Monday, June 13, 2011

Bikini line: defendant can sell genuine goods but not use TM name so prominently

Maya Swimwear, Corp. v. Maya Swimwear, LLC, -- F. Supp. 2d --, 2011 WL 2259644 (D. Del.)

Plaintiffs, whom we’ll call Maya Argentina for convenience, sued defendants, including an entity we’ll call Maya USA. Plaintiffs make an “exclusive” line of bikinis under the Maya brand name, which they sell at, and have registered the Maya mark for bikinis. Defendants sold genuine prior year Maya bikinis at; the court said a Google search for “Maya swimwear” returned defendants’ website as the second result after plaintiffs’ site. (Side note: the miniMAYA line for toddlers includes a design labeled the “Lolita,” which I would not have advised. The print features pictures of smiling little girls. Maybe they don’t read Nabokov in Argentina?) Plaintiffs alleged that defendants were engaging in trademark infringement and false designation of origin, as well as tortious interference through harassment of Christina Pinto, a former Maya USA employee who now works for Maya Argentina.

The parties used to have an exclusive distributorship agreement. This collapsed in late 2010, but defendants continued to sell Maya bikinis at, despite plaintiffs’ short-lived success in getting Network Solutions to take down the website for 8 days in January 2011.

Defendants used the stylized Maya trademark and “Mayan” symbols at the top of their website, with the logo in orange and presented as the largest text on the website: 
Defendants’ site contained no disclaimers. Plaintiffs use the logo in the same font and same relative position, though their version is white against a black background and the “Mayan” symbols were on the far right:

According to the complaint, Pinto was a former personal assistant to one of the individual defendants. She was let go in 2010, and began working for plaintiffs in 2011. She hadn’t signed a noncompete or confidentiality agreement or any other written contract, but defendants demanded that plaintiffs terminate her and cease using any customer lists and marketing materials obtained from her.

The court began with the affirmative defense of first sale/trademark exhaustion, which prevents liability even where there is likely confusion when a seller does no more than stock, display and resell the product under the producer’s trademark (note how this formulation swallows the “confusion over what?” problem—if there’s a genuine good, how can there be likely confusion?). However, resellers aren’t protected by first sale if they give the false impression they’re favored or authorized dealers for a product, or if there are material differences in the product they sell.

Maya Argentina argued that selling last year’s product line created confusion in the marketplace, because styles change fast. However, there was no case law to support this, especially when defendants didn’t claim that the products were the current line—which the court commented would give rise to a §43(a)(1)(B) claim.

The court thought that the only “true” question was whether defendants’ use of plaintiffs’ mark on the top of the website was actionable, and that it was indeed infringing. Of note in the confusion analysis: the court found that defendants’ intent was proper when they adopted the mark because they were associated with Maya Argentina at the time. However, because Maya Argentina put them on notice that they were no longer to use the mark, the intent factor “somewhat” favored Maya Argentina, even though there was no evidence that defendants intended to confuse the public. (But I thought first sale allowed defendants to continue to use the mark?) Also, “Defendants' placement of the mark in the title bar of their website along with the URL suggests that defendants are either producers of Maya brand bikinis or an authorized retailer.”

So, plaintiffs prevailed, but on a more limited basis than they wanted. “Had defendants' store been called ‘Bargain Barrel Bikinis,’ and defendants used the Maya trademark either as plain text or in whole with a clear disclaimer that they were not an authorized retailer, plaintiffs would not have a cause of action because of the first sale doctrine.”

The court found irreparable harm because defendants would continue to use the mark in a way implying sponsorship absent an injunction. (Why does this make the harm irreparable instead of compensable with damages, if the problem is false appearance of authorization in selling genuine goods? It’s a mystery.) The court recognized that defendants would have more trouble in search rankings if they couldn’t use, making it more difficult to sell their legitimate Maya stock, but this was “less significant than the harm to plaintiffs that stems from consumers' confusion over defendants' status as the official Maya representative” (of which there was no actual evidence). Likely confusion meant by definition that there was a public interest in suppressing confusion. (What is the public interest in not being confused over whether someone is an authorized dealer of bikinis? Is it really the same as the public interest in not being confused over whether the bikinis are genuine Maya bikinis, or even the public interest in not being confused over who is an authorized dealer of equipment one can expect to need a warranty for? When we talk about blanket rules after eBay, this one deserves some scrutiny.)

The court allowed defendants to continue sales, as long as they didn’t claim or imply that they were the current line unless they were. They couldn’t use the Maya mark at the top of their site, nor could they use, which indeed has already disappeared. They needed a site name that doesn’t involve “Maya.” “Defendants may use the Maya trademark on their website to advertise the sale of Maya brand bikinis, but they must use the mark either as plain text or in whole with a clear disclaimer that they are not an authorized retailer.” (Note the difference from the usual nominative fair use overstatement: defendants are allowed to use the stylized version as long as they use a disclaimer.)

The tortious interference claim failed on the pleadings; Pinto still works for Maya Argentina, which didn’t identify any actual or potential customer relationships harmed by Maya USA’s letters. However, without any analysis in the written opinion, the court did order defendants to refrain from contacting Pinto directly for any reason.

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