Monday, October 24, 2016

Third party lacked standing to challenge allegedly misleading use of abandoned mark

578539 B.C., Ltd. v. Kortz, 2014 WL 12572679, No. CV 14-04375 (C.D. Cal. Oct. 16, 2014)

Westlaw is doing something to surface all sorts of old cases, but this one covers an issue about abandoned marks that often comes up in my class on abandonment, so here goes.

Plaintiff, trading as Canadian Maico, filed a trademark infringement claim against Kortz, d/b/a SoCal Maico.  Maicowerk A.G. was a popular German motorcycle manufacturer founded in 1926; it went out of business in the 1980’s.  Plaintiff was founded in 1996 with the goal of rebuilding Maicowerk’s business by restoring and selling genuine Maicowerk motorcycles, as well as parts that could be used by others to restore and maintain Maicowerk motorcycles. Canadian Maico now serves Maicowerk motorcycle enthusiasts in the US and Canada, as well as internationally.  It had registrations for the word Maico and a large “M” superimposed over a shield (the “Maico marks”) for relevant goods.

Plaintiff alleged that Kortz observed its success and decided to copy it under the name SoCal Maico. In 2014, Kortz sought to register MAICO in connection with “on-line retail store services featuring new and used Maico motorcycle parts” and his website Kortz’s logo allegedly incorporated Maico’s federally registered trademarks; Kortz petitioned to have the USPTO cancel Maico’s registration.  Kortz also allegedly made false and damaging statements about Maico and its goods to potential customers.

Kortz alleged, in his counterclaims, that Maico registered Maicowerk’s abandoned trademarks despite the fact that it had not received an assignment of any of Maicowerk’s rights, reputation or goodwill, even though that reputation and goodwill persists.  He alleged that Maico traded on Maicowerk’s goodwill and caused consumer confusion as to the source or origin of its goods and services.

The court found that Kortz lacked Article III standing to bring his counterclaims.  He lacked allegations of injury to himself that was “concrete and particularized” and “actual or imminent” in order to satisfy the injury in fact requirement of Article III standing. Kortz wasn’t Maicowork’s successor in interest:

Because Kortz admittedly has no protectable legal interest in Maicowerk’s purported goodwill and reputation, he cannot assert injury based on damage to that goodwill and reputation. Because he sues as a competitor, and not as a member of the public confused by Maico’s use of the Maico marks, he cannot assert injury to consumers as a basis for his claims.

H didn’t plead that Maico’s customers would otherwise do business with him or that its use of the marks otherwise injured him in his business.  Lexmark analysis would reason likewise.

Later, the court commented that the fact of Maicowerks’ persistent goodwill would not, in itself, make Maico’s adoption of the Maicowerks marks invalid, quoting McCarthy: “Once abandoned, a mark may be seized immediately and the person doing so may build up rights against the whole world.” “After abandonment, those who then adopt the mark must turn to the basic rules of trademark priority to determine priority of use and ownership.”  True, parties who adopt an abandoned mark “must take steps to avoid a likelihood of confusion arising from an association with the former owner,” but that’s the former owner’s business, and even the former owner won’t win without use that fraudulently trades on its reputation.

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