Cedar Valley Exteriors, Inc. v. Professional Exteriors,
Inc., No. 13-CV-2537 (D. Minn. Jun. 29, 2016)
See DuetsBlog’s
2012 entry on what appears to be a related case, in which the plaintiff roofing/repair
company sued a different competitor for using orange on its signs. (Related DuetsBlog entry on pervasive
use of orange in the home improvement industry, making the PTO’s actions
here even more troubling and plaintiff’s lawsuits seem even more
anticompetitive.)
One might call this case a poster child for the problem of too-broad
trademark registrations. The court begin
by deeming Cedar Valley’s service marks
highly unusual in two respects:
First, both marks are for a color— specifically, the color orange. And second,
both marks are extraordinarily broad. Together, the two marks appear to cover
any use of any shade of orange in any article of clothing or any form of
advertisement related to any aspect of the construction industry. Thus, for
example, the use of orange safety vests on a construction site would appear to
be encompassed by the registered marks—something that would no doubt come as a
surprise to thousands of contractors.
How Cedar Valley was able to
persuade the United States Patent and Trademark Office (“PTO”) to register such
marks is a mystery, particularly given that Cedar Valley has used only
particular shades of orange; used it only on shirts, lawn signs, and a few
other advertising items; and used it only in connection with a narrow slice of
the construction industry. But the PTO did register the marks [and they became
incontestable], and, as a result, this lawsuit raises a number of difficult
legal and factual issues.
The court ultimately amends Cedar Valley’s registration and
finds that there are outstanding questions of fact on likely confusion.
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| Cedar Valley logo |
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| Flashy Cedar Valley logo |
The plaintiff is primarily in the residential repair
business, which it gets through “door-knocking campaigns, use of yard signs,
[and] referrals and other advertising,” as well as through preferential
relationships with insurance companies and their intermediaries. Professional Exteriors does residential “remodel[ing]
[and] restoration,” including similar services. Sixty to seventy percent of its work consists
of “insurance restoration” of storm-damaged homes.
“Cedar Valley uses orange on the signs that it puts on
customers’ lawns and the shirts that its employees wear, as well as on flyers,
door hangers, and other advertising materials.” Cedar Valley picked orange
“[b]ecause it stands out more than other colors,” and because orange was “the most
obnoxious, loud” color it could put on signs and shirts, according to its
witness.
In 2008, Cedar Valley registered two service marks involving
the color orange:
Registration No. 3,429,642 (“the
’642 mark”) is for “the color orange as applied to yard signs and other
advertising materials used in advertising the services.” The drawing depicts a
solid-orange yard sign outlined by dotted lines. Registration No. 3,429,643
(“the ‘643 mark”) is for “the color orange as applied to clothing worn during
the performance of the services.” The drawing depicts a solid- orange
short-sleeved polo shirt outlined by dotted lines.
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| Shirt registration |
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| Sign specimen |
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| Shirt specimen |
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| Sign registration |
The description of the services includes “building
construction and repair; building inspection; construction and renovation of
buildings; construction and repair of buildings; general construction
contracting; installing siding; roofing contracting; roofing installation;
roofing repair; [and] roofing services . . . .”
RT here: Examining TSDR, I found that the shirt mark had
initially been nonfinally rejected for failure to function as a mark, with the
2(f) statement of five years of continuous use deemed insufficient because the
nature of the claimed matter—the color of a shirt worn by an employee—wasn’t
such that consumers would ordinarily perceive it as a mark. The same was true for orange for signs.
In its response to the examining attorney, Cedar Valley
argued that color was in fact registrable.
It also argued that its sales of over $12 million/year and its pervasive
use of orange in marketing qualified orange as a trademark for its services,
since its 250 sales reps each spoke in person to 5,000 potential customers per
year (which works out to roughly 20/day in a 5-day week, yikes) and thus 1.25
million people were exposed to their orange clothing each year, not to mention
anyone who saw their orange-clad workers on 1,500 roofing etc. jobs per year.
Cedar Valley submitted employee declarations that they “often
receive telephone calls from prospective and actual customers who often times
invariably ask for them to confirm if Applicant is the roofing/siding company
with the ‘orange signs’, ‘orange flyers’ and/or ‘orange shirts’.” (Often times invariably? The declarations themselves say “sometimes,”
which is at least plausible; there are three employee declarations repeating
this statement, though only one considers it common—her estimate is 30 calls/week;
the other two employees only answered the phone when the receptionist was
unavailable.) Plus, Cedar Valley
contended that there was evidence of actual confusion in that “a member of the
purchasing public recently mistook services of a competitor wearing orange
shirts as the services as provided by the Applicant.” (In the declaration, the declarant states
that the relevant customer signed a contract with a Cedar Valley sales rep, who unbeknownst to Cedar Valley gave her
contact information to a competitor.
When the competitor showed up to perform the work, it’s not particularly
surprising that she thought it was Cedar Valley; I can’t imagine the absence of
orange shirts would have changed anything.)
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| "We're the guys with the orange signs!" |
The examining attorney accepted these claims; I saw no
further correspondence. The only “look
for” advertising in the TSDR record was “we’re the guys with the orange signs!”
on the second page of an orange flyer.
It’s hard to expect examiners to know how pervasive a color is in any
given industry, but I still think this has facts consistent with rejections
upheld by the TTAB, given the high burden of proof that color claimants should
face.
Anyhow, back to the present dispute: Professional Exteriors
began in 2010, and has used orange on its advertising and promotional
materials, including yard signs and shirts. After a 2011 C&D was ignored, Cedar Valley
sent another in 2013 adding a demand for $25,000 in damages, then sued.
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| Professional Exteriors logo |
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| Another Professional Exteriors logo |
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| Photo with Professional Exteriors shirt |
Mark Lemley
& Mark McKenna will be glad to hear how the court approached the issue:
Before the Court can assess the
merits of Cedar Valley’s infringement claims and Professional Exteriors’
defenses, the Court must first determine the scope of the registered marks.
That is, before the Court can answer such questions as “how strong are the
marks?” and “how similar are Professional Exteriors’ marks to Cedar Valley’s
marks?,” the Court must first determine the precise scope of Cedar Valley’s
registered marks.
Functionality limits the scope of color marks. In particular, functionality bars
registration of orange for earplugs, because “orange is particularly visible
and facilitates safety checks.” So too
with payphones, which if orange are easier to find in an emergency. And
likewise with safety in the construction industry. Given the breadth of the written descriptions
of the marks, they encompassed functional use of orange in “clothing” and “advertising
materials” across the entire construction industry. Read literally, the registrations would cover
construction workers’ safety vests and some of the orange signs at construction
sites, which could be deemed advertising materials. However, the court wasn’t sure if the record
showed that orange serves the same safety function in residential repairs as it
did on large construction sites. (In my
neighborhood, they use orange cones for small repairs all the time—it’s an
easily understood warning sign.) Still,
orange was functional in most of the construction industry. There was also a question about the
eye-catching use of orange, that is, aesthetic functionality, but the record
was contested at this point.
Given the record, Cedar Valley’s registrations had to be
amended to be limited to “installing siding; roofing contracting; roofing
installation; roofing repair; [and] roofing services.”
Separately, the marks as described were also illegitimate
phantom marks. “[U]nder the Lanham Act and the rules promulgated thereunder, a
trademark application may only seek to register a single mark.” A mark that might change is not a single
mark. “The prohibition against phantom
marks serves the primary purpose of federal trademark registration, which is
providing notice to the public of the registrant’s ownership of the mark,” and
allows people to search the register to figure out what’s there.
Color marks are subject to the phantom mark rule, and Cedar
Valley’s marks conflicted with it on their face. However, the TMEP allows an exception for
color service marks when an applicant “seeks to register a single color as a
service mark used on a variety of items not viewed simultaneously by purchasers.”
They can represent the mark as “a
solid-colored square with a dotted peripheral outline . . . .” TMEP §
1202.05(d)(ii). The idea is that a color service mark can be applied to a
variety of objects (“e.g., stationery, uniforms, pens, signs, shuttle buses,
store awning, and walls of the store”), but still create for the consumer a
unified “distinct commercial impression.”
(The court pointed out that Home Depot has its own registration for
orange for advertising for installation services, “including, notably, the
installation of ‘roofing’ and ‘seamless gutters.’”)
The court’s expert expressed doubt about the validity of
this exception; the TMEP notes that no court has blessed it, and, as a policy
matter, it’s not clear that such a registration provides adequate notice. The court didn’t need to decide the matter,
though, because Cedar Valley hadn’t registered a solid-colored square with a
dotted peripheral outline. The drawings
depicted a lawn sign and a polo shirt.
And, “[i]n the case of a discrepancy between the drawing and the written
description of a color mark, the drawing controls the text”:
To hold otherwise would be to
ignore the public-notice function of trademark law. Cedar Valley’s marks cannot
be allowed to encompass any type of advertising materials and any article of
clothing, because the drawings in the registrations depict only a yard sign and
a polo shirt, and thus indicate to anybody who finds Cedar Valley’s
registrations in a trademark search that the marks are limited to those
particular objects. The drawings do not give anyone wanting to establish their
own service marks adequate notice that Cedar Valley’s marks encompass more than
lawn signs and polo shirts.
The drawings also determined the particular covered shade of
orange, though the court noted that infringement by different shades of orange
would still be possible. And the
drawings determined the particular manner in which orange was claimed: “the
entire surface” of short-sleeved polo shirts and yard signs, not orange stripes
or orange trim or orange lettering against a non-orange background—though again,
that didn’t exclude infringement claims against such uses. (Though, especially with functionality
concerns, I think the registration’s limits should weigh very heavily against a
finding of infringement in such cases.)
The court also held that it had power to rectify the
register even as to incontestable marks, which the parties didn’t contest. And since the changes here aren’t based on
lack of distinctiveness, that seems correct.
On to likely confusion, where there was conflicting evidence
on the strength of the marks and the degree of competition between the parties; there was no evidence of
bad intent or actual confusion; and the consumers were likely to pay a lot of
attention. There were also factual
disputes about the functionality of orange in connection with roofing and
siding. Finally, though Cedar Valley
emphasized the incontestability of its marks, Professional Exteriors could
still argue that the marks were weak because they lacked distinctiveness or
secondary meaning.
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