Touting TM registration may be materially misleading

Basel Action Network v. International Association of Electronics Recyclers, No. C10-931RAJ (W.D. Wash. 2011)

Basel sued defendants, the Institute of Scrap Recycling Industries (“ISRI”) and International Association of Electronics Recyclers (“IAER”), over the term “certified electronics recycler,” which was entered on the Supplemental Register in 2003. The parties are nonprofits that certify entities that recycle electronic products. Basel uses the E-STEWARDS certification, registered in 2009. Defendants apparently typically use their mark in conjunction with the term R2/RIOS. Basel and defendants refer to the entities they certify as “certified electronics recyclers.”

Basel initially sought a declaratory judgment of noninfringement on the grounds that the term is generic, but the court found no Article III controversy because defendants have never threatened to enforce their purported rights against Basel. Basel also sought cancellation of the registration, but the court held that this claim couldn’t stand on its own without a valid independent cause of action for which cancellation is a remedy. (How would this apply to a claim for cancellation on grounds of disparagement?)

Basel filed an amended complaint including a claim for false designation of origin and false advertising under §43(a)(1)(B). The parties compete; defendants (now operating as one entity) even offer a “Recycling Industry Operating Standard Scorecard” comparing their certifications. The scorecard concludes by claiming that ISRI/IAER is the only certifier who can “[p]rovide[] the trademarked designation of CERTIFIED ELECTRONICS RECYCLER®.”

Basel plausibly alleged genericness of “certified electronics recycler” as applied to a certification program for an electronics recycler, including allegations that it, other organizations that certify electronics recyclers, electronics recyclers themselves, and the media use the term “certified electronics recycler” to refer generally to an electronics recycler that is certified. The only difference here from a standard genericness claim is that this is a certification mark, but a certification term can be generic.

False designation of origin: Basel alleged that consumers confused its certification program with defendants’. Basel and ISRI were scheduled to make presentations at a September 2010 conference, where ISRI’s presentation was called “How to become a Certified Electronics Recycler®” and Basel’s subsequent presentation on the same day was entitled “e-Stewards® Certification Workshop.” Basel alleged that several people contacted it believing that Basel would present the first session.

The court noted that, in most circumstances, no one can assert a confusion of origin claim based on a competitor’s use of a generic term. That’s what generic means. There has to be something more to bring an unfair competition claim. But Basel had alleged no more than defendants’ use of the generic term, and its specific example included identification of ISRI as the first presenter and Basel as the second. Defendants’ scorecard explicitly differentiated its “certified electronics recycler” certification from Basel’s E-Stewards certification, and defendants apparently use the phrase “Certified Electronics Recycler” in combination with the term R2/RIOS as a matter of practice.

Basel’s false advertising claim, however, survived. Though it might be literally true to say that only defendants can “[p]rovide[] the trademarked designation of “CERTIFIED ELECTRONICS RECYCLER®,” this might be misleading. If the term is generic, then the claim is true but incomplete, and the truth would be that the ® symbol didn’t mean anything. Defendants aren’t obligated to reveal the complete truth in ads, but they are obligated not to abbreviate the truth in a misleading way. “It is not plausible that Defendants chose to tout the registration of their certification to advertise that they hold a meaningless registration for a generic term.”

So, why do they advertise the registration?

It is plausible that Defendants intend to convey that the fact that they hold a PTO registration is significant in a way that matters to consumers. It is plausible, for example, that Defendants hope that the public will perceive their PTO registration as a favorable substantive judgment on their certification program. It is plausible that Defendants hope that the public will perceive that their use of the term “certified electronics recycler” is somehow “official” or government-sanctioned. It is plausible that Defendants hope that consumers will perceive a tangible benefit to them arising from the mere fact that Defendants hold a registration. It is plausible that Defendants seek to send these implicit messages because it is difficult to imagine another reason that Defendants would tout the mere fact that they hold a registration for a generic term as a reason for consumers to prefer their certification standard over Basel’s and others’.

Any of these messages would misrepresent the import of the registration and constitute false advertising. This also provided a basis for Basel’s cancellation request.