Tuesday, January 26, 2010

Leaving a billboard in place isn't actionable use of a mark

Howard Johnson International, Inc. v. Vraj Brig, LLC, 2010 WL 215381 (D.N.J.)

HJI licenses franchisees to use Howard Johnson marks. Defendant Vraj Brig was one such licensee. A nonparty leased the hotel facility from defendant Peter Tucci and contracted with Vraj Brig to manage the hotel, on a fifteen-year contract signed mid-2001. HJI was allowed to terminate the license if Vraj Brig discontinued operating the hotel or lost possession. In the event of termination, Vraj Brig was to cease using all Howard Johnson marks.

In mid-2006, Tucci took legal action against the nonparty lessee, and then took physical possession. At the time, the property was nonfunctioning, with extensive evident vandalism, theft and destruction. Vraj Brig then ceased operating it. When HJI learned of this, it terminated the license agreement, leaving Vraj Brig owing over $66,000 in recurring fees. Tucci and HJI began ultimately unsuccessful negotiations for a new license.

Key in this case was a billboard at the facility, visible from a nearby highway, using the name “Howard Johnson.” The parties disputed whether Tucci had refused to allow its removal when representatives from Vraj Brig and HJI sought to remove it.

HJI sued and Tucci brought a bunch of counterclaims. Of interest here is HJI’s Lanham Act claim.

Did Tucci use a mark to identify goods or services? Tucci argued that, since he hasn’t operated a lodging facility on the property in question since retaking possession, he hasn’t used the mark, and his failure to remove the Howard Johnson sign falls outside the scope of the Lanham Act.

HJI argued that the Lanham Act isn’t limited to profit-seeking activity, citing United We Stand America, Inc. v. United We Stand America New York, 128 F.3d 86, 90-92 (2d Cir. 1997), which applied the Act to political groups. Even assuming that United We Stand applied, however, it dealt with defendants in the business of providing identifiable services, albeit without charge. Tucci, however, isn’t alleged to have provided any goods or services whatsoever at the facility with the sign.

The court concluded that the Lanham Act shouldn’t apply when a defendant “displays” a protected mark, but doesn’t use the mark in the offer or provision of any goods or services. In support, the court cited Holiday Inns, Inc. v. 800 Reservation, Inc., 86 F.3d 619 (6th Cir. 1996), involving the use of a telephone number that corresponded to 1-800-H0LIDAY—taking advantage of preexisting confusion, but not making any effort to create confusion or publicize the alphanumeric combination. Generalization from this and similar cases: “The mere fact that confusion exists with respect to the affiliation between a protected mark and a defendant’s goods or services is insufficient grounds to hold the defendant liable. Rather, the defendant must take some affirmative action to create or enhance the confusion in order to violate the Lanham Act.”

Likewise, the caselaw supports the proposition that infringing use is only illegal if done “in connection with the defendant’s offer or provision of goods or services.” Thus, merely criticizing the trademark holder’s goods or services can’t violate the Lanham Act, see Bosley Medical Institute, Inc. v. Kremer, 403 F.3d 672, 677-680 (9th Cir. 2005). (There's some language here about intent to free ride on goodwill being a requirment; that probably can't be read as broadly as it would seem on its face.) Trademark law protects only against mistaken purchasing decisions and not against confusion generally; United We Stand would extend this to cover the cost-free consumption of goods and services. (Note that this can’t be right, at least if information is a good or its provision a service; United We Stand should be read to be about fundraising, not providing goods and services, to allow it to make sense in this context.) Summing up: the Lanham Act only prohibits the “affirmative use” of a protected mark, and only when the use is in connection with the defendant’s offer or provision of goods or services.

Thus, HJI’s Lanham Act claims had to be dismissed. Even if Tucci prevented HJI from removing the billboard, that was only “passively allow[ing]” the preexisting billboard to remain standing. He never “used” the protected marks within the meaning of the Lanham Act. Even if he had, he never offered or provided any goods or services at the facility, so there’s no display “in connection with goods or services.”

HJI argued that people traveling on the highway might exit the freeway looking for a Howard Johnson and then experience frustration on their failure to find a Howard Johnson hotel, tarnishing the mark. Again, the Lanham Act requires use in connection with the defendant’s offer of goods or services, not in connection with the plaintiff’s. Otherwise, any speech critical of the trademark owner would qualify as trademark infringement. “Simply put, §§ 32(1) and 43(a) do not prohibit unauthorized use of a protected mark when the user is not trying to gain any advantage through confusion in offering its own goods or services.”

The court had little trouble rejecting the federal dilution claim for the same reasons—there was no “use” “in commerce.”

Tucci raised some counterclaims of relevance. The court refused to dismiss his trespass claims, because a trespass can be committed by the continued presence on the land of a thing when the party who placed it there loses its license, and there was a genuine dispute over whether he prevented the sign’s removal. He lost his conversion claim, however, because he never contended that he owned the billboard. On his unjust enrichment claim—for compensation for allowing HJI to maintain the sign on his property after he retook possession—HJI argued that its repeated requests for him to take down the sign meant that he couldn’t reasonably expect remuneration. Given the dispute over whether and to what extent HJI demanded Tucci remove the signs, and whether or not Tucci prevented HJI from removing the signs, summary judgment was unwarranted. He couldn’t maintain passing off or false advertising claims, because there had been no services offered at the facility at all relevant times.

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