Fed Cir: Laerdal Medical v ITC – ITC Should Address Sec.1337 Pleading Defects Pre-Proceeding

Plaintiff filed a complaint with ITC alleging, inter alia, trade dress infringement by respondent.  Respondent defaulted.  ITC declines to issue relief regarding trade dress, finding that that “Laerdal failed to plead sufficiently (1) that it suffered the requisite harm, (2) the specific elements that constitute its trade dresses, and (3) that its trade dresses were not functional.”  Laerdal appealed.

Fed Circuit:  The word ‘shall’ in Section 1337 obligates the ITC to grant relief if the proceeding was initiated and respondent defaulted.  The time to bring up pleading defects is prior to initiating a proceeding.

Justia Summary:

Laerdal, which manufactures and distributes medical devices, filed a complaint at the International Trade Commission asserting violations of 19 U.S.C. 1337 by infringement of Laerdal’s patents, trademarks, trade dress, and copyrights by importing, selling for importation, or selling within the U.S. certain medical devices. The Commission investigated Laerdal’s trade dress claims, one patent claim, two copyright claims, and one trademark claim, excluding all others. Despite being served with notice, no respondent responded. An ALJ issued the Order to Show Cause. Respondents did not respond. An ALJ issued an initial determination finding all respondents in default. Laerdal modified its requested relief to immediate entry of limited exclusion orders and cease and desist orders. The Commission requested briefing on remedies, the public interest, and bonding. The Commission’s final determination granted Laerdal limited exclusion orders against three respondents and a cease and desist order against one, based on patent and trademark claims; it issued no relief on trade dress and copyright claims, finding Laerdal’s allegations inadequate. As to trade dress claims, the Commission found that Laerdal failed to plead sufficiently that it suffered the requisite harm, the specific elements that constitute its trade dresses, and that its trade dresses were not functional; despite approving the ALJ’s initial determination of default and despite requesting supplemental briefing solely related remedy, the Commission issued no relief on those claims. The Federal Circuit vacated. The Commission violated 19 U.S.C. 1337(g)(1) by terminating the investigation and issuing no relief for its trade dress claims against defaulting respondents.

Off-White Sues Brooklyn Lighthouse for Counterfeiting

2d Circuit: Sleepy’s v Sleep Number – Can You Be Defamed To Your Secret Agent?

Plaintiff Sleepy’s sold a line of mattresses manufactured by a competitor, Defendant Select Comfort. Sleepy’s line performed poorly in comparison to a ‘slightly different’ line sold by Select Comfort in its own stores (which line had ‘exactly the same’ technology and basic components as Sleepy’s line).  Select Comfort thought that Sleepy’s didn’t adequately advertise their line, while Sleepy’s suspected that Select Comfort was disparaging the line sold by Sleepy’s.

Sleepy’s sent ‘secret shoppers’ to Select Comfort stores, who asked sales staff about the differences between the two lines.  When the CEO of Sleepy’s was informed that the secret shoppers reported that Select Comfort’s sales staff was allegedly disparaging Sleepy’s, the CEO said:

This may be an enormous, fabulous lawsuit for Sleepy’s to collect damages . . . .This may be very good because if we start getting involved in a lawsuit especially in a class action and its gets publicity it will not be good for them.  This cannot help them at all in the industry.  It won’t mean a thing to the consumer, but it will for people who want to do business with [Select Comfort].

SLANDER:

Question: If the allegedly slanderous remark is made to an agent of the plaintiff, was the slander published, or was it consented to by the plaintiff?

Second Circuit: a statement made to an agent of plaintiff can be deemed to have been published, but:

When a plaintiff sues for defamation based on a statement of the defendant elicited by the plaintiff with some reason to expect that the defendantʹs statement might be defamatory, the more the evidence supports the proposition that the plaintiff elicited the statement with a high degree of certainty that it would be defamatory, for the purpose of enabling a lawsuit, the stronger the defendantʹs case for deeming the statement consented to, thus barring the claim.

Here, it was established that Sleepy’s was both virtually certain that its inquiry would elicit allegedly slanderous statements and was substantially motivated by the desire to bolster a contemplated lawsuit.  Thus statements made after the CEO’s statement (above), were deemed to have been consented to (statements made prior to that statement were remanded to the district court for further review).

LANHAM ACT FEES:

Question: What is the standard for expectionality under the Lanham Act, with regard to fee awards?

The Lanham Act allows a prevailing party to be awarded fees in exceptional cases.  The Second Circuit now decides that it will apply the Octane Fitness test when determining exceptionality  under the Lanham Act, namely that an ‘exceptional’ case is one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.  The question is to be considered by evaluating the totality of the circumstances, considering a wide variety of facts, including “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.”

In the event of a multi-claim suit under different statutes (as is the case here), the prevailing party will only be entitled to work expended in prosecuting or defending the Lanham Act claims.

While the issue of exceptionality will be determined upon remand, the Court noted:

It is not altogether clear to us that the case at bar was ʺfrivolous[]ʺ or improperly
ʺmotivat[ed].ʺ Octane Fitness, 572 U.S. at 554 n.6. Sleepyʹs claims survived summary
judgment and were only dismissed after a bench trial on a motion for judgment on
partial findings under Federal Rule of Civil Procedure 52(c). On appeal, we revived the
unfair competition, breach of contract, and slander per se claims. And although Ackerʹs
comments strike us as objectionable and inappropriate, it is not self‐evident that they
alone could convert an otherwise‐reasonable response to possible defamation
(investigation and litigation) into a bad‐faith competitive ploy. But the district court
must decide this in the first instance—in conjunction with other relevant factors, such as
Sleepyʹs spoliation—a decision to which we will owe deference in the event of a further
appeal.

Test of Fed Circ Decision in Converse v ITC

I spoke about this decision at the John Marshall Law Conference last week.  I think the bit about comparing defendant’s product to plaintiff’s mark, on page 24, seems like a mistake.  I think in a non-trade dress case the trier of facts compares the marks to each other, and considers the relatedness of the goods/services. I think on a trade case case, the trier of facts would compare the non-functional elements of defendant’s design or configuration, to the claimed trade dress (and would also consider the relatedness of the goods/services).

Also, the last sentence of the decision mentioning numerous commercial alternatives, is a reminder that there is a split among the circuits on whether this factor is relevant to the functionality analysis.

Some other bits will require further thought.

Read the dissent.

Today’s Pleading Quiz – What Do People Think When They See Pictures of Women on a Club’s Social Media Account

I think federal causes are tricky to plead in this one.

Defendant operates a strip club in Long Island.  Plaintiffs are 19 women, all of whom seem to be well-known professional models.  Defendant allegedly reproduced photos of plaintiffs on its Instagram (or other social media) accounts, and ‘intentionally altered’ the images ‘in order to make it appear that they worked at or endorsed’ defendant’s club.

The New York state rights of privacy and publicity causes are straightforward.

How would you plead false endorsement and false advertising?

Before you answer, read the decision embedded below.  There was a similar lawsuit involving models suing a sex club in Boca Raton, in 2016 (not the site of the 2016 INTA Leadership Meeting in Boca that year).  There is an interesting holding that allowed the models to base a false endorsement claim on an intent to commercialize their images (as opposed to basing false endorsement on ownership of a trademark). The decision also contains survey results as to what people think when they see pictures of women on a club’s social media account (spoiler – they think the women frequent the club).

Interesting Lawsuit: Bluetooth SIG v Fiat Chrysler re Use of BLUETOOTH in Car Communications System

Interesting case.  Bluetooth SIG licenses BLUETOOTH marks to entities that sell Bluetooth-compliant equipment.  Mere re-sellers seem to not need to pay license fees.  Defendant Fiat Chrysler utilizes audio components that themselves may be identified as Bluetooth-compliant, however Bluetooth SIG alleges that when defendant incorporates those components into the car’s system, the system itself may modify or alter the components.  Thus they are not mere re-sellers and thus the system needs to be licensed to identify itself as Bluetooth-compliant.

“a blood oath never to use the name Lynyrd Skynyrd again.”

until the tribute tour, and then the film.

From Justia’s summary:

A 1988 consent order settled a suit brought by plaintiff against past and then present members of the rock band known as Lynyrd Skynyrd, seeking to clarify each party’s rights with respect to the use of the name “Lynyrd Skynyrd” and their rights to make films about the band and their own lives.

Dr Martens v Yoox Net-a-Porter re Trade Dress

D Del. DJ Action: INSTAVOICE v INSTAGRAM for Voice Apps

Apparently Instagram’s API Brand Guidelines said that INSTA- formatives were cool.  See para 26 of the complaint.

Blockchain.io Responds to BLOCKCHAIN Trademark Lawsuit

I blogged the complaint filed by Blockchain Luxembourg against Blockchain.io here last week.

I have now been contacted by the head of communications for Blockchain.io, who asked that I post the following:

Paymium, that has been successfully operating a BTC/EUR exchange since 2013 and serving 170,000 customers, is currently closing its private ICO to accelerate the rollout of Blockchain.io. The public sale for this complementary cryptocurrency exchange service will start on September 27. 

The domain name Blockchain.io was registered by Paymium way back in April 2012 (https://www.whois.com/whois/blockchain.io), and the Blockchain.io project launch was publicly advertised in the press months ago. 3 days before the beginning of the sale, and a few weeks away from the official release of our platform, it thus comes as no surprise that we are challenged by some potential competitors, for obvious reasons. We condemn this approach that surely doesn’t comply with the crypto-community values. 

Moreover, Blockchain.io disputes the accusation of making false and misleading statements. What is at stake is, at first, the protection of our name, our reputation, and our loyal investors and customers. For these reasons, our lawyers will answer point by point the claims that have been made.

As for our ICO, we already provided early investors with the alpha version of our platform that is ready to be launched right after the public sale in November. The name blockchain.io is the legal property of Paymium and the public sale will start as planned on September 27.”