Friday, November 02, 2007

Candyland everybody wants

Haritatos v. Hasbro, Inc., 2007 WL 3124626 (N.D.N.Y.)

Plaintiff makes and sells candy out of his home in Rome, New York. In 1919, three men developed “Turkey Bones” candy, shortly thereafter renamed “Turkey Joints.” In 1921, one of those men, along with plaintiff’s uncle (and namesake) Spero Haritatos, opened the Candyland restaurant in Rome, and sold “Turkey Joints” there. In 1972, Candyland closed, and plaintiff’s father took over making Turkey Joints, continuing to sell them under the Candyland name.
In 1983, plaintiff took over the business and registered “Original Candyland Candy Turkey Joints” as a mark. In 1992, plaintiff filed an application to register “Candyland” for his goods; the mark was registered in 1996. (And I’d love to get the story there.) The mark is now incontestable.

Hasbro, of course, owns the Candy Land board game and accompanying registration. In 2001, Hasbro licensed the mark to Toys ‘R Us (TRU) for candy goods sections in its toy stores, and TRU opened a Candy Land section in its Times Square store, which remained open until 2005. In 2002, Hasbro negotiated with plaintiff for rights in plaintiff’s mark, but the negotiations failed.

Hasbro argued that Candyland was generic. Here Hasbro had an ally in the classic Abercrombie & Fitch case, which is remembered more for its classification spectrum than its facts. But part of those facts involved holding “safari” generic for certain clothing items, and “safariland” generic for news bulletins about safari expeditions. Thus, Hasbro argued, Candyland is generic as a matter of law: it simply appends the suffix “land” to the generic term for a type of goods and uses the combined term as a name for a store that sells that type of goods.

The court ruled that Abercrombie & Fitch does not hold that such uses are, as a matter of law, generic. Moreover, plaintiff was seeking to recover for infringement of his mark for candy, not for candy retail services. My reaction was similar: Hasbro’s argument makes TRU’s use generic, thus perhaps entitling it to the descriptive fair use defense, or some other defense analogous to that recognized in the Third Circuit’s “chocolate fudge soda” decision. But I can’t see that it invalidates plaintiff’s mark as such. Still, if a term is generic for a particular use, then even showing likely success on the confusion factors shouldn’t entitle a trademark owner to preclude the use of that generic term – that’s what it means to say that generic terms can’t be made subject to ownership, even ownership by someone who has generated secondary meaning for the term or has other rights in it, as Apple has for computers. (The goods/services distinction, however, might not hold up. If a term is generic for services, it seems to me that the service provider should also be allowed to attach the term to goods sold through the services. But I could be talked out of that.)

Anyway, at this point, Hasbro hadn’t submitted enough evidence to meet its burden to show genericism, despite evidence of third-party use by other candy businesses.

Likewise, the Polaroid factors remained largely contested, despite the absence of any evidence of confusion. The court also nodded towards the Third Circuit’s revision of the multifactor test for assessing reverse confusion, A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 234 (3d Cir. 2000). The conceptual and commercial strength of plaintiff’s mark is unclear, and Hasbro’s argument about its own mark’s strength speaks only to reverse confusion. (Okay, but it’s the board game, not the store area, that is famous, and properly analyzed plaintiff only gets to challenge the store area. I bet that there is reverse confusion because of the game, but that bell was rung a long time ago.) Plaintiff also has some evidence of bad faith because Hasbro negotiated with him but continued to license the mark even after negotiations failed.

However, since plaintiff admitted he couldn’t show actual confusion, he wasn’t entitled to money damages on that basis. If he could show willful deceptiveness, he could recover damages and/or defendants’ profits.

Willful infringement and willful deceptiveness are not the same thing. The latter requires a showing that the defendant intended to confuse or deceive consumers into believing that the plaintiff was the source of the defendant’s goods (or vice versa in a reverse confusion case). I’m not sure reverse confusion should ever count as willful deceptiveness, since it seems to lack much of the usual consumer harm; also, it’s hard to imagine why someone would intend to cause consumers to think that someone else’s product was theirs – as opposed to being indifferent to that possibility, or misjudging it – whereas the motivations for standard passing off are much easier to imagine. And indeed, plaintiff had no evidence that defendants “willfully sought to convince consumers that they were the source of plaintiff's candy goods.” So, though he could possibly recover costs and attorney’s fees, plaintiff was barred from recovering damages or an accounting of defendants’ profits.

Plaintiff’s state law consumer protection claims were dismissed because he couldn’t show direct harm to consumers, as opposed to simple confusion caused by infringement.

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