Navajo Nation v. Urban Outfitters, Inc., --- F.Supp.2d ----,
2013 WL 1294670 (D.N.M.)
The court largely refused to dismiss the Navajo Nation’s
claims against Urban Outfitters for using “Navajo” on some of its items. In this case, the court seemed to treat
“identification meaning” the same as “trademark meaning,” allowing the Navajo
Nation to claim that recognition of the Navajo as a group was recognition of
“Navajo” as a mark. I’m dubious about
this, but understand why it happened here.
The Navajo Nation “is a sovereign Indian Nation with over
300,000 enrolled members,” and “acts through its political subdivision …; its
wholly-owned instrumentalities …; its officers, employees, and authorized
agents; and its members, the Navajo People.”
(This is one place where I get nervous about applying trademark
concepts: if that isn’t naked licensing, what is?) It alleged that it and its members had been known as “Navajo” since at least 1849, had
continuously used the mark in commerce, and had made the mark famous with
numerous products, including, among other things, clothing, accessories,
blankets, jewelry, foods, tools, decorations, crafts, and retail services. The Navajo Nation has registered 86 trademarks
that include NAVAJO for different classes, including clothing, jewelry,
housewares, and accessories, and alleged that many had become
incontestable. (Urban Outfitters argued
that the Nation didn’t actually own all 86 marks, and that only 5 were
incontestable.) The Nation also alleged
substantial investment in promoting the marks, resulting in over $500 million
of sales of NAVAJO-branded goods.
Further, it alleged, “NAVAJO” was inherently distinctive,
and that it wasn’t a generic name for any products, since if you go into a
clothing store and ask for a “Navajo” you will be greeted with
incomprehension. (What if you go into a
grocery store and ask for a “Swiss”?)
The Nation alleged that, instead of using descriptive words like
“geometric” or “southwestern,” Urban Outfitters chose “Navajo” in order “to
trade off of the cachet and romanticism associated with the Navajo People, who
form the Navajo Nation.” Futher, UO
allegedly falsely advertised a number of its “Navajo” products as “Vintage” and
“Handmade,” making an expressly false claim that their goods are made by
members of the Navajo Nation.
UO allegedly rolled out a product line of at least 20 items
under the “Navajo” and “Navaho” names, echoing Navajo Nation tribal
patterns.
Further, UO allegedly “used”
the mark in its internal search engine to divert consumers, causing initial
interest confusion by returning results.
(The
Amazon
watch case might be of relevance here.)
The Nation alleged trademark infringement, federal and state dilution,
false advertising, violation of the Indian Arts & Crafts Act, and related
state-law claims.
On a motion to dismiss, the court refused to consider
excerpts from the trademark file histories of some of the marks referenced by
the Nation in its complaint. The Nation
didn’t attach an incomplete document to its complaint, but rather UO was
cherry-picking portions of the PTO record to contest the facts. The evidentiary value of the excerpts was
subject to reasonable dispute and not suited for judicial notice. “If Defendants' position were correct, the
entire trademark file history of each trademark allegedly infringed would
nearly always be permissible to consider on a motion to dismiss in any
trademark infringement case, an incredibly cumbersome analysis at the early
stages of a case.” Likewise, the court
declined to consider evidence that “Navajo” was used as a generic descriptor of
“Indian-styled” prints and designs at this stage of the case.
UO argued that the Nation failed to state a claim because it
failed to allege facts showing that UO’s use of the term was as a source
identifier instead of descriptively; the Nation cropped the content of the
sites (presumably so that UO’s own marks wouldn’t appear). Dismissal for failure to state a claim is
appropriate only in the most extreme trademark cases, and this wasn’t one.
The Nation argued that because their marks were
incontestable and fanciful, arbitrary, or suggestive, descriptive fair use was
unavailable as a defense. (I’m pretty
sure that the “incontestable” part there doesn’t work, inasmuch as §33(b) is in
the statute precisely to establish descriptive fair use as a defense as to
incontestable marks.) As for the
fanciful etc. argument, a number of courts have (correctly) concluded that it’s
the defendant’s use that must be
descriptive, not the plaintiff’s, but the court didn’t resolve the issue
because UO didn’t establish that the defense succeeded as a matter of law.
The Nation alleged sufficient facts to show that UO used “Navajo”
as a mark, and that it didn’t “sufficiently accompany ‘Navajo’ with such
distinguishing marks that a buyer exercising ordinary care would not be
deceived into believing they were purchasing an item produced by the Navajo
Nation.” The Nation alleged use on
similar goods to the Nation’s own goods, and that the goods compete in many of
the same channels of commerce. UO
advertised “Navajo Bracelet” and “Navajo Feather Earring” “without clarifying
words or images that ‘Navajo’ did not mean that it was made by a member of the
Navajo Nation and was merely descriptive of the style,” and other items were
advertised similarly. When the products
involved are similar, a descriptive fair use defense may fail not because
likely confusion makes the use nondescriptive, but because confusion shows that
a use is de facto use as a mark. Even as
to UO’s sub-brand Anthropologie, where the exhibits only showed statements
saying, “We're sorry. This Product is no longer available,” could count as use;
“a factual inference could be made that the product is no longer available
because all those particular goods had been sold from the site.”
Here, “Navajo” has a primary meaning referring to the Navajo
tribe and its people. “Navajo” also has
a geographic component, but the tribe is the registrant. As for dictionary definitions of “navajo
blanket” and “navajo rug” as “a blanket woven by the Navaho in geometric
designs of symbolic meaning,” this definition “demonstrates that, even when
used as an adjective, the term conveys information that the source of the rug
or blanket is the Navajo tribe or a member thereof.” Thus, even adjectival use could create likely
confusion among consumers. Some of the
items included another company’s brand in the product description, but that
wasn’t enough to find, as a matter of law, that the use of another brand would
eliminate all alleged confusion.
UO argued that the Nation itself acknowledged that “Navajo
Style” for goods would be fair use, relying on a license agreement submitted to
the PTO in connection with one trademark, but that evidence wouldn’t be
considered on a motion to dismiss. In
addition, UO argued that the Nation failed to show either trademark use or bad
faith as to Free People because “Navajo” was a descriptor of “vintage,
pre-owned items originally from artisans who identify as Navajo Indians.” But
UO’s affidavit was less than a model of clarity; it averred that the items were
“believed to” be made by self-identified Navajo artisans; this again wasn’t
suitable for resolution on a motion to dismiss. The allegations of use in, for
example, “Vintage Handmade Navajo Necklace,” were sufficient to state a claim
of confusion over origin.
In addition, UO argued that a user’s collection of items she
wanted, labeled “Navajo Beauty” and displayed on the Free People site, wasn’t
trademark use by UO. The Nation
acknowledged that its claims didn’t encompass acts of UO’s customers. The court noted that the Tenth Circuit
recognizes claims based on initial interest confusion, “the unauthorized use of
trademarks to divert internet traffic, thereby capitalizing on a trademark
holder's goodwill.” The court found it
“unclear” whether UO was responsible for using “Navajo Beauty” to describe a
collection, since the page says the collection was created by
“indiehippiepixie.” However, the Nation sufficiently alleged that UO used
“Navajo” to divert internet traffic.
Thus, the court didn’t decide whether there was infringement based on
advertising the “Palmedo Blanket Bag” (part of indiehippiepixie’s collection)
without “development of the factual record concerning how Defendants allegedly
used ‘Navajo’ in their internal search engines to divert customers to products
like the Palmedo Blanket Bag.”
Finally, the court couldn’t find nominative fair use as a
matter of law. And we get a new-to-me
reformulation of the doctrine: “whether (1) the product is readily identifiable
without use of the mark, (2) defendant used more of the mark than necessary, or (3) defendant falsely suggested he
was sponsored or endorsed by the mark's holder.” Assuming the doctrine’s validity in the Tenth
Circuit, whether “Navajo” was the only word reasonably available to describe
the designs of the products at issue was a fact question; the Nation alleged
that “geometric” or “southwestern” would also work. The Nation therefore successfully alleged
claims of source confusion as well as sponsorship or endorsement confusion.
Of course, the court also rejected UO’s contention that
Navajo was generic for clothing and accessories, given the pleadings, despite
what indiehippiepixie might have thought.
Turning to dilution, the court rejected UO’s argument that
the Nation failed to allege fame for the relevant goods. The Nation represented to the PTO that its
first use of the mark in connection with clothing such as shirts and jackets was
in 1995 and 2005; it didn’t allege particular facts showing the extent and
geographic reach of sales, advertising, and publicity. However, the Nation
alleged that it and its people had been known by “Navajo” since 1849; it had
continuously used the NAVAJO trademark in commerce; it had marketed and
retailed clothing, jewelry, and house wares since 1941; and it had registered
the NAVAJO trademark in 1943. This was a
significant duration, despite the Nation’s failure to allege many non-conclusory
facts about geographic reach. It did allege that it had invested “substantial
capital in promoting and protecting” the NAVAJO trademark, resulting in more
than $500 million in sales of NAVAJO-branded goods, and that the NAVAJO marks were
prominently featured on a number of its websites. Moreover, it alleged 86
registrations with a NAVAJO component (despite the factual dispute over how
many marks the named plaintiffs actually owned). Combined with general
allegations that the mark was broadly recognized by the general public as a
mark for Indian-styled and Indian-produced goods, this was enough to survive a
motion to dismiss.
In combination with the complaint as a whole, the allegation
that UO’s use of Navajo in retailing its 23 “Navajo” products and its marketing
of its “Navajo Collection” made it likely that consumers would incorrectly
believe that the “Navajo” mark is an indistinct term was sufficient to allege
dilution by blurring. Evidence that other fashion marketers already do that was
not relevant on a motion to dismiss.
The court did agree that plaintiffs failed to allege
dilution by tarnishment based on two theories, though a quality-based claim
survived. The “Navajo Print Fabric Wrapped Flask” was not sufficiently
unwholesome to constitute tarnishment, given that the Fire Rock Navajo Casino
registered trademark includes “shot glasses” among its goods. Although the
Nation bans the sale and consumption of alcohol within its borders, it admitted
that there was an exception for alcohol in dining areas of a Navajo Nation
Gaming Enterprise facility and that it had registered the mark for shot
glasses. Thus, as a matter of law, use
on a flask wasn’t sufficiently unwholesome or unsavory to support a tarnishment
claim.
In addition, the court rejected the argument that UO’s use
of “Navaho” was scandalous because the official spelling uses a j. There was no authority that misspelling is
scandalous. Indeed, the Nation’s own
complaint noted that “Navaho” is a long-thought acceptable spelling, and the
Nation relied on Webster’s dictionary in its briefs, which also used the terms
interchangeably.
The Nation did preserve a theory that UO’s products were of
significantly lower quality than the Nation’s own products, diluting the
marks. UO argued that these allegations
were conclusory and that the complaint itself showed that consumers rated the
products highly, with an average rating of 4.5 out of 5 stars. The court wasn’t willing to find that the
star ratings were conclusive as to quality. While the allegations of lower
relative quality were “somewhat conclusory,” they were enough to create a
factual issue.
The Indian Arts and Crafts Act: The IACA “is a
‘truth-in-advertising law designed to prevent products from being marketed as
‘Indian made,’ when the products are not, in fact, made by Indians as defined
in the Act.” It creates a cause of
action against a defendant who sells a good in a manner that falsely suggests
that it’s Indian-produced or the product of a particular Indian, Indian group,
or Indian tribe. “[T]he question for the
trier of fact is what the entire sales package, including advertising,
labeling, and place of sale, suggested to the average consumer.” An art or craft work is a handcraft—“an
object created with the help of only such devices as allow the manual skill of
the maker to condition the shape and design of each individual product.”
The court refused to dismiss the IACA claims:
Plaintiffs allege that Defendants
have displayed for marketing and retailing items such as “Navajo Bracelet,”
“Navajo Glove,” “Vintage Men's Woolrich Navajo Jacket,” and “Navajo Feather
Earring.” Plaintiffs contend that the products are in a traditional Indian
style, and composed of Indian motifs and Indian designs, but are without
identifier terms or labels; that the manner of marketing the goods falsely
suggests the products are Indian products of the Navajo Nation, when in fact
they are not Indian made; and that a consumer may find the products using
search terms like “Indian,” “Native American,” “tribal,” or “Navajo.”
This was enough to allege a cause of action under the IACA. Clothing and clothing accessories could be
arts or crafts within the meaning of the IACA, even if the clothing was
contemporary apparel. The regulations
specify that both traditional and modern apparel could qualify.
UO argued that the Nation made contrary representations to
the PTO in registering “Navajo Jeans” for “clothing, namely, tops, vests, shirts,
sport shorts, polo shirts, golf shirts, jackets, T-shirts, sweat shirts.” In response to an examiner’s refusal to
register the mark because registration could violate the IACA, the Nation
successfully argued that “[t]he goods offered under the Mark are not art works,
crafts, or handcrafts within these definitions contained in the Regulations
[for the IACA].” The court wasn’t willing to find judicial estoppel based on
the limited record before it, and it wasn’t clear whether judicial estoppel
would apply because the IACA’s regulations might have changed after the Nation
made its representation to the PTO. Anyway, it wasn’t clear whether the
Nation’s statement about “goods” referred to particular types of clothing, or
contemporary clothing generally. (This is an interesting issue, and the Nation
does seem to have a problem here. If it wants freedom to make “Navajo”-branded
garments anywhere and in any quantities, as a trademark owner normally does, isn’t
that inconsistent with the IACA’s goal of supporting Native American
artisans? For what it’s worth, I don’t
think the change in regulation text makes a difference—I read the old and new
versions of the regulation and I don’t think that the statements about apparel
represented a change in the law.)
Given the holdings above, the New Mexico Unfair Practices
Act claims also survived, with a certification to the state supreme court. UO argued that the Nation lacked standing
because it wasn’t a buyer of UO’s goods.
However, the case law simply suggested that a seller of goods couldn’t
sue the buyer of its goods under the NMUPA.
Here, the Nation alleged that false representations were made to the consuming
public, so the lawsuit served the statute’s consumer protection goals, albeit
indirectly. The statute said that “any
person” injured could sue, and many other states with similarly broad language
allow business competitor standing, though there’s no clear consensus. Given the limited briefing on the issue of
whether a competitor would need to allege a public interest component and
whether, if there is one, the Nation sufficiently alleged it, the court was
inclined to certify the issue to the New Mexico Supreme Court, and so the court
stayed its standing ruling until it received supplemental briefing.
The state law trademark infringement and dilution claims
also survived, though the Nation would have to amend the complaint to allege
fame in New Mexico.
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