Hershey Wins TRO Against Furniture Company Based On Trade Dress Dilution

Hat Tip to Marty Schwimmer for posting the complaint filed by Hershey Company (“Hershey”) against Art Van Furniture (“Art Van”), a Michigan furniture company over its use of the above picture on its furniture trucks as well as the somewhat surprising decision by the court to grant a temporary restraining order on the basis of dilution. See Hershey Company et al v. Art Van Furniture, Inc., Case No. 08-cv-14463 (E.D. Mich. Filed October 21, 2008). Reports on the actions of the parties leading up to the lawsuit have been published by the AP and The Detroit New.

Most of the court’s decision is spent analyzing, and ultimately rejecting (ed.—rightly so), a likelihood of success on the merits for Hershey’s trademark/trade dress infringement claims given the balance of the likelihood of confusion factors favoring Art Van.

However, the court then, with a relatively brief analysis of Hershey’s trademark dilution claim, concludes that Hershey has established a likelihood of success on the merits for a claim of trademark dilution by blurring.
Granted, Hershey had the advantage in meeting the primary elements necessary to show dilution under 15 U.S.C. §1125(c) – specifically a famous and distinctive trademark in the nature of the Hershey’s candy bar trade dress, use of the Art Van ad by Art Van after Hershey’s trade dress became famous, and a similarity between the Art Van ad and Hershey’s trade dress that gives rise to an association between Hershey’s trade dress (Comment: Based on the pictures above, I’m not so sure I would agree with the court's finding that Art’s candy bar would give rise to an association with Hershey’s candy bar).

As for whether such association is likely to impair the distinctiveness of the famous mark, when you start to analyze the six factors set forth in 15 U.S.C. § 1125(c)(2)(B) that courts consider in deciding if a junior mark is likely to dilute a famous mark through blurring (degree of similarity, degree of inherent or acquired distinctiveness of the famous mark, exclusive use of famous mark, degree of recognition, intent to create an association with the famous mark, and any actual association), they tend to favor Hershey’s as well (comment--although again, I’m not sure I agree with the degree of similarity in this case).

But what I found curiously odd was the court’s short shrift of Art Van’s parody defense. Naturally, as support for its argument that its use was protected by parody, Art Van cited to the last year’s “Chewy Vuitton” decision in Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 260 (4th Cir. 2007), which rejected a dilution cause of action by Louis Vuitton against the makers of “Chewy Vuitton” dog toys.

The following is the sum total of the court’s distinguishing of the instant case and the Louis Vuitton decision (emphasis added):

The [Louis Vuitton] court dismissed the plaintiff’s infringement and dilution claims; there was no mistaking the intentional, yet irreverent nature of the defendant’s miniature handbags. Id. at 260-61.
“It is a matter of common sense that the strength of a famous mark allows consumers immediately to perceive the target of the parody, while simultaneously allowing them to recognize the changes to the mark that make the parody funny or biting.” Id. at 261. Defendant’s “couch bar” may be funny, but it is not biting; its resemblance to Plaintiff’s famous trade dress is too muted to poke fun, yet too transparent to evoke a generic candy bar.
An important theme running through Louis Vuitton is that, while a parody may be nearly identical to the original in some respects, in others it is so different that no one could possibly mistake it for the real thing. Id. Defendant’s design is neither similar nor different enough to convey a satirical message.

So there is no mistaking that a dog toy that sells under the name “Chewy Vuitton” and made to look like (and yet obviously not be) a mini “Louis Vuitton” purse is so intentionally irreverent that it constitutes a parody – yet a sign on a furniture truck showing a brown couch emerging from a candy bar wrapper that looks somewhat like a Hershey candy bar wrapper is not irreverent? Surprisingly, the key appears to be "somewhat like a Hershey candy bar."

Basically, the court is saying that Art Van’s ad, while capturing an image that consumers would associate with Hershey’s trade dress, is not so strong enough that Art Van can claim it to be a parody of Hershey’s trade dress. The court uses the word “biting” although I’m not so sure I would call a “Chewy Vuitton” dog toy a “biting” parody (although I’m sure there are numerous dogs out there that find such toys quite “biting”).

While I’m not so sure I agree with the court’s decision that Art Van’s ad is not “biting” enough (i.e., neither similar nor different enough to convey a satirical message), the lesson learned is that if you are going to parody a famous mark, you had better make sure that you go all out to not only make an obvious association with the famous mark, but also to make an obvious disassociation with the famous mark.

Apparently, if you attempt to parody a Hershey bar, but it’s not clear enough that you are parodying an actual Hershey bar, then such ad, while apparently sufficient for dilution purposes with respect to such Hershey bar, is insufficient for parody purposes.

One wonders if the court would have decided the parody issue differently had the lettering more closely resembled the Hershey candy bar lettering (or even used a word like “Couchey’s” inpace of “Hershey's” and then “Fine Furniture” instead of “Milk Chocolate”) and had the color of the candy bar looked more like the famous dark brown color of a Hershey bar? What is the point where Art Van’s ad would have been intentionally irreverent enough to constitute a parody?

Sarasota Realtor’s MLS Domain Name Transferred by Network Solutions Despite Filing of Lawsuit

I previously blogged (here) about the lawsuit filed by Sarasota Realtor Marc Rasmussen in an effort to keep his domain name http://www.thesarasotamls.com/ following a split decision by an arbitration panel which ordered his domain name to be transferred to the Sarasota Association of Realtors (“SAR”).

Unfortunately, due to some carefully crafted language in ICAAN’s Uniform Domain Name Dispute Resolution Policy (“UDRP”), the lawsuit was unable to stop the transfer of the domain.

The Herald Tribune ran an article yesterday (link here) about the lawsuit which noted that as of Tuesday, October 21, 2008, the domain name had been transferred to SAR by domain registrar Network Solutions (based in Virginia) despite Rasmussen’s filing of his lawsuit in the U.S. District Court in for the Eastern District of Virginia. See Rasmussen v. Sarasota Association of Realtors, Inc., Case No. 08-cv-00954 (E.D. Va. September 15, 2008).

Apparently, on October 17, Network Solutions notified the parties by e-mail that the domain name would remain locked pending the outcome of the litigation. The same e-mail also noted that the proper jurisdiction for the lawsuit under the UDRP was either Sarasota (Rasmussen’s domicile) or Virginia (Network Solution’s domicile).

SAR countered by arguing that Rasmussen’s lawsuit had been filed in the wrong jurisdiction, and thus could not stop the transfer of the domain name. Multiple e-mails were exchanged back and forth among the parties, the UDRP arbitrators, and Network Solutions. Lawyers for the National Arbitration Forum (the arbitrator of the UDRP action between Rasmussen and SAR) told Network Solutions that its position on jurisdiction was incorrect because while there are indeed two proper jurisdictions for a lawsuit to block the transfer, the choice of jurisdiction is actually up to the complaining party, in this case, SAR. Thus, because SAR had chosen Sarasota for its jurisdiction, that was the only proper place for a complaint to be filed to stop the domain name transfer. By Tuesday, Network Solutions had turned control over the domain over to SAR, which immediately began redirecting web traffic to its own website.

In order to understand what happened, one must understand certain parts of ICAAN’s Uniform Domain Name Dispute Resolution Policy (“UDRP”) as well as ICAAN’s UDRP Rules (“Rules”).

Paragraph 4(k) of the UDRP describes the circumstances under which the domain registrar agrees to enforce a decision by a UDRP arbitration panel:

If an Administrative Panel decides that your domain name registration should be canceled or transferred, we will wait ten (10) business days (as observed in the location of our principal office) after we are informed by the applicable Provider of the Administrative Panel's decision before implementing that decision. We will then implement the decision unless we have received from you during that ten (10) business day period official documentation (such as a copy of a complaint, file-stamped by the clerk of the court) that you have commenced a lawsuit against the complainant in a jurisdiction to which the complainant has submitted under Paragraph 3(b)(xiii) of the Rules of Procedure.

Paragraph 3(b)(xiii) of the Rules, which describes the jurisdictional statement that all UDRP complainants must have in their UDRP complaints, reads “State that Complainant will submit, with respect to any challenges to a decision in the administrative proceeding canceling or transferring the domain name, to the jurisdiction of the courts in at least one specified Mutual Jurisdiction”. Paragraph 1 of the Rules defines “Mutual Jurisdiction” as “a court jurisdiction at the location of either (a) the principal office of the Registrar (provided the domain-name holder has submitted in its Registration Agreement to that jurisdiction for court adjudication of disputes concerning or arising from the use of the domain name) or (b) the domain-name holder's address as shown for the registration of the domain name in Registrar's Whois database at the time the complaint is submitted to the Provider.”

Thus, at the time SAR filed its UDRP action against Rasmussen, SAR’s complaint had to elect to submit to the jurisdiction of the court in at least one of the available jurisdictions (in this case, either Network Solution’s Virginia domicile or Rasmussen’s Sarasota domicile).

However, because Rule 3(b)(xiii) only requires a complainant to submit to “at least one” of the jurisdictions, SAR likely elected in its complaint to submit itself only to the jurisdiction of Sarasota (and not even mentioning Virginia). Thus, when it came time for Network Solutions to enforce Paragraph 4(k) of the UDRP, that provision explicitly required that the lawsuit against the complainant be filed in a jurisdiction to which the complainant submitted in its complaint. Since Rasmussen’s complaint was filed in Virginia and SAR had submitted to Sarasota, the lawsuit was insufficient to prevent Network Solutions from transferring the domain name.

Rasmussen has said he will continue the fight to get his domain name back. He has his own blog post on his current web site (link here) regarding the ongoing development in the case.

Las Vegas Sun Article Highlights MONGOLS Trademark Seizure and Controversy

As a follow-up to my own blog writeup yesterday (link here), Las Vegas Sun reporter Abigail Goldman wrote a nice article (and I'm not just saying that because yours truly is quoted therein) that ran in today's Las Vegas Sun (link here) about the U.S. Government's seizure of the MONGOLS trademark earlier this week and controversial plan to begin seizing any clothing bearing such mark.

Court Orders Mongols To Give Up Clothing Bearing Government Seized Trademark

The trademark story du-jour was the decision by a California district court judge to issue an broad injunction order which essentially prevents members of the Mongols Motorcycle Club ("Mongols") from wearing any clothing bearing the Mongols’ trademarked logo. See Associated Press, ZDNet, and Portfolio.com.

The injunction came after the U.S. government indicted 79 members of the Latino motorcycle gang for racketeering. The government’s 177 page indictment describes the group as engaging in a criminal enterprise involving murder, torture, drug trafficking and other criminal offenses.

The government apparently was able to seize two registered trademarks that were owned by the Mongols. Up until March 26, 2008, Mongol Nation, an unincorporated association based in California, owned the word mark MONGOLS for “association services, namely promoting the interests of persons interested in the recreation of riding motorcycles” and the logo M.C. (and Design) for jackets and t-shirts (pictured above). While these marks were purportedly assigned to a California limited liability company named Shotgun Productions, LLC on March 26, 2008 (click here), a corrective assignment filed on October 13, 2008 raises some questions about the current ownership of the marks because it’s not exactly clear about the nature of the “corrective assignment.” Given the recent timing of the corrective assignment, it’s possible that title to the marks reverted back to the Mongols, which would explain the basis for the Feds’ seizure of the marks (as property of the Mongols). There is also the possibility that the Feds were able to tie in Shotgun Productions, LLC with the Mongols and seize the marks on that basis.

What has raised eyebrows with this court order is that when the court initially issued a temporary restraining order on Tuesday, the order apparently only barred the “sale and distribution” of goods bearing the Mongols trademark. However, language subsequently added stated that gang members and their affiliates “shall surrender for seizure all products, clothing, vehicles, motorcycles ... or other materials bearing the Mongols trademark, upon presentation of a copy of this order.”

The case is being described as the first ever where a government, through a court order, has taken over a gang’s identity through the seizure of the group’s trademarks. It remains to be seen how the government will actually proceed with any such seizures. The U.S. Attorney General’s Office is supposedly drafting up protocols for law enforcement agencies to follow in executing the seizures, which could begin as early as today or tomorrow.

Vegas™Esq. Comments:
Anyone who might have a problem with the government’s seizure of the Mongols’ trademarks should recognize that trademarks are intellectual “property” and thus can be seized like any other property owned by the Mongols such as the 60 motorcycles, mostly Harley-Davidsons, seized by the U.S. Marshal’s Services on Tuesday (each with an estimate value of $22,000). In addition, if the U.S. government is indeed the legal owner of the M.C. logo for jackets and t-shirts, then they can stop the sale and distribution of such goods bearing such mark (and can also prevent any other motorcycle group from naming itself Mongols).

What is more questionable is the use of such marks to stop people from wearing clothing that they already purchased. The media has described this as a first amendment issue, but in terms of whether wearing such clothing would constitute trademark infringement (and thus be rightfully subject to the typical seizure order – although apparently we are dealing with an atypical seizure order), the issue is more about the first-sale doctrine, which protects buyers of trademarked goods. Under the first-sale doctrine, after the trademark owner has sold its trademarked goods to a buyer, the owner cannot later use its trademark rights to control how the buyer uses those goods (the owner is said to have exhausted its trademark rights with respect to those goods, which is why the doctrine is sometimes referred to as the exhaustion doctrine).

So if you buy genuine Nike shoes, and then the government suddenly seizes all of Nike’s intellectual property assets, including Nike trademarks, the government cannot stop people from wearing their previously purchased genuine Nike shoes. In the case of those Mongols members who purchased clothing bearing the Mongols logo, such clothing goods were authorized goods at the time they were purchased by the members, so how can the government now dictate how the members can wear such clothing?

Perhaps an even more interesting question is if and how the government will exploit its newly acquired intellectual property. What steps is the U.S. government going to take in order to ensure that the “goodwill” that has been built up in the Mongols’ registered marks is continued? If the Mongols name is really connected to the alleged criminal activity, how is the government going to continue the tradition? But seriously, does the government really want to be involved in an association of members interested in motorcycles or get into the clothing business? [Those in Nevada may remember that the U.S. government, through the BLM, was in the brothel business (sort of) for a period of time when it owned the trademark Mustang Ranch acquired through a criminal forfeiture proceeding against the prior owners – the government never actually used the name in operating a brothel and eventually sold the trademark on eBay in 2003].

Finally, if the government does not do anything with the marks, then that could be construed as abandonment unless the government can show evidence that such nonuse is due to special circumstances which excuse such nonuse. Perhaps the government needs some time to look for the right motorcycle gang worthy enough to carry on the Mongols name.

[HT to Las Vegas Sun reporter Abby Goldman for bringing this story to my attention.]

American Airlines Pursues Another Trademark Infringement Lawsuit Over Keywords

Eric Goldman writes on his Technology & Marketing Law Blog about the new lawsuit filed by American Airlines against Yahoo! And Overture (dba Yahoo Marketing Services) over “keyword” advertising. See American Airlines, Inc. v. Yahoo! Inc. et al, Case No. 08-00626 (N.D. Tex. Filed October 17, 2008). A copy of the complaint can be downloaded here.

When AA filed a similar lawsuit against Google last year (previously blogged here, here, and here), many trademark law spectators watched the legal wrangling with anticipation that it could result in a definitive legal decision on whether the sale of trademarks as keywords constitutes trademark infringement (whether direct, vicarious, or contributory infringement). Alas, the lawsuit between AA and Google settled under under confidential terms (blogged here).

Now with this new lawsuit by AA, does anybody really expect it to end any differently than the suit between AA and Google?

I guess AA’s motive for settling with Google wasn’t the growing financial troubles faced by the airlines in this faltering economy after all.

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.]

Sarasota REALTOR Files Federal Lawsuit To Keep MLS Domain Name

Inman New ran an article yesterday (link here) about a Sarasota real estate agent who filed a federal lawsuit in the U.S. District Court in for the Eastern District of Virginia in September in order to keep his domain name www.thesarasotamls.com. See Rasmussen v. Sarasota Association of Realtors, Inc., Case No. 08-cv-00954 (E.D. Va. September 15, 2008).

In August 2003, Marc Rasmussen, a REALTOR® and member of Sarasota Association of Realtors (“SAR”), registered the domain name http://www.thesarasotamls.com/ to promote his real estate services. In June, SAR filed a UDRP action against Rasmussen arguing that SAR had acquired trademark rights to the Sarasota MLS mark and that his domain name was confusingly similar to such mark and was registered in bad faith. A split decision by the arbitration panel ordered the domain name to be transferred. Rasmussen’s lawsuit will provide a temporary reprieve against the panel’s domain name transfer order while the parties battle it out in federal court.

As most people (and certainly most real estate agents) know, MLS is the well-recognized abbreviation for Multiple Listing Service – the databases of real estate listings which are controlled by various regional associations affiliated with the National Association of Realtors (“NAR”). In this case, SAR owned the domain name SarasotaMLS.com. What people may not know is that the term MLS is not actually a registered trademark owned by NAR or any associated group (unlike the REALTOR® mark which NAR for years has worked to protect from genericide).

What complicates the issue for NAR members is that for many years, NAR did not have any policy regarding the use of the MLS mark in domain names. In fact, NAR’s own REALTOR magazine an article at one time (before Rasmussen registered his domain name) by “Mr. Internet” (Michael J. Russer) specifically advising agents to register domain names with the term “MLS” in them in order to drive internet traffic to their sites.

When NAR last November finally did approve a policy, it gave the local associations running the local MLSs the option to enact a policy banning their members from using the terms "MLS" and "Multiple Listing Service" from Web site URLs, company names, e-mail addresses and other marketing materials. NAR also provided some guidance for local associations to use in determining whether the use of terms such as "MLS" in a website operated by an NAR member might conflict with provisions in NAR’s Code of Ethics that all members are bound to comply with (e.g., where use of MLS for a domain name might lead a consumer to believe that the website is the local MLS). But such a determination of whether a member’s use of MLS in a domain name is an ethical violation is ultimately left in the hands of the local associations – and thus decisions about use of MLS in domain names can vary by regional area and even on a case by case basis. In addition, the impact is felt mostly by members of the local association – real estate agents who choose not to be affiliated with NAR and the local NAR chapter or its MLS are not bound by NAR’s Code of Ethics or any local policy.

In the case of Rasmussen, there was an ethics panel decision by SAR which apparently found the he had not committed an ethical violation by the domain name registration. Interestingly, when Rasmussen attempted to enter this ethics decision into evidence before the UDRP panel, SAR cited a provision in NAR’s rules governing the ethics proceeding which apparently prevent Rasmussen from disclosing the ethics decision and or using the decision in an arbitration case.

Part of Rasmussen’s argument is that SAR does not have any valid rights to the mark Sarasota MLS. The website http://www.sarasotamls.com/ redirectes to SAR’s site at http://www.sarasotarealtors.com/. And while the website contains a small link at the top which reads “Sarasota MLS,” a click on the link leads to the current MLS to which Realtors in the Florida counties of Sarasota and Manatee use – the Mid-Florida MLS. SAR’s counterargument is that the Sarasota MLS does still exist and provides information to the Mid-Florida MLS.

While Rasmussen’s domain name is currently being forwarded to another domain name while the case is pending, his website still contains the disclaimer in bold that was on his previous site:

This is not the Sarasota Multiple Listing Service (MLS). The Sarasota MLS no longer exists. Realtors in Sarasota and Manatee counties now use the Mid-Florida MLS system. This website contains virtually all of the properties for sale in Sarasota and Manatee counties. There is no need to search multiple websites since this site is updated daily with almost every property for sale.

What may have given Rasmussen enough encouragement to file the federal action were the comments by the dissenting panelist in the UDRP action. That panelist felt that SAR had not established common law trademark rights to the MLS mark prior to the registration of the domain because SAR tended to use the MLS mark in a descriptive sense to identify the MLS database and not in a trademark sense, and never sought to protect the term as a mark until real estate agents began using the term in domain names. The panelist also felt that Rasmussen did not have the requisite bad faith needed under the UDRP, specifically noting the aforementioned advice to its members to register include the term “MLS” in their domain names in order to drive traffic to their sites (even though NAR later changing its policies about that). Finally, NAR’s own ethics decision declining to censure Rasmussen for this particular domain registration – even though the decision arguably should not have even been presented as evidence – nonetheless supported Rasmussen’s argument that he did not have any bad faith intention at the time he registered the domain name.