Falcon Stainless, Inc. v. Rino Companies, Inc., ---
Fed.Appx. ----, 2014 WL 1779246 (9th Cir. May 6, 2014)
After
the district court mostly denied a preliminary injunction, the parties proceeded to
trial on an implausible trademark claim; the jury found for the plaintiffs, but
the court granted judgment as a matter of law (and a new trial on false
advertising/trade libel claims), here affirmed.
Lesson: courts could be more aggressive in getting rid of overreaching
trademark claims earlier; it’d save everybody’s time and money. (This is the parties’ second trip to the Ninth
Circuit.)
The jury found that Rino had engaged in false designation of
origin and common law trademark infringement of Falcon’s SWC parts
numbers. Even assuming that parts
numbers can be a valid mark, there was no substantial evidence to support the
jury’s finding of likely confusion.
Though some of the Sleekcraft
factors favored Falcon, “the most critical ones do not.” The parties sold similar products, through
the same marketing channels, to the same customers. But some factors “are much more important
than others, and the relative importance of each individual factor will be
case-specific.”
Here, the problems were the weakness of Falcon’s mark, the
dissimilarities between Rino’s and Falcon’s parts numbers, and the lack of
evidence of actual confusion. Parts numbers are descriptive and thus inherently
weak. Falcon used “SWC” to indicate that
the parts were “stainless water connectors.”
(Isn’t that generic?) The following numbers indicated dimensions: the
SWC 10012 part is a stainless water connector 1 inch in diameter and 12 inches
in length. Falcon didn’t advertise its
parts numbers “in the trademark sense”—they’re only used on price lists and
Falcon’s website “to identify the different connectors that it sells.”
Plus, the parties’ parts numbers were dissimilar. Rino’s prefix SWF was different from Falcon’s
alternating use of the prefixes FF and SWC.
(Okay, how did this get accepted as a valid mark, even?) The use of “SW” in itself wasn’t likely to
cause confusion, both because the full prefixes were dissimilar and because the
parties sell to wholesale customers and experienced plumbing professionals.
Finally, there was no evidence of actual confusion:
Although Falcon and Rino received
purchase orders from wholesale customers that used the other party’s parts
numbers and name, the only customers who testified said that they were not
confused and that the orders were not misdirected. Falcon’s wholesale customers
testified that they used the numbers interchangeably for convenience and that
their customers ordered product by using the vendor name, not the parts number.
The fact that Falcon received some return requests for Rino products also does
not prove actual confusion. The jury heard testimony that these returns were a
result of wholesale customers not updating their computer systems to reflect
the fact that Rino’s owners were no longer Falcon sales representatives. The
lack of actual confusion in this case is “persuasive evidence that there is no
likelihood of confusion.”
Likewise, JMOL on claims related to Falcon’s “diamond F”
product stamp was affirmed. The court of appeals agreed that the stamps weren’t
similar. Falcon’s F was surrounded by a
flattened diamond shape with sides of different lengthst, while Rino’s S was
surrounded by a rhombus. “‘Where the two marks are entirely dissimilar, there
is no likelihood of confusion.’ [Brookfield.]
These marks do not look alike at all.” (At
least one district court has found this statement from Brookfield to be dicta. Its
application here is good to see.) Also
there was no evidence of confusion because of the product stamps. One GM of a plumbing company testified that
his company was confused about who produced some leaking connectors they
installed, but he didn’t testify that the confusion resulted from the stamps. “There was no evidence that could lead a
reasonable juror to conclude that Rino’s use of its visually dissimilar product
stamp was ‘likely to confuse an appreciable number of people as to the source
of the product.’” This overwhelmed the
facts that the parties sold similar products through the same marketing
channels and that Falcon’s mark was arbitrary (all things which would be true
no matter which competitor Falcon sued).
Moreover, the court of appeals affirmed the grant of JMOL on
Falcon’s claim for intentional interference with prospective economic
advantage. Falcon argued that Rino advertised that its SWF 118 connector was
certified under the Uniform Plumbing Code and complied with industry standards even
after it was determined to be noncompliant and decertified. But there was no evidence that this conduct disrupted
Falcon’s business relationships or proximately caused economic harm to Falcon. Falcon’s
evidence came from two wholesale customers, but neither testified that Rino’s
ads influenced their purchasing decisions. Instead, they testified that they
purchased products based on price and that they stopped buying from Falcon for
this reason. They did say that they would not purchase uncertified products. But
there was no evidence that they purchased the SWF 118 connector while it was
decertified or, if they did, that they would have bought from Falcon had they
known that it was decertified. This wasn’t substantial evidence that Rino’s
conduct disrupted Falcon’s business relationships and proximately caused
economic harm to Falcon.
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