Seattle Trademark Lawyer

Any likelihood of confusion with a prior trademark used in Canada can make a trademark registration vulnerable to expungement (cancellation) in that country.

That’s what the Supreme Court of Canada found last week in a relatively rare decision that clarified Canadian trademark law.

Many Canadian practitioners had believed that geography played a role in deciding whether a senior user’s user’s unregistered mark would affect a junior user’s ability to maintain its registration.

Not so.

As the Canadian Trademark Blog put it: “This result was contrary to what most practitioners in Canada assumed the test to be for likelihood of confusion in the context of non-entitlement, based on the wording of the Trade-marks Act, which makes no express reference to the geographic location of prior use in the relevant provisions of the Act.”

Speaking for the court, Justice Marshall Rothstein wrote that “[i]n order for the owner of a registered trade-mark to have exclusive use of the trade-mark throughout Canada, there cannot be a likelihood of confusion with another trade-mark anywhere in the country.”

In other words, if Owner A obtains common law trademark rights by using its mark before Owner B obtains its trademark rights, Owner A can get Owner B’s registration expunged in Canada — even if Owner A uses its mark in the Yukon Territory and Owner B uses its mark in Nova Scotia.

That result seems to be in line with trademark registration law in the States. Anyone here with prior rights who believes they would be “damaged” by the junior user’s continued registration may seek to have the junior user’s registration cancelled, notwithstanding the geographic location of the senior user’s use. The only practical limitation is the senior user must bring the cancellation proceeding within five years of the registration, which I understand is about the same in Canada.

The case cite is Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27 (May 26, 2011).

In November 2009, the Central District of California denied the prevailing defendant’s motion for attorney’s fees.

The court found plaintiff’s claims couldn’t have been groundless when it survived defendant’s motion for summary judgment. It reasoned: “Given the standard for summary judgment, the Court is not willing to find that a party has litigated a groundless or unreasonable case when the Court itself found that there were genuine issues of fact on all disputed claims. Indeed, what wold have been ‘exceptional’ is if Plaintiff had unilaterally stopped litigating the case after the Court made such a finding.”

On appeal, the Ninth Circuit held that wasn’t a good basis to deny defendant’s request.

“In denying Fortune’s motion for attorney’s fees under the Copyright and Lanham Acts, the district court gave undue weight to the fact that Tokidoki survived Fortune’s motion for summary judgment. The summary judgment ruling should have been afforded little or no weight in deciding whether to award fees, given that many of the factual contentions upon which Tokidoki relied at the summary judgment stage were not borne out at trial.”

The Ninth Circuit vacated the denial of fees and remanded to the district court “to reconsider Fortune’s motion, without regard to the court’s summary judgment ruling,” though it expressed no opinion about whether a fees award was appropriate.

The case cite is Tokidoki, LLC v. Fortune Dynamic, Inc., 2011 WL 2036466, Nos. 09–56388, 10–55661 (9th Cir. May 25, 2011).

In the interests of completeness, I’d wanted to write about the Ninth Circuit’s recent trademark decision in Egg Works, Inc. v. Egg World, LLC.

But what was there to say?

In affirming the district court’s denial of the plaintiff’s motion for a preliminary injunction, the Ninth Circuit seemed to say it all:

“The district court correctly identified the legal standard for likelihood of confusion of a trademark, its findings were not clearly erroneous, and the district court did not clearly err in finding no likelihood of confusion concerning appellants’ trademark. We conclude that the district court did not abuse its discretion in concluding that appellants failed to meet the requirements to merit preliminary injunctive relief. Accordingly, we affirm the district court’s denial of appellants’ motion for a preliminary injunction.”

But there’s more. Las Vegas Trademark Law Blogger Ryan Gile fills in the interesting back story, which involves a dispute between two Las Vegas breakfast restaurants.

It’s also noteworthy that, as Ryan points out, the appellee won its appeal and didn’t even file a brief. Now that’s confidence! Or indifference. Or something.

The case cite is Egg Works, Inc. v. Egg World LLC, 2011 WL 1585846, No. 10–17534 (9th Cir. April 20, 2011).

Back in 2008, Seattle IP attorney Samuel Watkins wanted information about the seizure of counterfeit goods at various ports around the country. He asked the U.S. Bureau of Customs and Border Protection (CBP) for the date seized merchandise was imported, the port of entry, the description of the merchandise, the quantity of the merchandise, the country of origin, and the names and addresses of the exporter, importer, and manufacturer.

CBP denied his request, so Mr. Watkins sued under the Freedom of Information Act (FOIA). In October 2009, Western District Judge James Robart granted CBP’s motion for summary judgment and denied Mr. Watkins’ cross-motion. (STL post here.)

Mr. Watkins appealed. On May 4, the Ninth Circuit affirmed the decision in part and reversed it in part.

The reversal is the more interesting part of the decision, at least for trademark practitioners. The court found the information Mr. Watkins requested was subject to Exemption 4, which protects against the release of information containing confidential commercial information.

“Watkins argues that the information contained in Notices of Seizure cannot be commercial because it pertains to “the unlawful importation of counterfeit goods, and not any sort of legitimate commercial activity.” The district correctly rejected this argument because Notices of Seizure are not final determinations that goods seized are counterfeit. Instead, the issuance of a Notice is akin to a finding of probable cause. As the Agency’s declarations demonstrate, an importer whose merchandise is seized can challenge the seizure both administratively and in court. Further, importers sometimes acquiesce in the Agency’s seizure and forfeiture of legitimate goods. As a result, we cannot conclude that information contained in a Notice of Seizure is non-commercial just because it’s likely—perhaps even very likely—that the merchandise seized is counterfeit.”

However, the court also found that CBP had waived its right to withhold the documents because it previously had disclosed them to trademark owners without assuring that the documents remain confidential.

“Here, disclosure of the Notices of Seizure to an aggrieved trademark owner is mandated by statute. When disclosure is made to a trademark owner, the government imposes no restrictions on the owner’s use of the information in the Notice. He can freely disseminate the Notice to his attorneys, business affiliates, trade organizations, the importer’s competitors, or the media in a way that would compromise the purportedly sensitive information about an offending importer’s trade operations. This no-strings-attached disclosure thus voids any claim to confidentiality and constitutes a waiver of Exemption 4. FOIA accordingly creates an obligation for the government to disclose the requested documents.”

The case cite is Watkins v. U.S. Bureau of Customs and Border Protection, __ F.3d __, 2011 WL 1709852, No. 09–35996 (9th Cir. May 6, 2011).

Plaintiff Ezell’s Fried Chicken, Inc.’s logo

Fellow Seattle IP lawyer Gary Marshall put me onto this.

It’s a struggle over use of the restaurant name “Ezell’s Fried Chicken” between its founder, Ezell Stephens — now separated from the company — and the company’s board. Both parties now sell fried chicken in the Seattle area under the Ezell name.

Gary asks some good questions about who owns a company’s technology. The same questions can be asked about who owns the company’s trademark.

“Founders often neglect to put licenses between themselves and their company in writing. They just assume that the company can use the technology they create. But what happens when they are no longer associated with the company? Can the company continue to use the technology? Can the founder?”

Those are questions the court will have to decide. But as Gary points out, it needn’t be that way.

Decide from the outset who owns the trademark. The founder or the company? Then decide what happens if the company breaks up. Who will own it then?

Just last week I traded emails with a small business owner faced with this very problem. His partnership operated under a single brand. The partnership split up, and the partners are on their own. They now compete against each other offering the same services on the same turf. And both partners continue to operate under the partnership’s brand. Confusing to consumers? You bet.

It raises the same questions the Ezell’s litigants face. Which partner can use the brand? Can either? If one applies to register the mark, can the other object?

Don’t roll the dice with the court. That’s expensive and disruptive. Control your own fate and get these issues hammered out between partners, shareholders, and joint venturers when times are good. It might cost a bit in legal fees up front, but it’ll save you lots more down the road.

So what’s up with the Ezell’s case? The Western District sent it back to King County Superior Court — from which the case had been removed — finding plaintiff’s causes of action sound in state court, the court plaintiff had selected. It also awarded fees, finding the removal had been improper (though it later reduced the amount of the award).

Story on the Ezell’s dispute here.

The case cite is Ezell’s Fried Chicken, Inc. v. Stephens, No. 10-1424 (W.D. Wash.).