Wednesday, November 09, 2011

Nominative fair use defense blocks Levi's summary judgment motion screenshotLevi Strauss & Co. v. Papikian Enterprises, Inc., 2011 WL 5192237 (N.D. Cal.)

Levi owns a bunch of trademarks for clothing, including 501. It sells only through company-owned stores and authorized retailers, with special policies for authorized online retailers. In 2000, Papikian registered, which sells discontinued or out-of-stock styles of Levi Strauss jeans. The website includes visual depictions of a number of Levi Strauss marks, including its Red Tab mark, its house mark, and the Arcuate mark.

Levi learned of the website (and other Papikian domain names incorporating its marks) around May 2003. For a year, the parties “engaged in discussions” about this. Levi claimed that, shortly before it filed suit, it reviewed the website and concluded that it had changed radically. Levi sued in November 2010.

Levi moved for summary judgment on liability and on Papikian’s laches defense, as part of which Levi stated that it decided to forego damages claims. (A wise, because belated, choice.)

Levi argued that Papikian infringed by (1) using the 501 mark in the domain names for and; (2) using it in his business name A Division of Papikian Enterprises and 501USA: Jeans and Accessories; (3) using the Levi Strauss "Tab Device" trademark on and throughout the websites; (4) using the Levi’s mark throughout the websites; (5) using Levi Strauss trademarks in keyword metatags associated with the websites; and (6) using Levi Strauss trademarks for the purpose of generating search term priority and diverting customer attention to the websites. “It is evident from Levi Strauss' motion, however, that its primary complaint is that Papikian's use of the marks on his website, and its overall look and feel, falsely suggest that he is an authorized online retailer of Levi Strauss products.”

Papikian argued nominative fair use. His burden, per Judge Kozinski, was to show that he was using the mark to refer to the trademarked good. He was. Summary judgment is generally disfavored in trademark cases. In nominative fair use cases, the three New Kids factors are used to evaluate likely confusion: confusion is more likely when defendants use an unnecessary trademark or “more” of the mark than necessary. The court concluded that the facts were sufficiently in dispute.

A reasonably prudent consumer accustomed to shopping online could go either way. The domain names here “are the type of domain names that the Ninth Circuit has stated could suggest sponsorship or endorsement by the trademark holder.” And although the logo has evolved over time, a reasonable juror could find it reminiscent of the Levi house mark. Moreover, Papikian used a number of Levi’s marks throughout the website, as well as Levi’s “proprietary” photos (query: why no copyright infringement claim?). A jury could find this more use than necessary, because Papikian could adequately communicate his message without the visual trappings of the Levi brand.

However, Papikian has also used disclaimers in the past, though he didn’t at the time the issue was submitted to the court (the disclaimer appears to be back now). The disclaimers are in small font, though. Also, the headline “501USA Jeans and Accessories, a division of Papikian Enterprises” could be construed as an implicit disclaimer. Thus, a reasonable consumer could find confusion unlikely, and the court noted that Levi didn’t present any evidence of actual confusion.

Levi did manage a vital objective—kicking out the laches defense. Laches requires prejudice. Papikian testified that he expended effort in obtaining a high search ranking and, if he was forced to abandon the domain name, he would have to expend significant amounts of time and money to regain that ranking. The court agreed that this was improper lay opinion, since Papikian testified that he didn’t know what about his website kept it high in search engine responses. The source of search engine rankings is “subject matter that would be based on technical or other specialized knowledge and, thus, is the subject of expert testimony.”
Papikian also purchased various goods and services in connection with his business, but didn’t offer any evidence that these were investment in as the identity of his business. Thus, he couldn’t show any genuine disputed issues of material fact on prejudice.

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