Valley Forge Military Academy Found. v. Valley Forge Old
Guard, Inc., No. 09–2373, 2014 WL 2476115 (E.D. Pa. Jun. 2, 2014)
Nominative fair use doesn’t have to work this badly, guys!
Valley Forge Military Academy Foundation operates the Valley
Forge Military Academy, a college-prep boarding school and a two-year college. The
Foundation and coplaintiff Valley Forge Military Academy and College Alumni
Association alleged that they own/license various federally registered and
common law marks, including “Valley Forge Military Academy,” “Valley Forge
Military Academy & College Alumni Association,” and “Valley Forge
Experience.” The Foundation also alleged goodwill in marks such as “Lieutenant
General Milton G. Baker Founder’s Society,” “Baker Founder’s Society,” and
“Founder’s Society.”
Valley Forge Old Guard is a nonprofit that has criticized
plaintiffs over the past few years. Plaintiffs alleged that Old Guard used
their marks to solicit funds from parents and alumni. Plaintiffs submitted two
letters from parents of students at the Academy allegedly showing actual
confusion about the distinction between the Old Guard and the Alumni
Association. The Alumni Association’s mission statement reads: “[T]o enhance
the quality of the ‘Valley Forge Experience’ and to contribute to the welfare
and future of the finest institution of its kind in the world through
leadership, recognition, contribution of resources, and the investment of
time.” The Old Guard’s mission statement reads: “[T]o enhance the nature of the
‘Valley Forge Experience’ by contributing to the welfare, viability, and future
of the Valley Forge Military Academy and College and its Corps of Cadets through
leadership, the investment of time, the proper management of tangible resources
....”
After a C&D, the Old Guard changed its name from the
Valley Forge Old Guard to the Founder’s Old Guard, and changed its website from
www.valleyforgeoldguard.org to www.foundersoldguard.org, adding a disclaimer
that disavowed any affiliation between the Old Guard and the Alumni
Association. Plaintiffs were unsatisfied, and contested the use of “Founder’s”
in the new name. They sued for trademark infringement, false advertising, and
dilution.
The court rejected defendants’ arguments that their speech
wasn’t commercial. The court first
quoted the general standard for commercial speech: basically, is it an ad for a
product/service by someone with an economic motivation for the speech—is it
speech proposing a commercial transaction? But it quickly pivoted to the more
expansive definition used in Lanham Act cases.
(Cf. Riley v. Nat’l Fed’n of the
Blind, finding fundraising speech for nonprofits to be noncommercial.)
Plaintiffs alleged that defendants competed with the Alumni
Association for fundraising and alumni services, and that they used plaintiffs’
marks in an ad referring to a specific service: the Old Guard emailed 4000
people promoting the Old Guard’s alumni services, with an economic
motivation—they solicited funds. This
plausibly alleged that the Old Guard proposed a commercial transaction, not
another type of speech. Thus, their “appropriation
of Plaintiffs’ marks for commercial purposes” was not protected by the First
Amendment.
Unsurprisingly, the court then rejected defendants’
arguments that they weren’t using plaintiffs’ marks to sell goods or
services. “Services” is a broad term
that has been applied to lots of defendants providing noncommercial
public/civic benefits. United We Stand
Am., Inc. v. United We Stand, Am. N.Y., Inc., 128 F.3d 86, 89 (2d Cir. 1997);
Villanova Univ. v. Villanova Alumni Educ. Found., Inc., 123 F. Supp. 2d 293,
306 (E.D.Pa. 2000) (applying Lanham Act to alumni organization and finding that
while “they are not commercial entities, the parties to this action are now in
competition in that they offer similar services and engage in similar
activities”); Am. Diabetes Ass’n, Inc. v. Nat. Diabetes Ass’n., 533 F. Supp.
16, 20 (E.D. Pa.1981) (applying Lanham Act to two organizations that solicit
donations to find services for diabetics). The services here were provided to
the Academy’s alumni.
Likely confusion: defendants argued that their messages
criticized plaintiffs, and thus couldn’t be confusing. But plaintiffs alleged that defendants were
their competitors in the market for fundraising and alumni association
services, and directed their activities towards the same customers (parents and
alumni). Note that this is clearly
nonresponsive! However, the court also
gave weight to plaintiffs’ allegation that “much of the information that
Defendants distribute is not, in fact, critical of Plaintiffs.” Nor could defendants’ website disclaimer be
ruled sufficient as a matter of law, given the other contents of the website,
such as the similar mission statement, “text of the Academy’s alma mater, and
pictures of the Academy’s campus.” Plus,
there was no showing that defendants used disclaimers in their other challenged
activities, such as email and press releases. And plaintiffs alleged incidents
of actual confusion.
Nominative fair use: defendants argued that they were only
using the marks to identify the plaintiffs as the subject of their
criticism. (I don’t see how this works
given the name of defendants’ organization.)
But “[t]he facts necessary to establish an affirmative defense generally
come from outside of the complaint.” The three-part nominative fair use showing
(the Third Circuit has its own special version) can only come after a plaintiff
shows likely confusion. Further factual
development was required.
Dilution: Defendants correctly pointed out that the marks
aren’t famous. But the court, despite Twiqbal, accepted
well-pleaded facts as true, and plaintiffs alleged that the marks “have been
continuously used since 1928, have continuously been used to advertise and
promote for Plaintiffs, have been used extensively by the press in connection
with Plaintiffs, and are known throughout the nation and world as identifying
Plaintiffs.” Comment: That’s not even close.
The court doesn’t mention whether plaintiffs pled that their marks were
“widely recognized among the general consuming public,” and to contend that they
are is entirely implausible. If a court accepts this weak tea at the pleading
stage, I sure hope it makes fees available at the summary judgment stage. Hope
springs eternal, I guess.
Defendants also argued that their uses were excepted from
dilution liability by § 1125(c)(3). But
plaintiffs alleged that defendants offered competing alumni services and that
there was source confusion, which defeated any exceptions. Note, however, that
comparative advertising will generally be by someone in competition with the
claimant and it is still categorically protected, and the statute also does not
require that the comparative advertising be nonconfusing.
Still, to the extent that defendants
were using the marks at issue as marks, dilution could apply in the counterfactual
world in which the marks were famous, unless it’s a Chewy Vuiton situation in which the reference actually increases
the connection between the plaintiff and the marks, which is plausible on these alleged facts (and isn't even inconsistent with the more persuasive confusion theory!).
False advertising: defendants argued that they weren’t
engaged in commercial advertising or promotion, but the court already found
that they were engaged in commercial speech.
(Note: the conventional test here has three more elements besides that,
though one—the requirement of commercial competition—might not properly survive
Lexmark.) Anyhow, §43(a)(1)(B) “is
broad enough to support, in the context of non-profit fundraising, a claim of
false and misleading statements about the services represented by a protected
mark.” Birthright v. Birthright, Inc., 827 F.Supp. 1114, 1138 (D.N.J.1993). There’s
liability for misrepresentations not only in commercial advertising but also in
the “promotion” of services, which plaintiffs alleged.
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