I suspect that concededly bad behavior in other areas influences this
latest iteration of nominative fair use, which, as scholars have cautioned, can
easily be turned from bright-line, easily resolved defense to full-scale
confusion inquiry all over again, thus preventing summary judgment.
L&A makes aftermarket all-terrain vehicle (ATV) parts,
particularly starter clutches. L&A
was started by plaintiff Wesley Allford and Monty Lightner. When the partnership falered, Alford bought
Lightner’s 50% share of L&A, though Lightner wasn’t barred from using the
design of the starter clutch developed while he was with L&A. Lightner started his own company, L&L
eXtreme, to sell competing starter clutches.
Defendant Xtreme sells aftermarket ATV parts using a
Connecticut store and several websites.
Defendants Andrew & Natalie Clunan operate Xtreme. In 2004, Xtreme began selling clutches made
by Lightner. (The L&A Designs mark
was used beginning in 2003, registered in 2009.)
L&A challenged three websites, raptorstarterclutch.com,
onewayraptor.com, and ladesigns.com. The
Raptor sites use the phrase, “From the designers of the L&A Designs starter
clutch, this is the same dependable product built to endure Xtreme riding
conditions.” The L&A Design mark was also used multiple times as a metatag
on the first site. The last site was set
up to receive traffic from ladesignsllc.org, which didn’t have content of its
own. The L&A design mark was also
used in metatags on ladesigns.com, with product photos marked “www.LADesigns.com
Copyright 2006.” Also, defendants used
the mark to sell L&L eXtreme clutches on eBay, labeled as L&A Designs
starter clutches.
Xtreme admitted that the third site violated the Lanham
Act.
The court granted defendants’ motion for judgment on the
pleadings on plaintiffs’ claim for violation of the Oregon Unfair Trade
Practice Act, which the court held protected only consumers, not
competitors. Prior cases allowing
competitor suits to proceed hadn’t specifically addressed standing challenges.
Defendants moved for summary judgment limited to the “from
the designers” phrase. This should be
easy, since L&A didn’t contest that the non-L&A clutches were in fact
“from the designers,” but the court makes it hard.
Post-Tabari, Sleekcraft doesn’t apply if a defendant
uses the mark to refer to the trademarked good itself. If that threshold condition is met, the
plaintiff has the burden of showing likely confusion under the nominative fair
use test. Though L&A argued that
defendants were using the mark to refer to defendants’
product, that was a mistake: there can be a reference to plaintiff’s product
even if the ultimate goal is to describe defendant’s product.
Then, L&A’s product wasn’t readily identifiable without
use of the mark, and defendants used no more than necessary (it’s a plain word
mark, and they used the word mark; they could have used no less). Unsurprisingly, factor three was where the
analysis faltered. The court framed the
issue as whether the use “suggests sponsorship or endorsement,” which of course
is confusion all over again, so what did we use a separate test for?
Defendants argued that the phrase, “From the designers of
the L&A Designs starter clutch, this is the same dependable product built
to endure Xtreme riding conditions” simply indicated the history of the product
design. Even though the court refused to
consider “the totality of Defendants’ conduct among the three websites,” the
court found the phrase “ambiguous enough” to suggest that the product was
produced by L&A. (What should
defendants have said to convey the truthful information that the product had
been designed by the L&A designers to the same design?) Thus, there was a genuine issue of material
fact on the “from the designers” phrase.
The remaining claims were about the use of L&A’s mark as
metatags (and personal liability for the individual defendants). The court first rejected, at least at this
stage, a nominative fair use argument, “particularly since the use of the mark
as a metatag is substantially different from using the mark in a phrase.” (Sigh.
Assuming counterfactually that metatags mattered, this would be a
perfectly good way to point people to a product that competed with L&A’s
mark.) Moreover, the court doubted that
“the threshold condition—whether the mark was used to refer to the trademarked
good—has been met.” Given the limited
argument, the court couldn’t make a nominative fair use determination.
Absent nominative fair use, we’re back with Sleekcraft. Confusion can be either source confusion or
initial interest confusion, and “[b]ecause the metatags are not visible to the consumer, initial interest confusion is more likely
here”—even though the court went on to cite Network
Automation for the point that Google doesn’t use metatags. A number of the factors favored L&A (as
one would expect when applying Sleekcraft
to a comparative use), though the court gave no weight to similarity of
marketing channels because everyone uses the internet. Eric Goldman’s going to love this ruling on
intent: “Defendant Natalie Clunan’s understanding of a metatag is important, as
she is the one who inserted the metatags on the websites. Ms. Clunan believed that search engines could
use metatags, among other things, to rank search results.” It was undisputed that
raptorstarterclutch.com was started before the owners of L&A split up, and
defendants argued that they sold L&A products from Lightner on the website,
making the use fair. I don’t understand how
this creates a “genuine issue of material fact” on intent, but apparently it
does, even though it sounds like Clunan put in metatags that she believed
accurately described what they had to sell.
L&A’s evidence of actual confusion was that an L&A
dealer testified that he received several phone calls from people asking about
differences in the competing products, and also received defendants’ starter
clutches in the mail requesting warranty service. Defendants objected to this as hearsay and
contested the witness’s credibility due to a prior conviction, but the court
didn’t care about that because the evidence didn’t explain how any confusion
would have been caused by the challenged use of metatags, so the court gave the
actual confusion factor no weight.
Defendants sold their products for $169 or $269, but the
court couldn’t make a determination about the degree of consumer care. Overall, there were genuine issues on a
number of Sleekcraft factors, so
L&A’s motion for summary judgment on the metatag use was denied.
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