Sunday, October 18, 2009

Special pleading: Iqbal and trademark

Found this interesting case while working on a comment for Mark McKenna’s forthcoming piece in the Iowa Law Review:

Hensley Manufacturing v. ProPride, Inc., 579 F.3d 603 (6th Cir. 2009)

Hensley sued ProPride for using the name and reputation of Jim Hensley, whose business Hensley had bought, in advertising its trailer hitches. ProPride ads featured Jim Hensley’s name and evoked his reputation as a designer, and also had a small disclaimer of past affiliation with Hensley Manufacturing. The district court dismissed the complaint as fair use as a matter of law. The court of appeals applied Iqbal and affirmed on the ground that the complaint failed to sufficiently allege use of a mark in a way that was likely to cause confusion as to source. Examining the ads at issue, as allowed on a motion to dismiss, the court concluded that ProPride used a separate, dissimilar mark for its products, and, although Hensley alleged confusion as to origin and sponsorship, the court found this a merely “conclusory and ‘formulaic recitation’” of the elements of an infringement claim. ProPride's use was not the type of use as a mark that can cause confusion. The court also agreed that ProPride had conclusively established that it had made a descriptive fair use of Jim Hensley’s name as a matter of law, rejecting ProPride’s argument that judgment on the pleadings was inappropriate in a trademark case. While “facts may exist” that showed consumer confusion, “mere speculation” was insufficient, and Hensley needed to allege those facts; absent them, Hensley failed to state a claim that was plausible on its face.

Iqbal fits into a pro-business trend at the Court, in the sense that most businesses think it’s in their interest to make it harder to sue. But this has distributional effects even among businesses, some of whom at least occasionally want to be plaintiffs. Thus, it will be very interesting to see how Iqbal plays out in Lanham Act law.


Sean Woodruff said...

Hensley Mfg. never bought any businesses from Jim Hensley as you have stated in this post.

RT said...

Woods: According to the opinion, the parties disagreed about how to characterize the earlier relationship; to decide the appeal, the court accepted what it thought was the most favorable characterization for the plaintiff. ("Hensley Manufacturing alleges that on February 22, 1994, it purchased the trailer hitch business of Jim Hensley-an inventor and designer of trailer hitches-as a going concern.") In general, I stick with what is alleged or found, because even if that's wrong, it's what turns into the governing law for the next case.