Sunday, November 02, 2008

False marking/trademark case continues

Vantage Trailers, Inc. v. Beall Corp., 2008 WL 4746288 (S.D. Tex.)

Beall has a trademark registration for the design of a bottom-dumping truck trailer with conical, tapered front and back ends, sold as the Beall Bullet. Vantage makes a trailer with a similar look. A previous lawsuit was dismissed for lack of a live case or controversy, because Vantage didn’t have a finalized trailer design; that’s on appeal, but Vantage filed this lawsuit too.

Beall moved to dismiss the complaint. First, Beall argued that Vantage’s patent false marking claim should be dismissed. Vantage alleged that Beall knowingly and falsely advertised on its website that the Beall Bullet was “patented,” intending to deceive the public. It claimed that each hit on the website constituted an instance of false marking subject to a $500 penalty. Beall’s objection was to the damages calculation; regardless of the proper method of counting instances of false marking, Vantage properly stated a claim for at least one offense of false marking.

Beall also argued that there was still no case or controversy because Vantage hadn’t fixed on a design when Beall sent it a C&D or when Vantage initially sued. After MedImmune, Inc. v. Genetech, Inc., 127 S.Ct. 764, 771 (2007), however, a declaratory judgment plaintiff need not have reasonably anticipated litigation to establish an actual controversy. Instead, a court is to examine the totality of the circumstances at the time the suit is filed. When this suit was filed, Vantage had “designed, sold, and advertised” an allegedly infringing trailer. It was in the process of making five additional trailers for its first customer, and its design allegedly facially resembles the design shown in Beall’s registration. This, along with allegations of direct competition, make the dispute sufficiently definite and concrete to support jurisdiction.

The court also rejected the argument that the trademark dispute should be resolved by the TTAB under the doctrine of primary jurisdiction. There was no TTAB proceeding pending and no reason to defer to the TTAB when additional claims for injunctive relief were present that couldn’t be resolved by that body.

Further, the court rejected the argument that Vantage couldn’t use functionality to invalidate Beall’s mark because the mark became incontestable before functionality was added to the grounds for cancellation of an incontestable mark. Because Vantage sought only prospective relief—the invalidation of the mark—there was no retroactivity issue.

Finally, the court held that Vantage had adequately pled its claim for fraudulent procurement of trademark. The trademark examiner initially rejected the application on functionality grounds. Beall allegedly represented that equally efficient alternative designs were available for the same cost, which Vantage alleged was an intentional misrepresentation because it contradicted Beall’s ads touting its design’s lower cost and superior features. This was sufficiently specific to satisfy the heightened pleading requirements for fraud under Rule 9(b).

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