when weak TM claims do better than seemingly strong false advertising claims

Sanho Corp. v. Kaijet Technol. Int’l, 2024 WL 4553279, --- F.Supp.3d ----, No. 1:18-cv-05385-SDG (N.D. Ga. May 20, 2024)

Note: A jury found Kaijet liable for design patent and copyright infringement after this opinion, but rejected the TM claims, which I guess says something about a jury’s ability to distinguish claims. It didn’t get a chance to decide the false advertising claims, which I think reflects courts’ relatively lax approach to TM compared to the rigors to which false advertising claims are subjected before reaching a jury; personally, I likely would have gone the other way.

Sanho sells accessories under the HyperDrive name, including MacBook dongles. Kaijet sells competing UltraDrive MacBook dongles. 

Kaijet product

Sanho product

(My spouse uses a third competitor that looks basically indistinguishable; FWIW, he says that he would not buy the same product again because it's easy to whack it in a way that detaches it from the laptop and that a cable connection would have been a better choice.)

Sanho has a registration for HYPERDRIVE.

HyperDrive logo

UltraDrive logo

The court first found that there was a factual issue about whether the hubs were “power adapters” as specified in the trademark registration. The hubs can be used “to transmit[ ] power from a ‘source’ (MacBook Pro) to a ‘sink’ (a cell phone being charged).”

The court also found a factual issue on likely confusion between UltraDrive and HyperDrive, reasoning that because a power hub is not a drive (and also that there’s a Star Wars reference), the mark was suggestive. Third-party use of the weak components “hyper” and “drive” didn’t reduce the strength of the mark (but somehow that didn’t make confusion less likely just because the overlap was in “drive”). Although the marks weren’t similar in appearance, they were “similar in sound, meaning, and usage,” since they both had a two-syllable prefix followed by the word “drive,” and “hyper” and “ultra” were roughly synonymous. They were directly competing. Although there’s a distinction between bad “[i]ntent to benefit from a competitor’s goodwill” and good “intent to copy,” they’re often related and bad can be inferred from good, as it could be here. Email communications repeatedly referenced Sanho’s design, and expressed a desire to use similar elements in its own product. Kaijet US changed its existing product name from “ultrastation” to “UltraDrive” after Sanho began selling its hubs, and as Kaijet US was preparing to introduce a competing product into the same market.

Whether there was evidence of actual confusion was a contested issue about interpreting consumer complaints.

Sanho’s false advertising claim  alleged that the defendants falsely advertised a hub as an “8-in-1” product, when it contains only seven ports. But the court agreed that this wasn’t literally false, and Sanho offered no evidence of likely confusion. It seems like a jury should at least have addressed the literal falsity issue, because it’s hard to say that no reasonable jury could have found literal falsity, when there are eight numbers for ports and the numbers don’t correspond to, or even add up to as far as I can tell, eight distinct functions. But the court reasoned that “labels do, in fact, count out eight functions. Several of those functions do seem duplicative—(5) and (6) are both labeled ‘USB 3.0.,’ (7) and (8) are both labeled ‘Memory Card’—but that suggests the labels are misleading, not literally false.” I would instead have said that means that both possible meanings—number of functions or number of ports—are literally false.  

neither eight functions nor eight ports shown

There were also factual disputes on the copyright infringement claim based on the parties’ packages.  Sanho’s packaging contained both protectable and non-protectable elements: 

Sanho packaging

Non-protectable are Sanho’s product name and description, the packaging’s selection of typographies and colors, and familiar images such as MacBooks and laptop ports.

Also non-protectible are functional elements like the listing of product information and specifications. The way in which the product-shaped cutout or window on the front of the packaging allows consumers to view the product without opening the packaging is likewise functional and therefore non-protectable.

However, there was “a spark of creativity here in Sanho’s arrangement and coordination of the packaging’s otherwise unprotectible constituent elements—most notably in the alignment of the right side of the product-shaped cutout with the left edge of a depiction of a MacBook to suggest the physical docking of the hub to the laptop.” Packaging for similar products contained “more or less the same elements—product name and description, specifications and features, cutouts or windows—but in a variety of arrangements, none of them resembling Sanho’s in overall layout, and none of them suggesting its product’s physical compatibility with another device in the way that Sanho’s does.”

packaging front comparison

packaging side comparison

The court found that defendants

appropriated the most original element of Sanho’s design: the cutout in the center showing the product hub physically interfacing with a depiction of a MacBook to the right. In addition, the front of [defendants’] packaging presents mostly the same information as Sanho’s, and in the same layout: product name at top, product description at bottom, “4K” and “50 Gbps” callouts at bottom right. The back of j5create’s packaging, like Sanho’s, depicts a MacBook, open at a similar angle and viewed from a similar perspective, with the product hub attached and its ports labeled, followed by a bulleted list detailing the ports’ capabilities. The left side panel of [defendants] packaging, like Sanho’s, depicts and labels the hub’s ports. These are significant similarities in the packagings’ arrangement and coordination of dominant design features.

But they were also “far from identical,” including differences in color and font, as well as defendants’ product carrying product specifications in four languages and depicting the product’s side profile on the side of the package. Because substantial similarity is qualitative, this was for the jury.

Finally, the court rejected Kaijet’s false advertising counterclaim based on Sanho’s allegedly false “fake review campaign” of positive product reviews on Amazon, based on failure to show materiality. It was insufficient to provide:

1. A study showing that 74% of respondents “read online reviews” from online stores like Amazon and BestBuy;

2. A study showing that 32.7% of respondents cited “[p]roduct reviews and recommendations as a “[m]ain reason for shopping at Amazon”; and

3. Sanho CEO Daniel Chin’s declaration testimony that “The UltraDrive is an inferior and lower quality version of the HyperDrive. It receives less favourable customer rating reviews on Best Buy’s website and has many complaints.”

“Evidence about where consumers read online reviews is not probative of what they do with the information in those reviews. Likewise, evidence about why consumers choose to shop at Amazon is not probative of why they would choose the HyperDrive over the UltraDrive, when the latter was sold exclusively through Best Buy.” There was no evidence tending to prove that Sanho’s alleged fake reviews caused consumers to buy Sanho’s products instead of defendants’, and self-interested testimony on superiority was insufficient. (This is a bit of conflating materiality with harm causation, but ok. Imagine a court finding evidence that consumers generally care about brand names, or other general testimony about branding, insufficient in a TM case!)

Also, defendants failed to rebut Sanho’s evidence of immateriality, which was deposition testimony that No such evidence has been produced. Furthermore, the Kaijet Defendants have failed to meaningfully rebut Sanho’s evidence of immateriality: deposition testimony that the Sanho product had a better aggregate rating on Best Buy (where it is actually sold) than it did on Amazon, and Sanho’s expert’s testimony that the sales metrics of its products, both of themselves and relative to the sales metrics of Kaijet, were uncorrelated with the timing of Sanho’s alleged fake review campaign. No reasonable jury could find, on this record, that Sanho’s fake review campaign was material.