Thursday, December 28, 2006

Court shoots down Crossbow dilution claim

Nautilus Group, Inc. v. Icon Health and Fitness (W.D. Wash. Dec. 21, 2006), courtesy of the Seattle TM Lawyer.

This latest round in a litigation deathmatch encompassing patent, trademark, false advertising, and false patent marking claims concerned plaintiff’s argument that Icon’s CrossBow personal training machine diluted the Nautilus Bowflex. This opinion granted summary judgment to defendant on state and federal dilution claims, and I admit to some puzzlement: The court applied the FTDA’s original language and found that Nautilus must lose because it had no evidence of actual dilution. But, as the case was pending when the TDRA was enacted, that’s no longer the standard – likely dilution will suffice. (I doubt plaintiff’s overall burden is decisively lightened by the TDRA. Showing that “Bowflex” is famous among the general consuming public has got to be easier than showing actual dilution – but see below for another problem.) The parties filed cross-summary judgment motions in early 2006, before the TDRA, then asked the court to hold the motions in abeyance during settlement discussions. The parties inexplicably failed to file even letter briefs on the TDRA when the abeyance expired, a month after the TDRA became law.

The court applied other pre-TDRA precedent, which probably survives: the Ninth Circuit’s rule that dilution requires identity or near identity of marks. A reasonable fact finder could conclude that consumers would perceive the marks as essentially the same, but it couldn’t be determined on summary judgment. This is a pretty expansive view of "essentially the same," given the differences between the marks.

Also of note: the court ruled that Icon’s purchase of “Bowflex” as a search engine keyword was not use of an identical mark for dilution purposes, because Icon showed that it did so only as comparative advertising. The text of the sponsored ad displayed in response to a Bowflex search was “Compare CrossBow to Bowflex.”

The state dilution claim was dismissed for two reasons: First, while the litigation was pending, Icon had received a federal registration for Crossbow, triggering the old FTDA preemption provision. Second, the state statute was identical to the federal statute, and thus had the same actual dilution requirement. Both of these merit some thought.

As for the first, Nautilus argued that Icon had only received the registration by telling the PTO that it would not use the mark until the litigation was resolved. The court found that the plain language of the statute still required preemption, a result that makes sense to me – I can’t see how the PTO can override the terms of the statute, in which case it’s the registration that resolves this portion of the litigation. (Plaintiff’s confusion claims remain.) The TDRA extends the blocking effect of the federal registration to federal dilution claims, so the dilution claim will go away entirely regardless of the lower likelihood of dilution standard.

That makes the second issue a moot point in this case, but not in others: Does the state statute move in lockstep with the federal rule, such that it’s now (back to) a likelihood of dilution standard even in the absence of amendment by the state legislature? Or does the old actual dilution standard apply until the legislature acts? I can see arguments both ways. Given that the actual dilution standard was probably imputed to the state law because of the FTDA in the first place, it seems more reasonable to continue the lockstep, since it’s not as if the state legislature specified actual dilution in the first place.

Practice tip: Get a federal registration! It’s protection from state dilution laws, which require only distinctiveness and not fame from plaintiffs and thus cover a lot more marks than federal law does. And a pending state dilution claim isn’t grounds for opposition.

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