Nominative fair use on a motion to dismiss

Architectural Mailboxes, LLC v. Epoch Design, LLC, 2011 WL 1630809 (S.D. Cal.)

The parties compete to sell locking mailboxes. Plaintiff AM is the exclusive licensee of OASIS for metal mailboxes, and alleged that Epoch used the Oasis TM on its website to divert prospective customers, create a false impression of affiliation, and misrepresent the character and quality of Oasis goods. In addition, AM alleged that Epoch used an actual Oasis mailbox at a trade show, and also used an actual Oasis mailbox in its point of purchase videos and systems, making false and misleading statements about the Oasis. AM thus sued for trademark infringement, dilution, and unfair competition under the Lanham Act, intentional interference with prospective economic advantage, and common-law unfair competition.

Epoch argued nominative fair use. The court agreed based on the exhibits attached to the complaint. The excerpts from Epoch’s website clearly identified AM as the manufacturer of the Oasis mailbox, and Oasis as AM’s registered trademark. Every statement about the Oasis was negative, criticizing its lack of security. “Under these circumstances, it is unclear why Defendant would attempt to create an ‘affiliation, connection or sponsorship’ between itself and Plaintiff's products. On the contrary, Defendant is drawing a clear distinction between its products and those of Plaintiff.” Thus, AM failed to plead infringement.

AM argued that it also relied on Epoch’s use of AM’s trademark in Epoch’s metadata, but the complaint didn’t include any such allegations and the court didn’t decide the question of whether arguing initial interest confusion would be enough to state an infringement claim (which obviously should be in Epoch’s favor; if the metadata works, it is only to draw consumers to an explicit comparison, at the core of nominative fair use). Though other courts in the Ninth Circuit have declined to dismiss trademark claims based on nominative fair use at the pleading stage, the court of appeals has upheld a dismissal based on descriptive fair use, indicating that courts may resolve these issues at the pleading stage.

Likewise, AM could not plead trademark dilution. Setting aside the laughable claim of fame, there’s an explicit exception for comparative advertising and another for criticism. The facts set out in the complaint and in the exhibits reflected that Epoch used AM’s mark in this way.

As for false advertising, the first question was whether Rule 9(b) applied. The Ninth Circuit hasn’t decided the issue, but has applied 9(b) to other types of false advertising claims under California law, and the court agreed that this should be extended to Lanham Act false advertising claims. Epoch argued that AM failed to identify the “what” and the “how,” but the court diagreed with respect to various specific statements involving the Oasis Jr. mailbox’s alleged security inadequacies. For “how,” it was sufficient for AM to allege that the statements were false and misleading as applied to AM’s products, which allegedly provide secure locking.

The intentional interference claim was subject to dismissal because AM pled only diversion of potential customers. While AM might have a speculative expectation of a relationship with potential customers, that’s insufficient to state a claim.