Monday, June 15, 2015

Seventh Circuit engages in target practice on descriptive fair use

Sorensen v. WD-40 Co., No. 14-3067, 2015 BL 184918 (7th Cir. June 11, 2015)
The Seventh Circuit continues its pattern of telling district judges just to eyeball cases in the expectation that they’ll be good enough to get it right most of the time. Honestly, given how elaborate trademark defenses have gotten, I’m not sure this is the wrong thing to do, but it sure puts a premium on sharing common sense with federal judges.
Sorenson is the founder and CEO of Inhibitor Technology Corporation, which produces a line of rust-inhibiting products containing a substance called volatile corrosion inhibitor (VCI), sold under the incontestably registered term THE INHIBITOR. Sorensen also claims common law trademark rights in an orange-and-black crosshair.  Sorensen sold a variety of products containing VCI, and generally targeted his sales at firearm, fishing, and hunting enthusiasts, as well as members of the military.

WD-40 introduced a new product line, the WD-40 Specialist, and one of its products—WD-40 Specialist Long-Term Corrosion Inhibitor, which contains VCI and has a purpose similar to that of Sorensen’s products—contains on its packaging both the word “inhibitor” and an orange crosshair. (WD-40 registered a simple black-and-white crosshair design, which appeared differently on each product.)  WD-40 marketed its specialist products to tradesmen, industrial consumers, auto consumers, construction workers, and maintenance workers, with the greatest focus on the auto industry.  WD-40 denied previous knowledge of Sorenson’s mark, though it did consider forming a partnership with Sorenson’s former company and some documents indicated that someone at the ad agency had identified Sorenson’s company.

Sorensen sued. The court of appeals affirmed a grant of summary judgment in favor of WD-40.
The court found that WD-40’s use of “inhibitor” was descriptive fair use.  The district court reasoned that the word could not function as a source indicator because the Long-Term Corrosion Inhibitor bottle also displays the famous WD-40 shield, serving as the source indicator. The court of appeals disagreed, because products can contain more than one indicator of source.  Nor did WD-40’s omission of “the” matter, because, “[h]ad WD-40 called its product ‘Inhibitor’ and placed that word in large, bold letters on its can, we think it probable that a jury would find that to be trademark use, despite the lack of the word ‘the.’” Nor did the presence on the market of other products using the word “inhibitor” indicate lack of trademark use, because that just shows descriptiveness, and descriptive terms can be used as marks.  (One would think that widespread use would nonetheless offer some evidence of how to bet in any given case, not least because widespread use makes it harder for any given instance to acquire trademark meaning.)  Moreover, it didn’t matter that WD-40 used “inhibitor” on only one product, rather than every product in the line.  The converse wasn’t true: “Sorensen’s argument would be much stronger if ‘inhibitor’ appeared on all of the products in the Specialist line.” But a mark can be a mark for just one product in a larger line.
Nonetheless, the court of appeals agreed that WD-40 made non-trademark use of the term, because look at it (interjectionary complement because):
Compared to other features in the bottle’s design, the word “inhibitor” is much less prominent or noticeable. It is much smaller than the bright and eye-catching WD-40 shield. It is also smaller than the stylized and colored word “Specialist” and the colorful crosshair mark. Finally, the word “inhibitor”—which is written in relatively small, white type—is less attention-grabbing than even the word “Corrosion,” which is larger and colored in orange. Due to the word's small size, plain color, and non-privileged placement on the bottle, we find that “inhibitor” is not an “attention-getting symbol,” and does not function as a source indicator.
Although WD-40’s communications guide required that employees and ads use the full name of the product, “WD-40 Specialist Long-Term Corrosion Inhibitor,” that didn’t mean that each individual word in the name served as a mark.
There was no doubt that “inhibitor” was descriptive of WD-40’s product, as the multiple competing uses showed. Further, WD-40 used the word multiple times on its bottle in a manner that was clearly non-source identifying.  Even if “inhibitor” required some imagination, the product was a “corrosion inhibitor,” which required no imagination to understand.  This wasn’t inconsistent with Fortune Dynamic, Inc. v. Victoria's Secret, 618 F.3d 1025 , 1035 (9th Cir. 2010), which sent the question of whether the trademarked term DELICIOUS was being used in a descriptive sense to a jury.  There, “delicious” was used as a mark for women’s shoes (actually, that’s the plaintiff’s mark, not the defendant’s use, which was on shirts), and not for a food or beverage. If “Corrosion Inhibitor” appeared on a t-shirt, the court of appeals might’ve ruled differently.  (Though it shouldn’t have.  Suppose Sorenson distributes promotional goods such as T-shirts for his products, and so does WD-40.  The result in this case should be no different.)
Finally, no reasonable jury could find bad faith. There was evidence that WD-40 had knowledge of Sorenson’s product; even though there was no evidence that the marketing department, which decided on the name, had that knowledge, a jury could infer that someone with decision-making authority did know. But knowledge is insufficient to show bad faith—the plaintiff needed something more suggesting subjective bad faith. Failing to conduct an investigation can sometimes support an inference of bad faith.  But if WD-40 believed that it wasn’t using the word “inhibitor” as a mark, it had no reason to conduct a trademark search. Plus, a theory of failure to investigate is inconsistent with Sorenson’s theory of guilty knowledge.
Turning to the crosshair: the analysis shouldn’t zoom in on the crosshairs alone, but on the labeling as a whole.  Consumers looking at the entirety of the labels wouldn’t be confused as to source. “The WD-40 bottles are primarily black and silver, with a large yellow WD-40 shield and a bright yellow cap. The packaging of Sorensen's products, in contrast, is primarily orange, yellow-orange, and black.” Even the crosshairs were quite different: “WD-40’s silver and burnt orange crosshair, with silver symbols shaded to show depth, creates a different impression than Sorensen’s bright orange-and-black crosshair, which features two-dimensional symbols that are silhouettes.”  Their relative size and label placement were different—usually the crosshair appeared as the “O” in Sorenson’s “Inhibitor,” not as a free-standing mark near the bottom of the bottle, like on the Specialist products. “Simply put, the overall commercial impression of the two bottles is quite distinct.”
Further, the prominent display of WD-40’s own well-known marks was a strong indication of lack of likely confusion.  Sorenson first argued that this gave owners of strong marks carte blanche to infringe.  But trademark law “exists primarily to protect consumers, not only the holder of the trademark.”  And Sorenson could have brought a reverse confusion claim, but didn’t.  Sorenson argued that consumers would think the companies were co-branding, or that Sorenson had consented to the use.  But that theory makes more sense when the senior user’s mark is much stronger than the junior user’s, “lending credibility to the theory that the junior user was trying to feed off of the senior user's goodwill.”
The use of an especially strong house mark can “greatly lessen the likelihood of confusion,” but “it may not wholly eliminate the possibility that consumers will believe a product to be cross-branded.”  (Ahem.  The standard, of course, is not possibility but likelihood.)  The strength of the senior user’s mark relative to the junior user’s mark affects that possibility; the weakness of Sorenson’s crosshair mark made it unlikely that consumers would think the well-known WD-40 brand was cross-branding with Sorenson.  The other key consideration is the comparison between the senior mark and the image on the junior user’s product.  “If cross-branding were indeed occurring, the junior user would likely use an exact copy of the senior user’s mark, and probably the name of the senior user’s product as well.” Not so here. “If cross-branding were occurring, the junior user would seek to make it as clear as possible; it would not use a significantly different form of a seldom-used logo.”
Similarity of the products: two of the products were functionally identical, favoring Sorenson, and the court of appeals found that “consumers might very well expect Sorensen, as the producer of rust-preventive products, to expand his product line into the types of sprays included in the Specialist line,” even sprays that don’t contain VCI. The fact that Sorensen’s current products all contain VCI was “minimally relevant,” since WD-40’s own product line showed that companies might make both VCI-containing and VCI-free products.
However, the area and manner of concurrent use/channels of commerce/targeted consumers didn’t help Sorenson much.  There was no evidence that the parties’ products had ever been sold side by side, targeted the same consumers, advertised through the same channels, or shown at the same trade show in the same year.  A jury could make limited inferences in Sorenson’s favor, since both parties’ products were sold in one store (albeit in different sections, and Sorenson’s VCI oils and sprays—the most similar products—weren’t sold at that store). “And, though there is no evidence that WD-40 specifically markets to Sorensen’s target audience—hunters and fishermen—that is somewhat beside the point, as WD-40 effectively targets all consumers.” A jury could also find that WD-40 specifically targets members of the military by selling to companies that supply military commissaries.  Still, this only weakly supported Sorenson.
As for degree of care, the parties’ products were “quite inexpensive (under $12), and could even be characterized as impulse purchases.”  Though WD-40 argued that its customers sought out its famous brand, that didn’t matter to the relevant consumers—those who sought to buy Sorenson’s products or would consider them, and who were misled into buying a Specialist product.
Strength of the mark: Sorenson didn’t offer consumer surveys or testimony about consumer awareness of the crosshair mark, or sales data “showing that products bearing the mark are so widely sold that a jury could infer that many consumers are aware of the mark.” Sorenson’s biggest problem was inconsistent use of the mark, which makes a symbol less helpful as a source indicator and therefore weaker.  The crosshair had been in use since 1997, but “inconsistently—sometimes the crosshair has symbols in each quadrant, sometimes the quadrants are empty, and many times there is no crosshair at all, but rather a bull’s eye.” This factor aided WD-40. 
There was no evidence of actual confusion, and no evidence of a bad faith intent to pass off WD-40’s product as having come from Sorenson, even though a jury could find that WD-40 knew of the crosshair. There was no evidence that the design firm that first designed the WD-40 crosshair had any knowledge of Sorensen’s mark, and the presence of the WD-40 shield on the products suggested a lack of bad faith.
The factors that favored Sorenson were not enough to create a material dispute of fact on the ultimate question of likely confusion.  The three most important factors—similarity of the marks, bad faith intent, and actual confusion—pointed “decisively” in favor of WD-40, especially dissimilarity of the marks. The “clear weakness” of Sorenson’s marks was also “central” to the court’s conclusion.

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