Friday, March 10, 2023

"TM-compliant" ads not shown to be nominative fair use

World Axe Throwing League, Inc. v. Cold Steel Inc., 2023 WL 2372059, No. 2:20−cv−11407 JAK (Ex) (C.D. Cal. Feb. 14, 2023)

Plaintiffs sued defendants for state and federal trademark infringement and related claims. Plaintiff WATL is allegedly the preeminent governing body and league for the sport of axe throwing and uses the trademark “WATL” to market and publicize the axe throwing league. Cold Steel allegedly “marketed, advertised and sold substantial sums of axes which were clearly labeled ‘WATL Compliant’ or ‘Meets WATL regulations.’ ”

The court found that this was close enough to saying “WATL approved” that it wouldn’t grant summary judgment on nominative fair use, which is yet another way that trademark is just much more expansive than false advertising (compare treatment of “FDA registered,” for example).

First, nominative fair use permits only the “truthful use of a mark.” Toyota, 610 F.3d at 1177. Defendants contended that one axe “meet[s] WATL Regulations” and that another “meets WATL Regulations with a slight modification that is commonly made.” But WATL argued that wasn’t true, creating a disputed issue of fact. As to one axe whose compliance was undisputed, the defense was still disputed.

NFU factors: (1) WATL wasn’t readily identifiable without use of the mark (the current ad claim “Meets most axe throwing association requirements for tournament play,” was an insufficient substitute). (2) Defendants didn’t use any distinctive features of the mark, such as logo or stylized lettering; although the WATL mark was displayed more prominently than the Cold Steel mark in some instances, that wasn’t important given the lack of distinctive font or logo; defendants only used what was reasonably necessary.

The problem was (3): whether defendants did anything that would, in conjunction with the mark, suggest sponsorship or endorsement. Use of the mark with the words “compliant,” “legal,” and “meets ... regulations” could have done so because there was evidence of consumer confusion. An axe-throwing business owner testified that, in 2019, he and two other league members believed that WATL worked with Cold Steel to manufacture axes, based on advertisements on Cold Steel’s website. “Although it is not clear whether the phrase ‘WATL approved” appeared on Cold Steel’s website, [his] testimony demonstrates that axe purchasers could reasonably and mistakenly believe that the Competition Thrower was either approved by or made with WATL, and that this belief arose due to the use of the WATL mark on Cold Steel’s website.” Another business owner testified similarly; though his belief “stemmed from assumptions and inferences,” his testimony supported “the view that Defendants’ use of the WATL mark on social media and through a sales representative, contributed to confusion about the relationship between WATL and Cold Steel within the community of competitive axe throwers.” Thus, a reasonably prudent consumer could be confused, and another putative defense dies as it is reduced merely to confusion.

“Further, internal Cold Steel communications support the inference that Cold Steel intended to use the WATL trademark to increase sales.” In another case, statements by a manager of a band that recommended the use of a trademark to “create or enhance marquee value,” was evidence that the band used the trademark to suggest sponsorship. Cold Steel’s use could have contributed to the impression that Cold Steel’s Competition Thrower would be “the next big thing in WATL,” causing throwers to buy it. [None of that depends on confusion. NFU was born because USA Today polled on New Kids on the Block, not some unknown band, which it did because that would be more profitable than polling about an unknown, but that’s not the same thing as intending or desiring confusion. Sigh.]

Contributory infringement: There was a genuine issue as to whether defendants intentionally caused any other person to infringe on the WATL mark or continued to supply axes to any person while knowing that the person was using the axe to engage in trademark infringement, based on the “common practice for retailers, including Amazon, to copy and paste product descriptions from the website of the manufacturer.”

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