Dexon Computer, Inc. v. Travelers Prop. Cas. Co. Am., No. 23-1328 (8th Cir. 2024)

Justia: Dexon Computer, Inc., a reseller of computer networking products, was sued by Cisco Systems, Inc. and Cisco Technologies, Inc. for federal trademark infringement and counterfeiting. The complaint alleged trademark infringements between 2006 and 2010, and thirty-five acts of infringement between 2015 and 2020. Dexon sought defense from Travelers Property Casualty Company of America under a liability policy it had purchased from Travelers. Travelers denied coverage and a duty to defend, arguing that all the alleged acts of trademark infringement were “related acts” under the policy and thus were deemed to have been committed before the policy’s retroactive date.

The District Court of Minnesota denied Travelers’ motion to dismiss Dexon’s claims for a declaratory judgment that Travelers has a duty to defend and indemnify. The court held that the documents submitted by the parties concerning the coverage dispute were not “matters outside the pleadings” and could be considered in ruling on the motion to dismiss. The court concluded that it could not hold, as a matter of law, that every act of trademark infringement alleged in the Cisco complaint was necessarily related to an act of trademark infringement that occurred prior to the retroactive date.

The United States Court of Appeals for the Eighth Circuit affirmed the district court’s decision. The court held that the district court correctly determined that Travelers had a duty to defend Dexon in the entire Cisco Action. The court noted that this did not resolve whether Travelers has a duty to indemnify, and if so, the extent of that duty, which would depend on the ultimate resolution of the Cisco Action.

Donald Judd was a minimalist furniture designer so I’ll leave it at that. His La Mansana tables and chairs now go for $90K and $9k respectively. The Judd Foundation, his successor in interest (he passed in 1994), asserts trade dress in the La Mansana table and corresponding chairs (see photos below and in complaint, link at bottom).

Kim Kardashian employed a designer for her new SKKN BY KIM offices. Knowing of Ms. Kardashian’s interest in minimalism, the designer proposed that he fabricate tables and chairs “in the style of Donald Judd.” Kardashian obtained two sets of table and chairs (price redacted in the Complaint).

Ms. Kardashian filmed herself giving a tour of her offices. She identified various artists and designers who had contributed, and, displaying the tables, stated:

“If you guys are furniture people—because I’ve really gotten into furniture lately—these Donald Judd tables are really amazing and totally blend in with the seats.” (You’ll note that the chairs fit precisely under the table. I think that’s an interesting point to remember when considering trade dress, but I digress).

The video obtained over three million views on You. Comments on the video seemed to erroneously refer to the “JUDD” furniture.

The Judd Foundation has now sued the designer and Ms. Kardashian. The first ten causes of action are against the designer. The 11th cause is against Kardashian, asserting that:

Ms. Kardashian’s unauthorized use of the DONALD JUDD trademark and Mr. Judd’s name and identity is likely to confuse consumers as to Mr. Judd’s and/or Judd Foundation’s sponsorship or approval of the SKKN BY KIM brand and products advertised in the Kardashian Video

See page 44 of the Complaint for the full allegations against Kardashian.

At least three interesting issues arise from this Complaint;

  1. The always interesting question of to what extent is the configuration of the table and chairs functional. What is not functional about a minimalist design?
  2. To what extent does Ms. Kardashian make trademark use of the Judd marks in the video? I’m reminded of some fleeting/incidental appearance cases such as Gottlieb Development v Paramount Pictures, 590 F.Supp. 2d 625 (SDNY 2008) in which the endorsement theory between plaintiff and the defendant was strained (there, it was implausible that viewers of a theatrical movie in which a pinball machine appears, would consider that the movie was somehow affiliated with/endorsed by the source of a pinball machine.
  3. However, even without trademark use – this could be a novel post-purchase confusion fact pattern. Ms. Kardashian, like the purchaser of a $20 Rolex, is possibly not confused as to source given the context of her purchase. Also, she is not selling goods that compete with those of plaintiff. But her display of the infringing item, while not trademark use, could confuse her audience as to the provenance of her tables and chairs, There are plausible allegations in the complaint that viewers of her video were confused. And that could be a problem for her co-defendant.

text of complaint in Judd v Kardashian.

If you receive a Rule 68 judgment, be careful how you crow about it.

Rule 68 of the Federal Rules of Civil Procedure is structured to motivate defendants to make settlement offers. It provides that

At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

Part of the motivation is cost-shifting. Section 68(d) provides that “If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.”

Also, and this is the relevant part in this case, the Rule 68 offer is not to be deemed as an admission of liability.

Here, Crocs sued defendants in 2006. Fourteen days before trial sixteen years later (ouch), defendants made Rule 68 offers which were accepted. The Rule 68 offers pretty clearly indicated that they are not to be deemed to be admissions nor acknowledgements of Crocs’ rights and remedies.

Here’s the practice pointer – don’t do what plaintiff did next: Crocs issued a press release that, in part, “announced a judgment of infringement against USA Dawgs and Double Diamond Distribution as a result of both companies’ sales of imitation Crocs shoes.” Emphasis added.

The press release also refers (somewhat confusingly in my view) to other TM lawsuits it had recently brought. The full text of the press release is in the decision (link below).

Defendant Diamond Distribution then sued Crocs for defamation, false advertising, and related state torts. Crocs moved to dismiss.

The holding, at 12(b)(6);

The Court finds that the complaint plausibly establishes that the press release contains materially false statements. The press release states that Crocs obtained “a judgment of infringement against USA Dawgs and Double Diamond Distribution as a result of both companies’ sales of imitation Crocs shoes.” … The press release discusses how “[t]his judgment . . . reinforces the validity of [Crocs’] patent rights.” The Court finds that the complaint plausibly establishes that these statements are false because the statements would have a “different effect on the mind of the reader” from that which the Rule 68 offer of judgment would have produced. … The “gist” of the press release is that the Court’s judgment determined that Double Diamond sold shoes which infringed Crocs’ patents. … However, the Rule 68 offer of judgment stated that the offer of judgment “is not to be construed either as an admission that Double Diamond is liable in this action or that Crocs has suffered any damage.” … The Court’s judgment did not rule on the validity of Crocs’ patent rights or find that Double Diamond was liable for patent infringement. …As a result, the substance or gist of the press release is contrary to the Rule 68 offer of judgment and the Court’s final judgment. …Furthermore, the Court finds that Double Diamond has plausibly alleged that the false statements in the press release are material because the statements would likely cause reasonable people to think “significantly less favorably” about Double Diamond than they would if they knew the truth. … Accordingly, the Court finds that Double Diamond has plausibly established that the press release contains materially false statements, and the Court therefore denies this portion of defendant’s motion. Citations removed.

So . . . there was a judgment (and not a dismissal), and the judgment was in plaintiff’s favor. But it’s not a judgment of infringement – there were no findings or holdings as such. So don’t call it a judgment of infringement. It might be defamatory.

Prof Tushnet’s 43(b)log discusses Double Diamond v Crocs here.

Text of Double Diamond v Crocs District of Colorado decision here.

LEDO PIZZA SYSTEM, INC. & LEDO PIZZA CARRYOUTS, INC., Plaintiffs,
v.
LEDO’S INC., Defendant.

No. 20 CV 7350.

United States District Court, N.D. Illinois, Eastern Division. March 7, 2024.

The defendant’s fraud claim fails even to get out of the starting blocks, because the defendant has failed to adequately establish standing to assert the claim.[5] A petition to cancel a mark must “be filed . . . by any person who believes that he is or will be damaged, including as a result of a likelihood of dilution.” 15 U.S.C. § 1064. The party must “demonstrate a real interest in the proceeding and a reasonable belief of damage.” Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, 965 F.3d 1370, 1374 (Fed. Cir. 2020). A party can establish a reasonable belief of damage, “by producing and selling merchandise bearing the registered mark.” Id. at 1375; see also Cunningham v. Laser Golf Corp., 222 F.3d 943, 945 (Fed. Cir. 2000) (“A belief in likely damage can be shown by establishing a direct commercial interest.”). Here, the defendant alleged only that “Ledo’s has been and will continue to be damaged as a result of Plaintiffs’ fraudulent conduct before the USPTO.” Am. Answer & Countercls. ¶ 109, ECF No. 113. Although standing is a “low-threshold, intended only to ensure that the plaintiff has a real interest in the matter,” the petitioner still carries the burden to plead or prove facts “showing a `real interest’ in the proceeding.” DRL Enterprises, Inc. v. N. Atl. Operating Co., Inc., 301 F. Supp. 3d 824, 834 (N.D. Ill. 2018) (internal citation omitted); Int’l Ord. of Job’s Daughters v. Lindeburg & Co., 727 F.2d 1087, 1092 (Fed. Cir. 1984). The defendant’s statement that it “has been and will continue to be damaged” is insufficient to establish a “reasonable belief of damage” such that the defendant has standing to petition for cancellation, particularly where the defendant operates in a distant geographic territory from the plaintiff. Id.

Amazon satisfies multi-factor test for default:

AMAZON.COM INC; JL CHILDRESS CO INC, Plaintiff, v.
TANG ZHI; ET AL, Defendant.

Case No. 2:20-cv-01215-TMC-MLP.

United States District Court, W.D. Washington, Tacoma.

Motion for default denied wo prejudice for failure to show personal jurisdiction:

HAMMER BRAND, LLC, Plaintiff,
v.
VORO INC., et al., Defendants.

Case No. 8:23-cv-01272-KKM-NHA.

United States District Court, M.D. Florida, Tampa Division.March 8, 2024.

ED Cal: Motion granted after duplicative defendant removed:

GS HOLISTIC, LLC, Plaintiff,
v.
MORAD NASHER, et al., Defendants.

Case No. 1:23-cv-00285-KJM-JDP.

United States District Court, E.D. California.March 13, 2024.

Whaleco Inc., a Delaware Company Plaintiff,
v.
Temuapp.me, a domain name; Temuapp.space, a domain name; and Does 1-20, unknown individuals, Defendants.

No. CV-23-02615-PHX-MTL.

United States District Court, D. Arizona.May 31, 2024.

Plaintiff has been suing various wristwatch companies over the use of the term RED GOLD. Here, Breitling’s dismissal of plaintiff’s suit at summary judgment provides a road map as to how to make descriptive fair use of even an incontestable mark (and even when there were (allegedly) alternative descriptive terms available to defendant).

From the decision: “Left untouched, pure gold is yellow. With the addition of silver, gold takes on a whiter tone; copper creates a reddish or pinkish color . . . Throughout the
twentieth century, many newspapers, advertisements, magazines, textbooks, and
other reference materials used the term “red gold” to describe the gold-copper
combination. Though the term “rose gold” is commonly used today, references to
“red gold” continue; from 2001 to 2017, the Wristwatch Annual included more than
1,300 references to “red gold” by fifty-three different watchmakers.”

Plaintiff alleged that it has used the mark RED GOLD on watches since 1989. It filed to register the mark in 2001 and in 2009, RED GOLD® achieved incontestable status

Breitling began using the term in 2010 to describe the color of its watches, indicating, for example, that the watch was available in stainless steel and 18k Red Gold:

Breitling also used the hashtag #redgold as one of various hashtags (many of them also descriptive) in social media (see below).

Breitling argued that the term was generic (as it was barred from arguing that the term was descriptive, due to the registration’s incontestable status). Alternatively, it argued that it was making fair use of the term,

Held: Breitling satisfied the three prong test of descriptive fair use as (1) it did not make trademark use of the term; (2) it used the term solely to describe as aspect of the product; and (3 ) there was no evidence that it did not act in good faith.

Practice pointer: You can show the illustrations of Breitling’s use of the term in various promotional materials to clients and say “here, you can do this.”

The court notes that Breitling did not use the term to describe any product that is
not made from gold with a red/pink hue, The term was always accompanied by Breitling’s own trademarks. The term was used in smaller print, near other descriptive terms. Breitling’s “#redgold” tag was buried in a long list of other terms, most of which are descriptive.

The decision is also notable for clarifying an argument that never seems to disappear from fair use analysis. Plaintiff’s often argue that defendant’s use was not fair because it had descriptive alternatives (in this case, plaintiff alleged that Breitling could have used ROSE GOLD – which is disputed by Breitling because ROSE GOLD tends to refer to a lighter color than RED GOLD). Here, the circuit court noted that when a term is inherently descriptive, defendant descriptive use of the term is not evidence of bad faith without more, regardless of whether it could have used other terms (the dissent had a problem with this holding).

Text of Solid 21 v Breitling, 22-366 (2d Cir March 14, 2024).