Friday, May 09, 2014

No similarity means no infringement

Falcon Stainless, Inc. v. Rino Companies, Inc., --- Fed.Appx. ----, 2014 WL 1779246 (9th Cir. May 6, 2014)

After the district court mostly denied a preliminary injunction, the parties proceeded to trial on an implausible trademark claim; the jury found for the plaintiffs, but the court granted judgment as a matter of law (and a new trial on false advertising/trade libel claims), here affirmed.  Lesson: courts could be more aggressive in getting rid of overreaching trademark claims earlier; it’d save everybody’s time and money.  (This is the parties’ second trip to the Ninth Circuit.)

The jury found that Rino had engaged in false designation of origin and common law trademark infringement of Falcon’s SWC parts numbers.  Even assuming that parts numbers can be a valid mark, there was no substantial evidence to support the jury’s finding of likely confusion.  Though some of the Sleekcraft factors favored Falcon, “the most critical ones do not.”  The parties sold similar products, through the same marketing channels, to the same customers.  But some factors “are much more important than others, and the relative importance of each individual factor will be case-specific.” 

Here, the problems were the weakness of Falcon’s mark, the dissimilarities between Rino’s and Falcon’s parts numbers, and the lack of evidence of actual confusion. Parts numbers are descriptive and thus inherently weak.  Falcon used “SWC” to indicate that the parts were “stainless water connectors.”  (Isn’t that generic?)  The following numbers indicated dimensions: the SWC 10012 part is a stainless water connector 1 inch in diameter and 12 inches in length.  Falcon didn’t advertise its parts numbers “in the trademark sense”—they’re only used on price lists and Falcon’s website “to identify the different connectors that it sells.”

Plus, the parties’ parts numbers were dissimilar.  Rino’s prefix SWF was different from Falcon’s alternating use of the prefixes FF and SWC.  (Okay, how did this get accepted as a valid mark, even?)  The use of “SW” in itself wasn’t likely to cause confusion, both because the full prefixes were dissimilar and because the parties sell to wholesale customers and experienced plumbing professionals. 

Finally, there was no evidence of actual confusion:

Although Falcon and Rino received purchase orders from wholesale customers that used the other party’s parts numbers and name, the only customers who testified said that they were not confused and that the orders were not misdirected. Falcon’s wholesale customers testified that they used the numbers interchangeably for convenience and that their customers ordered product by using the vendor name, not the parts number. The fact that Falcon received some return requests for Rino products also does not prove actual confusion. The jury heard testimony that these returns were a result of wholesale customers not updating their computer systems to reflect the fact that Rino’s owners were no longer Falcon sales representatives. The lack of actual confusion in this case is “persuasive evidence that there is no likelihood of confusion.” 

Likewise, JMOL on claims related to Falcon’s “diamond F” product stamp was affirmed. The court of appeals agreed that the stamps weren’t similar.  Falcon’s F was surrounded by a flattened diamond shape with sides of different lengthst, while Rino’s S was surrounded by a rhombus. “‘Where the two marks are entirely dissimilar, there is no likelihood of confusion.’ [Brookfield.] These marks do not look alike at all.”  (At least one district court has found this statement from Brookfield to be dicta.  Its application here is good to see.)  Also there was no evidence of confusion because of the product stamps.  One GM of a plumbing company testified that his company was confused about who produced some leaking connectors they installed, but he didn’t testify that the confusion resulted from the stamps.  “There was no evidence that could lead a reasonable juror to conclude that Rino’s use of its visually dissimilar product stamp was ‘likely to confuse an appreciable number of people as to the source of the product.’”  This overwhelmed the facts that the parties sold similar products through the same marketing channels and that Falcon’s mark was arbitrary (all things which would be true no matter which competitor Falcon sued). 

Moreover, the court of appeals affirmed the grant of JMOL on Falcon’s claim for intentional interference with prospective economic advantage. Falcon argued that Rino advertised that its SWF 118 connector was certified under the Uniform Plumbing Code and complied with industry standards even after it was determined to be noncompliant and decertified.  But there was no evidence that this conduct disrupted Falcon’s business relationships or proximately caused economic harm to Falcon. Falcon’s evidence came from two wholesale customers, but neither testified that Rino’s ads influenced their purchasing decisions. Instead, they testified that they purchased products based on price and that they stopped buying from Falcon for this reason. They did say that they would not purchase uncertified products. But there was no evidence that they purchased the SWF 118 connector while it was decertified or, if they did, that they would have bought from Falcon had they known that it was decertified. This wasn’t substantial evidence that Rino’s conduct disrupted Falcon’s business relationships and proximately caused economic harm to Falcon.

No comments:

Post a Comment