15 U.S.C. § 1125(d)(1)(B)(i)), found several of factors which the court stated readily defeated an inference that the Wyatt intended to profit by using domain names similar to UTLM's trademark.

The first such factor was the domain name registrant’s “bona fide noncommercial or fair use of the mark in a site accessible under the domain name.” See 15 U.S.C. §1125(d)(1)(B)(i)(IV). The court agreed with the district court’s determination that Wyatt’s use was both entirely noncommercial and a fair use parody, and thus was not use of the mark in bad faith. Wyatt’s website was a parody that offered an indirect critique and lacked an overt commercial purpose.

The second factor critical to the court’s determination was the defendant’s intent to divert consumers to a website that “could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site.” See 15 U.S.C. § 1125(d)(1)(B)(i)(V). The court agreed with the district court’s conclusion that Wyatt’s website created no likelihood of confusion as to its source, or whether it was affiliated with or endorsed by UTLM, and thus did not evidence any intent on the part of the Defendants to divert consumers and to take advantage of or harm the goodwill of UTLM’s mark.

The court concluded that Wyatt lacked a bad faith intent to profit from the use of UTLM's trademark in several domain names linked to the Wyatt website. The court added that Wyatt’s website, as a parody, fits within the "safe harbor" provision of the ACPA (see 15 U.S.C. § 1125(d)(1)(B)(ii): precluding a finding of bad faith intent if “the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.”). Because Wyatt’s website was deemed a parody, Wyatt could have reasonably believed that use of the domain names incorporating UTLM’s trademark was legal, and thus the safe harbor provision applied to Wyatt’s use.

As such, the court concluded that the district court properly granted summary judgment on UTLM's cybersquatting claim

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