Friday, October 25, 2019

company claiming rights in "overhead doors" makes little headway against challenger

OGD Equipment Co. v. Overhead Door Corp., No. 17-cv-00898-ALM-KPJ, 2019 WL 5390589 (E.D. Tex. Jul. 15, 2019)

This is the magistrate judge’s R&R, subsequently adopted by the court. OGD is a Texas “residential and commercial door repair and installation company” with offices throughout Texas; it does business nation-wide. Overhead “is the largest manufacturer, marketer, and distributor of residential and commercial overhead doors and operators in the North American market,” and defendant Overhead-Lubbock is an authorized distributor for Overhead.

Overhead has, appallingly, a registration for OVERHEAD DOOR for garage door openers (one reason a broad definition of genericity including generic adjectives is important--a narrow definition allows exactly the kind of foolery here, where the registration is used to claim extra rights), as well as a registration for a wordless banner.

How anyone is likely to perceive that as a mark is beyond me.  It also claims trademark rights in “OVERHEAD DOOR,” “OVERHEAD DOOR COMPANY,” and “OVERHEAD,” “as used without any other words.”

Meanwhile, OGD registered its logo, prominently featuring “Overhead” with a curved letter shape:

(Also not much there to register.)  OGD argued that the shape of the logo, and the logo’s prominent use of the word “Overhead,” were used frequently in the garage door industry.

OGD alleged that Overhead was unfairly using its registration to “expand its reach from electronic controls to overhead door products.” Among other things, Overhead uses the designation “TM” after each use of the term “Overhead Door” on the Overhead website, regardless of whether the term is used in its protected form, and used lawsuits, unfair business practices, and letters to competitors to threaten them. OGD alleged that “Overhead Door” was generic for products in the overhead door industry. Overhead disagreed and alleged that OGD was using a deceptive name and logo to pass itself off as an Overhead distributor. Further endearing them to me, Overhead argued that the use of its claimed names in “unfair search engine marketing and search optimization techniques” was deceptive, and alleged that multiple customers have expressed confusion.

OGD previously bought over $750,000 in products and services from Overhead and its affiliates. In April 2017, Overhead sent OGD a letter regarding use of the Trade Names in paid internet advertisements, but didn’t raise any concerns related to OGD’s name, trademark, or stylized logo. In July 2017, Overhead sent a C&D claiming “it held a protectable trade name and trademark over the words ‘Overhead Door,’ ” and claiming that OGD’s uses constituted “ ‘clear trademark infringement violations ... under Texas and Federal law,’ ... as well as violations of Texas unfair competition laws.” The letter stated that Overhead “has regularly taken legal action to prevent use by others of OVERHEAD DOOR or OVERHEAD, as company names.”  OGD found Overhead’s claims overbroad and sought a declaratory judgment as well as bringing affirmative claims.

The court found that there was an actual controversy between the parties. Not only had Overhead alleged that OGD infringed, but OGD alleged that Overhead’s actions violated the Lanham Act and the Sherman Act. The parties’ claims about the rights to use the claimed marks were incompatible.

Overhead argued that the court couldn’t determine whether OGD infringed Overhead’s registered marks because Overhead didn’t claim infringement based on its registrations. The court disagreed. There was an objective possibility of litigation, and the C&D didn’t claim rights only under §43(a); rather, it attached the federal registration for OVERHEAD DOOR. There was also a concrete dispute between Overhead and OGD about §43(a) and state claims, although there wasn’t a dispute about Overhead-Lubbock’s trademark or trade name rights, since that entity didn’t claim any such rights.

The Lanham Act claim was properly pled: Overhead allegedly knowingly misrepresented to consumers that: (1) they, along with other Overhead distributors, are the only companies that can lawfully use the Trade Names; (2) OGD is using the Trade Names with the intent to trade on Defendants’ brand names and purposefully confuse consumers; (3) OGD is not a reputable company; (4) OGD is affiliated with a company called “GDS” or “Garage Door Services,” which has been the subject of negative articles and lawsuits; and (5) OGD is a deceptive company that intends to confuse consumers. OGD alleged specific communications by defendants in online advertising and marketing and a specific blog entry by Overhead-Lubbock, allegedly written by a person employed both by Overhead and Overhead-Lubbock.

Texas doesn’t have a separate false advertising common law tort, but it does have unfair competition. “Unfair competition includes a number of types of objectionable trade practices, including trademark infringement, dilution of good will, misappropriation of business value, palming off, passing off, and theft of trade secrets.” “To prevail on its unfair competition claim, OGD must show an illegal act by Overhead and Overhead-Lubbock which interferes with OGD’s ability to conduct its business.” The allegations here (as above, along with alleged misrepresentation that OGD doesn’t have a physical location in Lubbock) sufficed. Although defendants argued that this was just false advertising, the court found the allegations “akin to a claim for dilution of good will.”  [I would have thought trade disparagement.] And because the Lanham Act claim survived, the unfair competition claim was properly premised on independent substantive torts. [This seems weird. Is it an independent reason? If not, then can trademark infringement be actionable under state common law if you don’t bring, or for lack of interstate commerce don’t have, a §43(a) claim?]

Sherman Act claims failed (they are, after all, antitrust claims) for want of a sufficiently good market definition, though Overhead ought to look out for 1-800-Contacts given its attempt to control internet advertising.

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