Wednesday, July 02, 2014

Court applies Lexmark to TM case, in the alternative

Ahmed v., 2014 WL 2925292, Nos. 13–13117, 14–10026 (D. Mass. June 27, 2014)
This isn’t a difficult case, but it represents the first move towards applying Lexmark to §43(a) in its entirety.  Only time will tell whether this will be an eBay v. MercExchange-like change in the way trademark litigation works, or a diversion.
Ahmed sued Hosting, Facebook, and some John Does for infringement of the marks “The News International,” “the Jang,” and “Geo.” (These marks apparently are in use in Pakistan by a company known as Jang.)  Hosting and Facebook moved to dismiss.  Ahmed claimed an interest due to trademark applications filed by a company called Axact, but alleged no connection between Axact and himself.  When Jang learned of Axact’s applications, Jang sued it in Pakistan, and the High Court of Sindh at Karachi issued an injunction ordering Axact to refrain from trying to undermine Jang’s trademarks; Jank also filed an application in the US for “The News International.”  Axact assigned its applications to Ahmed; the PTO refused registration.
Obviously there was no standing to sue for infringement of a registered mark. What about §43(a)?  The First Circuit has used a “reasonable interest” test, looking for some degree of commercial injury to the plaintiff.  Ahmed lacked standing under this test.  He claimed damages to his business and goodwill, but failed to allege “specific facts that establish any causal link between Hosting’s use of the mark and the alleged injury.”  He didn’t identify his type of business or his products and services, or how they were adversely affected by defendants’ use.  Nor did he allege his own use in commerce; the rejected trademark application wasn’t enough to establish a protectable interest.
In the notable part of the holding, the court commented that the Supreme Court “may have supplanted the reasonable interest test” in Lexmark.  Though the court acknowledged that the Supreme Court was interpreting §43(a), it found it “unclear” whether the holding extended to §43(a)(1)(A) false association claims.  Fortunately, it didn’t matter, since Ahmed failed to show standing under the Lexmark test too.  (This reminds me of early cases applying eBay only in the alternative.)  Lexmark requires “a two-step process: a zone of interests inquiry and a proximate cause analysis.”  The zone of interests covers those who “allege an injury to a commercial interest in reputation or sales.” Proximate cause requires “economic or reputational injury” that isn’t “‘too remote’ from the defendant’s unlawful conduct.”
Here, Ahmed’s allegation of damage to his business might “hint at” a commercial interest, but there weren’t enough facts alleged that, if true, would substantiate his assertions. A mere legal conclusion of injury wasn’t enough in the absence of facts establishing either a commercial interest in the mark or a commercial injury caused by the alleged infringement. (And here is where Lexmark might have some bite, depending on how it’s read: other plaintiffs may also have difficulty telling the story of how confusion harms them, even if it occurs.) 

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