Seattle Trademark Lawyer

The June issue of InsideCounsel has a nice piece on fraud on the Trademark Office. It accurately frames the problem as follows:

“In the past few years, the [Trademark Trial and Appeal Board] has adopted an extremely tough attitude toward trademark filings that contain overly broad statements of use. The agency has canceled many registrations, belonging to companies large and small, because the companies wrongly averred that they were using their marks on some goods or services.”

This is a tough one. If a trademark owner files a statement saying it uses a given mark in connection with 20 categories of goods and services, and in actuality it only uses the mark in connection with 19 categories, its entire registration is at risk. Forget about honest mistakes.

As the article puts it, “Not only has the TTAB adopted a tough objective standard, but it also has applied this standard mercilessly.”

So what’s a trademark owner to do?

It should audit its portfolio to ensure its most valuable marks are in good stead. If they’re not, it should file narrower follow-on applications that will stand up to scrutiny in the event the original registration falls. It should correct any errors promptly, voluntarily, and in good faith — before an adversary brings them to the PTO’s attention. And it should make sure, going forward, that its statements to the PTO are 100% accurate. After all, they’re made under oath.

On June 25, the U.S. Supreme Court found in Exxon Shipping Co. v. Baker that punitive damages under maritime common law cannot exceed the amount of compensatory damages when such awards are “substantial.”

Will this decision affect punitive damages awards in trademark cases?

It shouldn’t under federal law — even by analogy — because the Lanham Act does not provide for punitive damages. Section 35(a) (15 U.S.C. § 1117(a)) authorizes courts to enhance damages, but only to the extent the award constitutes compensation and “not a penalty.”

However, Section 35(a) does not extend to supplemental state law claims. As the Supreme Court recognized, ”[s]tate regulation of punitive damages varies.” It noted that Washington and three other states only permit punitive damages when authorized by statute. Other states limit punitive damages in other ways, though the court stated that “punitive damages overall are higher and more frequent in the United States than they are anywhere else.”

Indeed, many states allow punitive damages in state-law trademark claims. For example, the District of Oregon jury’s recent award of $305 million in Adidas America, Inc. v. Payless Shoesource, Inc., included $137 million in punitive damages. (STL post here; jury verdict form here.)

While Exxon Shipping’s limit of punitive damages to the amount of compensatory damages in some cases does not appear to apply literally to punitive damages awards under state law, it’s obviously an influential yardstick.

Payless Shoesource thinks so. On June 26 it filed the opinion as supplemental authority in support of its motion for a new trial on the issue of damages.

The case cite is Exxon Shipping Co. v. Baker, 554 U.S. __ (2008), No. 07-219.

Further discussion on the case’s implications beyond maritime law here (via the SCOTUS Blog).

A dozen Seattle law bloggers congregated tonight to talk shop. Blogs represented included the Washington Employment Advisory, Law According to Michael Rice, Trial Ad (and Other) Notes, Copyright or Wrong, China Law Blog, Employment Law Blog, Criminal Defense Law with an Apple, Speeding Ticket Blog, Seattle Trademark Lawyer, and our host, the Avvo Blog. Several “microbloggers” in attendance waxed eloquent about the joys of 140-character long posts, and we caught wind of a forthcoming Seattle law gossip site. Looking forward to that one!

Photo credit: Avvo Blogger Shalini Gujavarty

Is this another instance of jurors playing Sudoku?

Cryptic docket entries about a “juror letter” and sealed court records suggest something’s gone awry in the Adidas v. Payless Shoesource case that resulted in what reportedly was the largest damages award ever in a case of trademark infringement.

On May 5, a nine-person jury in the District of Oregon found Payless Shoesource, Inc., liable for infringing Adidas America, Inc.’s three-stripe trademark and awarded Adidas a whopping $305 million. (STL post here; jury verdict form here).

Three weeks later, on May 27, the court entered on the docket an “Order - Setting a Telephone Conference to discuss a juror letter….” The telephone conference with the parties’ attorneys was set for 1 p.m. the same day.

The next docket entry states: “MINUTES of Telephone Conference: Juror letter discussed as stated on the record.” The entry does not provide any more information, though the court set an in-person status conference for 11:30 a.m. the next day.

No docket entry reveals what transpired during the in-court conference.

Two days later, on May 30, the court entered a scheduling order — under seal. The docket entry does not say what events the scheduling order governed.

The next apparently relevant entry, for June 9, states: “Order - At the parties’ request the Court is setting a briefing schedule as follows: Defendant’s Motion is due by 6/9/2008. Plaintiffs’ Response is due by 6/16/2008. Defendant’s Reply is due by 6/19/2008.” The docket does not reveal the subject matter of the briefs.

However, the next entry, also dated June 9, states: “Supplemental Motion for New Trial. Oral Argument requested.” The untitled motion was filed under seal. The docket states it was filed by Payless Shoesource.

The next three entries — the docket’s most recent — are all filed under seal. The docket describes them as “Memorandum in Opposition to Defendant’s Supplemental Motion for New Trial,” filed by Adidas; “Declaration of Stephen M. Feldman” (Adidas’ attorney); and “Payless’ Reply Brief in further support of Supplemental Motion for a New Trial,” filed by Payless Shoesource.

What is going on here? What did that “juror letter” say? Did it disclose juror misconduct? Attorney misconduct? Is it going to unravel Adidas’ $300 million victory? Even if it is, why all the secrecy?

Is John Grisham now writing the court’s docket entries?

The case cite is Adidas America, Inc. v. Payless Shoesource, Inc., No. 01-1655 (D. Or.) (King, J.).

STL thanks a savvy STL reader/tipster who wishes to remain anonymous for bringing this issue to light.

In Alfa Corp. v. Alfa Mortgage Inc., the plaintiff alleged that its federally-registered marks containing the word ALFA are famous and that defendant’s use of ALFA constituted dilution, among other trademark-related causes of action. 

Plaintiff is an Alabama-based company that uses ALFA in connection with financial services, including insurance and reinsurance services. Defendant is an Indiana-based company that uses ALFA in connection with mortgages, residential construction loans, and commercial loans.

Defendant did not answer, and plaintiff moved for entry of a default judgment. On June 11, the Middle District of Alabama adopted the magistrate’s recommendation granting plaintiff’s motion with respect to other trademark causes of action but denied it with respect to plaintiff’s claim for dilution under the Alabama dilution statute because it found plaintiff had failed to allege facts supporting all of the factors indicating fame:

“In examining the Complaint, the Court must infer Plaintiff’s allegations.  Plaintiff alleges its marks are famous because Plaintiff has registered its marks, engaged in substantial advertising, and conducts business in some form under the ALFA marks nationwide. But, there are no factual allegations regarding the mark’s distinctiveness, the duration and extent of the use of the mark, or the degree [of] the ALFA marks’ recognition. Based on the absence of these allegations, the Court simply cannot conclude Plaintiff’s ALFA marks are famous. Consequently, Plaintiff has failed to set forth sufficient allegations entitling it to default judgment on Count 5.”

While this result doesn’t strike me as strange, the way the court got there does. It found the burden of proof under the Alabama dilution statute was “essentially the same as under federal law.” It then analyzed the claim applying the criteria for fame set forth in the Federal Trademark Dilution Act, even though plaintiff filed suit on October 25, 2006 — two weeks after the Trademark Dilution Revision Act was enacted. In a footnote, the court even acknowledged that “the Trademark Dilution Revision Act … amended the FTDA effective October 6, 2006…” Why the court did not apply the criteria set forth in the TDRA is a mystery.

The case cite is Alfa Corp. v. Alfa Mortgage, Inc., __ F.Supp.2d __, 2008 WL 2397522, No. 06-962 (M.D. Ala.) (Watkins, J.).