BLOGS: Georgia IP Litigation



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Monday, December 31, 2012, 1:35 PM

Eleventh Circuit Raises its Glass to the Public Domain, Affirms Summary Judgment Entered Against Miller's Ale House on Trademark, Trade Dress, and Copyright Claims

Introduction

Score one for McDowell's and its "Golden Arcs." [1]  In a dispute between two sports bar and restaurant chains, the Eleventh Circuit has affirmed a grant of summary judgment in favor of the defendant, Boynton Carolina Ale House, LLC ("Boynton Carolina"), whom plaintiff Miller's Ale House, Inc. ("Miller's") had accused of infringing its alleged common law trademark to the term "Ale House," its trade dress relating to the restaurant's interior decoration, and its copyrighted restaurant floor plans.  In so doing, the Court came down on the side of free economic competition and the copying that such open competition encourages, and cautioned against any tendency to allow trademarks in generic terms.
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Friday, December 28, 2012, 4:24 PM

11th Circuit Sua Sponte Vacates and Replaces Earlier Opinion in Lanham Act Case, but “Harmless Error” Doctrine Preserves Original Result

Introduction

In a decision entered on December 18, 2012, the U.S. Court of Appeals for the Eleventh Circuit, on its own motion, vacated the September 11, 2012 opinion summarized in our September 18 post.  The 11th Circuit substituted a new opinion for its September 11 opinion.  The new opinion repeats, and thus leaves untouched, the trademark fraud defense principles we discussed.  Also unaffected is the ultimate rejection of plaintiff’s false advertising claim, but the grounds for affirming that rejection have now been modified.

Recap of Judge Pryor’s Dissent in the September 11 Opinion (Sovereign Military II)

The text changes incorporated into the new opinion focus on the evidentiary issue over which 11th Circuit Judge William H. Pryor had dissented from the September 11 opinion. The new opinion adopts Judge Pryor’s reasoning on that issue, i.e., that the district court had abused its discretion in allowing, over an objection, testimony by Mr. Nicholas Papanicolaou on behalf of the defendant, The Florida Priory.  Mr. Papanicolaou, the Grand Master of The Ecumenical Order (the parent organization of The Florida Priory), had testified about the history concerning The Florida Priory and the plaintiff, Sovereign Military Hospitaller Order of Saint John of Jerusalem or Rhodes and of Malta (“Plaintiff Order”).  Through that testimony, The Florida Priory sought to establish that it did, in fact, have a shared history with Plaintiff Order and that therefore, the district court should rule against Plaintiff Order on its false advertising claim.

In its false advertising claim, Plaintiff Order had contended that The Florida Priory, through the Ecumenical Order, “falsely claimed a historic affiliation with Plaintiff Order going back to the eleventh century.”[1]  Plaintiff Order had argued “that The Florida Priory’s adoption of Plaintiff Order’s pre-1798 historical lineage and corresponding record of charitable activities is likely to deceive customers into contributing money to The Florida Priory.”[2]

The district court had considered conflicting testimony and sided with The Florida Priory, entering judgment against Plaintiff Order on its false advertising claim.[3]  In its September 11 opinion, the 11th Circuit upheld the district court’s decision to admit Mr. Papanicolau’s testimony.  As we discussed in our September 18 post, Judge Pryor dissented from that part of the September 11 ruling because Mr. Papanicolaou had never been qualified to testify as an expert witness and because as a lay witness, he did not have first-hand knowledge of the historical events on which he testified.

The New Text Appearing in the December 18 Opinion (Sovereign Military III)

In its new opinion, the Eleventh Circuit now recognizes that there were two independent grounds on which the district court rejected Plaintiff Order’s false advertising claim: (1) The Florida Priory did, in fact, share a pre-1798 history with Plaintiff Order; “and (2) because ‘the Florida Priory expressly associates itself with the Ecumenical Order, a non-Catholic organization.’”[4]  Ground (2) did not appear in the Eleventh Circuit’s September 11 opinion.[5]  That is important here because, as discussed below, this previously-unmentioned ground forms the alternative basis on which the Eleventh Circuit has now been able to affirm the district court’s rejection of the false advertising claim, despite finding that the district court did, in fact, abuse its discretion when it admitted Mr. Papanicolau’s testimony.

In reversing itself over the challenged testimony, the Eleventh Circuit essentially echoed the reasoning of Judge Pryor’s earlier dissenting opinion:

We acknowledge that the district court erred when it permitted Papanicolaou, a lay witness, to testify about historical matters.  Papanicolaou had neither “personal knowledge” of the historical facts about which he spoke, Fed. R. Evid. 602, nor could he offer testimony in the form of an opinion based on his “perception” of those historical facts.  Fed. R. Evid. 701. Papanicolaou should have been qualified as an expert witness.[6]

However, the Eleventh Circuit then characterized the district court’s error as “harmless”:

Nevertheless, “[w]here a District Court abuses its discretion in admitting evidence, we may still find the error harmless.” United States v. Gamory, 635 F.3d 480, 492 (11th Cir. 2011) (citation omitted).  An evidentiary error is harmless if “sufficient evidence uninfected by any error supports the verdict, and the error did not have substantial influence on the outcome of the case.” United States v. Khanani, 502 F.3d 1281, 1292 (11th Cir. 2007) (internal quotation marks and citation omitted).
*  * *
We conclude that despite its abuse of discretion in allowing Papanicolaou to testify, the district court was not “substantially swayed” by Papanicolaou’s inadmissible testimony because the holding's alternative ground--that The Florida Priory is non-Catholic--is sufficient to uphold the district court.
*  * *
And of course, by its very name, the Ecumenical Order is an interdenominational organization.  It is evident, therefore, that the district court's admission of Papanicolaou's testimony was harmless, given that his testimony had nothing to do with the district court’s alternative ground for dismissing Plaintiff Order's false advertising claim.

At bottom, the district court erred when it allowed Papanicolaou to testify--that much is true.  Nevertheless, we conclude that the district judge was not substantially swayed by Papanicolaou’s testimony, because the uninfected evidence--namely, The Florida Priory's unequivocally interdenominational nature--rendered moot any possibility that the alleged deceptions about Napoleonic history would influence purchasing decisions.[7]

Consequently, despite the different conclusion on the evidentiary issue now reflected in the December 18 opinion, the ultimate result is the same: the false advertising claim remains out of the case, and no other portion of the September 11 opinion was affected. 

As one might suspect, the new opinion has no dissent.

The new decision is Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. The Florida  Priory of Knights Hospitallers of the Sovereign Order of St. John of Jerusalem, Knights of Malta, The Ecumenical Order, No. 11-15101, ___ F.3d ___, 2012 U.S.App.LEXIS 26125 (11th Cir. Dec. 18, 2012).  


[1] Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. The Florida  Priory of Knights Hospitallers of the Sovereign Order of St. John of Jerusalem, Knights of Malta, The Ecumenical Order, No. 11-15101, ___ F.3d ___, 2012 U.S.App.LEXIS 26125, at *3 (11th Cir. Dec. 18, 2012) (Sovereign Military III).
[2] Sovereign Military III, 2012 U.S.App.LEXIS 26125, at *32-*33.
[3] Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. The Florida  Priory of Knights Hospitallers of the Sovereign Order of St. John of Jerusalem, Knights of Malta, The Ecumenical Order, 816 F.Supp.2d 1290, 1302 (S.D. Fla. 2011) (Sovereign Military I).
[4] Sovereign Military III, 2012 U.S.App.LEXIS 26125, at *15 (quoting Sovereign Military I, 816 F.Supp.2d at 1301-02).
[5] See Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v. The Florida  Priory of Knights Hospitallers of the Sovereign Order of St. John of Jerusalem, Knights of Malta, The Ecumenical Order, 694 F.3d 1200, 1209 (11th Cir. 2012) (Sovereign Military II).
[6] Sovereign Military III, 2012 U.S.App.LEXIS 26125, at *35.
[7] Id. at *35-*37 (citation omitted).

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Thursday, December 27, 2012, 3:28 PM

Trademark Infringement Action Asserted by James and Laurie Williams against Columbus Bar Association

In a complaint filed in the Atlanta Division of the Northern District of Georgia on December 19, 2012, James Williams and Laurie Williams (“Williams”) filed a complaint against the Columbus Bar Association (“Columbus”) seeking cancellation of Columbus' trademark registration, damages, and an injunction.  To avoid confusion, we disclose that the Columbus Bar Association is the bar association in Columbus, Ohio, not Columbus, Georgia.

The Williams have published a website known as www.lawyerfinder.com continuously since May 31, 1997. The complaint asserts that Columbus has been marketing, offering for sale, and selling services under the marks LAWYERFINDER, LAWYERFINDER.COM, and/or COLUMBUS LAWYER FINDER.COM and has further federally registered as trademarks LAWYERFINDER.COM (Registration No. 3,933,108) granted on March 15, 2011, and COLUMBUS LAWYER FINDER.COM (Registration No. 3,699,866) granted on October 20, 2009.  In support of their use, the complaint attached an affidavit from James Williams as Exhibit A and an affidavit of Christopher Butler, Office Manager at the Internet Archive, operator of a service known as the Wayback Machine.[1]  An image from the current Williams’ website is reprinted below:
The Williams’ website provides users throughout the United States with a searchable directory of advertisements as well as informational legal articles and other services.  On June 16, 2000, the Williams filed trademark application Serial No. 78/013019, which was ultimately abandoned by their failure to timely respond to an office action.  A new trademark application, Serial No. 85/484175 was filed by the Williams on November 30, 2011, but was suspended by letter dated June 15, 2012, for pending civil proceedings.
The complaint assets that Columbus commenced publication of www.columbuslawyerfinder.com on June 5, 2008, more than eight years after the Williams began using the LAWYERFINDER mark.  After adoption of its marks, Columbus began marketing “confusingly similar” services on a national basis including the licensing of “LAWYERFINDER” to other organizations, including Cincinnati LawyerFinder, Clark County LawyerFinder, New Haven Lawyerfinder, and Pittsburgh LawyerFinder.  An image from the home page of the Columbus website is reproduced below:

The complaint alleges irreparable harm has been suffered as a result of the Columbus announcement and launch of an advertising campaign confusing the public and creating misimpressions that the Williams are unauthorized users of Columbus’ marks.

The complaint asserts fraud on the U.S. Patent and Trademark Office (USPTO) based on Columbus’ knowledge or access to knowledge of the Williams’ mark, as their website had been active for more than a decade before Columbus’ first use of the accused marks. The complaint asserts that Columbus did not disclose the Williams’ use of the mark to the USPTO and a Columbus agent wrongfully attested that “no other person, firm, corporation, or association has the right to use the mark in commerce, either in the identical form thereof or ins such near resemblance thereto as to be likely, when used on or in connection with the goods/services of such person, to cause confusion, or to cause mistake, or to deceive.”  The complaint also asserts that Columbus’ sworn declaration that it was using the mark LAWYERFINDER.COM in commerce on September 20, 2010, was false.  The Williams ask that Columbus registrations of LAWYERFINDER.COM (Reg. No. 3,933,108) and COLUMBUS LAWYER FINDER.COM (Reg. No. 3,699,866) be cancelled.

The complaint further asserts unfair competition and false designation of origin under 15 U.S.C. § 1125, unfair competition under O.C.G.A. § 23-2-55 and Georgia common law, Georgia trademark infringement under O.C.G.A. § 51-12-5.1 and Georgia common law, and Unfair and Deceptive Trade Practices under O.C.G.A. § 10-1-370 et seq. (specifically O.C.G.A. §§ 10-1-372(a) and 10-1-373(b)(2).  In addition to cancellation of the registrations, the Williams seek an injunction, lost profits, pre- and post-judgment interest, punitive damages, and attorney fees.

The case is Williams v. Columbus Bar Ass’n, No. 1:12-cv-4382, filed 12/19/12 in the U.S. District Court for the Northern District of Georgia, Atlanta Division, and has been assigned to U.S. District Judge Richard W. Story.


[1] Quote from the site:  Browse through over 150 billion web pages archived from 1996 to a few months ago. To start surfing the Wayback, type in the web address of a site or page where you would like to start, and press enter. Then select from the archived dates available. The resulting pages point to other archived pages at as close a date as possible. Keyword searching is not currently supported.”

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Northern District of Georgia dismisses copyright and state law claims brought by Master Mind Music, Inc.

Introduction

On December 18, 2012, the U.S. District Court for the Northern District of Georgia issued a decision dismissing a copyright infringement action and all but one of the pendent state law claims.   There is no indication from that decision, however, that as to three state law claims dismissed on statute-of-limitation grounds, the parties considered Georgia revival statutes.

Factual Background

Discussed below as a “factual background” is the court’s summary of the allegations in the plaintiff’s complaint, taking the allegations as true solely for purposes of motions to dismiss filed by the defendants. 

Plaintiff Master Mind Music, Inc. (“Master Mind”) entered into an agreement with Mr. Jasiel Robinson (professionally known as Yung Joc) on February 3, 2005.  Master Mind received the exclusive right to manufacture and sell records and exploit the master recordings and gained co-ownership of Yung Joc compositions.  In return, Master Mind was obligated to actively seek a recording and distribution agreement for Yung Joc.

Yung Joc recorded his debut single “It’s Goin’ Down,” which gained airtime on Atlanta radio and drew the attention of Russell Spencer (“Spencer”) of Block Enterprises, LLC (“Block”).  Block and Master Mind entered into a Joint VentureAgreement on October 28, 2005, with Master Mind to distribute Yung Joc’s first album, the master recordings of which had already been completed.  Under that Joint Venture Agreement, if Block were successful in negotiating a distribution agreement, 50% of the revenues from that agreement would go to Block. 

On December 20, 2005, Block executed a distribution agreement with another defendant, Bad Boy Records, LLC (“Bad Boy”), without disclosing the Master Mind rights.  Master Mind was not a party to the agreement, did not participate in negotiations, and was not identified as a third-party beneficiary.

Bad Boy released two albums: “New Joc City” in June 2006, and “Hustlenomics” in August 2007.  Master Mind was not consulted, was paid no remuneration, and was denied, after request, credit as “co-executive producer.”  Master Mind registered copyrights for both albums on January 5, 2012.  Bad Boy had registered copyrights on the first album on September 15, 2006, and on the second on June 4, 2008.

The opinion notes that two prior actions were brought by Master Mind against Block in the Superior Court of Fulton County based on similar facts and allegations – the first brought on February 14, 2007, and mutually dismissed without prejudice on June 15, 2009, and the second brought ten days later on June 25, 2009, and dismissed for lack of prosecution on August 25, 2001 – less than five months before the federal court action was commenced in the Northern District of Georgia.

Block sought dismissal of Master Mind’s copyright infringement claim under 17 U.S.C. § 507(b), which bars the filing of such a claim more than three years after the claim accrued.  The court recognized that the Eleventh Circuit had not “squarely addressed” the date on which a copyright infringement claim accrued.  Calhoun v. Lillenas Publ’g, 298 F.3d 1128, 1236 (11thCir. 2002) (accrual occurs with actual infringement), was compared with United States v. Shabazz, 724 F.2d 1536, 1540 (11th Cir. 1984) (period begins to run “on date of last infringing act”).   The court then noted that some courts have distinguished between ownership and infringement claims, citing Kwan v. Schlein, 634 F.3d 224, 228 (2d Cir. 2011) (ownership claims only accrue once – when “a reasonably diligent plaintiff would have been put on inquiry as to the existence of a right.”), and Ediciones Musicales Y Representatciones Internacionales, S.A. v. Matea San Martin, 582 F. Supp. 2d 1358, 1360-61 (S.D. Fla. 2008) (accrues when plaintiff “had reason to know of alleged injury.”).

Block and the other defendants also sought dismissal of all but one of Master Mind’s state law claims[1], citing Georgia statutes of limitation as to three of them and other grounds against the remaining claims.

The Court’s Analysis

The court observed that Master Mind sought a declaration that it was sole owner of the copyrighted works and that such ownership was disputed and time-barred.  The failure of the ownership claim was, in turn, dispositive of the infringement claim.[2] 

The court next addressed the Block/Spencer motion to dismiss the tortious interference with contractual relations claims under the Georgia four-year statute of limitations (O.C.G.A. § 9-3-31 – defendants erroneous citation to O.C.G.A. § 9-3-26 was deemed immaterial).  The court noted that the discovery rule only applies to continuing torts, expressly limited in Georgia to personal injury claims.  See Corp. of Mercer Univ. v. Nat. Gypsum Co., 258 Ga. 365, 368 S.E.2d 732, 733 (1988).  The court  found the claims time-barred whether they accrued when the Bad Boy contract was signed or when the albums released – as both events were over 4 years before the action was filed. 

Presumably the parties did not consider Georgia laws permitting avoidance of statutes of limitation when suits are dismissed and refilled within six months.  The opinion is silent on the effect of the prior suits, specifically the suit that was dismissed for want of prosecution on August 2011.  It is understandable that the court would not address the language of O.C.G.A. § 9-11-41(e), if no one brought it to the court’s attention.  That statute concludes:  “When an action is dismissed under this subsection, if the plaintiff recommences the action within six months following the dismissal then the renewed action shall stand upon the same footing, as to limitation, with the original action.”  See also O.C.G.A. § 9-2-61 (restricting use of this right to one occasion after the expiration of the statute of limitations and requiring the payment of costs).

The court also dismissed Master Mind’s claims against Block and Spencer based fraudulent misrepresentation and on fraud based on the four-year statute of limitations.  Again, there was no analysis of O.C.G.A. §§ 9-11-41 and 9-2-61.  The Court referred to the earlier suits as establishing Master Mind’s knowledge of the fraud, and found that the fraud claim accrued at the latest in 2007 by the time of filing the first suit on February 14 of that year.

The court dismissed Master Mind’s conversion claim on a separate ground, namely, thatthe property allegedly converted was specified as being “funds of an unknown amount.”  Thus, Master Mind’s pleadings undermined its own conversion claim.  Similarly, Master Mind’s claim for money had and received was barred because the dispute at issue arose from an express contract.

The court next turned to the motions to dismiss of defendants Bad Boy and Atlantic Recording Corp. (“Atlantic”).  Based on the same reasoning made as to Spencer and Block, Judge Story dismissed the declaratory relief claim on copyright ownership asserted against Bad Boy on the three-year statute of limitations.  The copyright infringement claims against Bad Boy and Atlantic were similarly dismissed.  The conversion claims against Bad Boy and Atlantic also met the same fate as the identical claims against Block and Spencer.  The accounting claim was dismissed because there was no showing that it “would likely result in the discovery of an amount of money to which [Master Mind] is entitled.”


The decision is Master Mind Music, Inc. v. Block Enter., LLC, No. 1:12-cv-162-RWS, 2012 U.S. Dist. LEXIS 179221 (N.D. Ga. Dec. 18, 2012).


[1] Against Block and defendant Russell Spencer, Master Mind asserted, in addition to its copyright claim, state law claims of breach of contract (not addressed in the dismissal motions), tortious interference with contractual relations, conversion, and fraudulent misrepresentation.  Additionally, as to Block, Master Mind asserted state law claims of fraud and “money had and received.”  Against defendants Bad Boy and Atlantic, Master Mind asserted state law claims of conversion and accounting, as well as a copyright claim.

[2] Later in this post there is a description of O.C.G.A. §§ 9-11-41 and 9-2-61 in connection with the dismissal and refilling of suits.  However, because a federal copyright claim cannot be asserted in a state court (see 28 U.S.C. § 1338(a)), the author does not consider that discussion necessarily pertinent to the dismissal of copyright claims based on the statute of limitations.  To apply those statutes to copyright claims might require a finding that the new copyright claims were part of the original “action” and that the running of federal statutes of limitation can be tolled by state law.

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Wednesday, December 19, 2012, 2:53 PM

Trademark Infringement Action Asserted by The American Registry of Radiologic Technologists against Antonine X. Brown

In a complaint filed in the Atlanta Division of the Northern District of Georgia on December 10, 2012, The American Registry of Radiologic Technologists (“ARRT”) seeks to enjoin Antonine X. Brown (“Brown”) for trademark infringement and to recover damages.

This lawsuit concerns a species of trademarks known as “certification marks."  The term “certification mark” is defined in 15 U.S.C. § 1127 as “any word, name, symbol, or device, or any combination thereof . . . [that is used to] certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of . . . goods or services . . . .” 

According to the complaint, ARRT is a national credentialing organization – the largest such organization of radiologic technologists – and the only one that maintains a registry of these professionals.  According to the complaint, ARRT adopted the ARRT service mark in or around 1962 and has continuously used it since that time to identify individuals who meet its educational, testing, and other requirements, and are consequently registered with the organization.

The ARRT trademark was registered on May 22, 2007 – U.S. trademark application Serial No. 78/913,063, filed June 21, 2006 (the ‘063 Application) with a first use on July 1, 1962.  In addition, ARRT registered the Certification Mark R.T. on September 2, 2003 – U.S. trademark application Serial No. 76/442,210, filed August 21, 2002 (also with a first use on July 1, 1962) , and the Certification Mark R.T.(R)(ARRT) was registered on February 8, 2011 – U.S. trademark application Serial No. 77/855,878, filed on October 23, 2009, with a first use on June 1, 1977. 

Many health care facilities require ARRT certifications for their radiologic technologists and Medicare and Medicaid require at least one ARRT-certified radiologic technologist on duty at all times for reimbursement.

According to the complaint, Brown submitted an application to take the ARRT examination in Radiography and took the exam on February 22, 2006.  Brown did not pass the exam and has never registered with ARRT.  ARRT awards certification to individuals passing the exam and meeting other requirements of its rules and regulations.  The individual can thereafter be registered on an annual basis as long as the individual meets ARRT’s continuing education and ethics requirements.

According to the complaint, Brown repeatedly requested applications to retake the exam, was provided with those applications, but never turned them in or retook the exam.

The complaint next reports that ARRT received a request in May 2012 from Southern Regional Medical Center (“SRMC”) for the status of Brown’s ARRT status.  Upon being informed that Brown was not credentialed, SRMC allegedly sent a forged ARRT credential card bearing Brown’s name.  A facsimile copy of the allegedly forged card was included as an exhibit in the complaint.  The below image was derived from that exhibit.
ARRT sent notices to Brown to cease and desist to which no response was received, according to the complaint.

The complaint recites five counts, namely, trademark infringement under the Lanham Act (15 U.S.C. §§ 1114 and 1117(a)(3)), federal unfair competition (15 U.S.C. § 1125(a)), common law trademark infringement, common law unfair competition, and violation of the Georgia Uniform Deceptive Trade Practices Act (Ga. Code Ann. §§ 10-1-370 et seq.).

The case is The American Registry of Radiologic Technologies v. Antoine X. Brown, LLC, No. 1:12-cv-4272, filed 12/10/12 in the U.S. District Court for the Northern District of Georgia, Atlanta Division, and has been assigned to U.S. District Judge Orinda D. Evans.

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Saturday, December 15, 2012, 2:42 PM

Not Taking it Lying Down: Lawsuit Launched over MATTRESS SAFE® and Related Trademarks

On December 10, 2012, Cumming-based Mattress Safe, Inc. filed a complaint against New Jersey-based Hospi-Tel Manufacturing Co. ("Hospi-Tel") in the U.S. District Court for the Northern District of Georgia, alleging trademark infringement and related causes of action.

Mattress Safe is the named owner of record of the following U.S. Trademark Registrations, each for certain specified bed products: Nos. 3,224,992 and 3,184,575, for the marks MATTRESS SAFE, the latter including the design shown at left (respective assignment records here and here); No. 3,149,778, for the mark SOFCOVER (assignment record here); and No. 3,507,477 for the mark KLEENCOVER (assignment record here).  Collectively referring to these marks as "the Mattress Safe Marks," the complaint alleges that Mattress Safe has sold bedding products under the MATTRESS SAFE and SOFCOVER marks for at least the last 8 years, and under the KLEENCOVER mark for the last 5 years.  Mattress Safe refers to Exhibit B to its complaint (excerpt shown at left) as an example of such trademark use.

The complaint alleges, with reference to attached exhibits, execution of two agreements concerning Hospi-Tel: (i) a Distributor Agreement entered into between Mattress Safe's predecessor (Mattress Safe, LLC) and Hospi-Tel on September 20, 2006; and (ii) an Exclusive Distributorship Agreement entered into between Mattress Safe and Hospi-Tel on November 18, 2008 ("the Second Distributorship Agreement").  Page 2 of the purported Second Distributorship Agreement (Exhibit F to the complaint) defines the term "Subsequent Expiration Date" to mean "as the case may be, December 31, 2012, and every December 31 thereafter in an even numbered year."

"Mattress Safe previously attempted to terminate the Second Distributorship Agreement on July 12, 2012 by written notice to Defendant," states the complaint, but Hospi-Tel's counsel threatened to file a temporary restraining order to prevent such termination.  The parties then "agreed to a 45-day standstill" to expire on September 9, 2012, for the purpose of trying to resolve their differences without legal action, according to the printout of an e-mail chain between counsel attached as Exhibit I to the complaint.

The parties were unsuccessful, however, in resolving their differences, despite continuing to engage in discussions past September 9, according to the complaint.  Mattress Safe alleges that it then sent an "affirmative written notice," on December 10, 2012, that it would not renew the Second Distributorship Agreement at the end of December 31, 2012.

The complaint asserts counts for trademark infringement and federal unfair competition under the Lanham Act, violation of the Georgia Uniform Deceptive Trade Practices Act, common law misappropriation and conversion, and for a declaratory judgment.  On that last count, Mattress Safe contends that it validly exercised its option to not renew the Second Distributorship Agreement, and that, in the alternative, the agreement was terminable at will for lacking a finite term provision.  In addition to that declaratory relief, Mattress Safe seeks injunctive and monetary remedies under the Lanham Act, as well as attorneys' fees which it says are due pursuant to § 13 of the agreement.

The case is Mattress Safe, Inc. v. Hospi-Tel Mfg. Co., No. 1:12-cv-4273-RLV, filed 12/10/12 in the U.S. District Court for the Northern District of Georgia, Atlanta Division, assigned to U.S. District Judge Robert L. Vining, Jr.

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Friday, December 14, 2012, 10:50 AM

Plaintiffs Affiliated with MR CHOW Restaurants Appeal to 11th Circuit in Lanham Act Case

Introduction

On November 26, 2012, Mr. Michael Chow and other plaintiffs affiliated with the MR CHOW restaurants doing business in New York, London, Miami, and Beverly Hills (and soon in Las Vegas) filed an appeal with the U.S. Court of Appeals for the Eleventh Circuit of a judgment rendered in a trademark and false advertising lawsuit.

Plaintiffs appeal because they are dissatisfied with having prevailed on only false advertising and related unfair competition counts.

As aptly stated by the U.S. District Court for the Southern District of Florida, from which Plaintiffs took their appeal: “This case involves a relatively straightforward dispute which was aggressively litigated, between two sets of restaurant companies and their principals, regarding allegedly unfair business practices.”[1]

Discussed in greater detail below, the case presents interesting insights by the district court regarding blog posts and alleged in-person customer statements as proffered evidence of actual confusion, which it deemed insufficient to grant a new trial on the trademark and trade name infringement claims rejected by the jury.

Factual Background

The facts discussed here are those: (1) treated as facts by the Southern District of Florida in an order resolving post-trial motions, entered on October 24, 2012 (“the October 24 Order”) [2]; and (2) apparent from on-line records hyperlinked below.

California-based plaintiff Mr. Chow Enterprises, Ltd. (“MCEL”) is the owner of record of, among other registrations, U.S. Trademark Registration No. 1,160,402 (the ‘402 Registration”) for the mark MR. CHOW®, for “restaurant services and carry out restaurant services.”  The ‘402 Registration issued on July 7, 1981, claiming a first use date of January 1973.  The mark as presently used appears as MR CHOW, without the period at the end of “MR,”[3] but MCEL is not listed to own any federal registration or application for that mark, for restaurant services.  Plaintiffs only asserted the mark of the ‘402 Registration in this litigation, however, and in any event the district court deemed the difference between those marks as “of no significance.”[4]

Plaintiff Michael Chow “testified that the Plaintiffs’ restaurants are known throughout the world and that he also is a well known figure in the United States.”[5]
The first-named defendant, Chak Yam Chau, changed his name to Philippe Chow Chau in 2006.[6]

“Plaintiff Michael Chow conceded that from ‘day one’ he bonded with and liked Defendant Chau, as they shared the same last name/character, a symbol pronounced ‘Zhou,’ from their country of origin.”[7]  Over the 25-year span in which Mr. Chau worked for Mr. Chow[8], however, that relationship changed: “The jury heard impassioned testimony from Defendant Chau that he left his long-time employer, whom he liked, because ‘Michael Chow didn’t give me the chance, so . . . I believe I need to go out and have my own business.’”[9]  Defendant Chau left Mr. Chow’s employ in late 2005.[10]

In early 2006, therefore, Defendant Chau launched his first competing restaurant.[11]  “Defendants have consistently used ‘Philippe by Philippe Chow’ or ‘Philippe Chow’ or ‘Philippe’ in association with their restaurants, including use of these names in signs, menus, plates, etc.”[12]  “The jury heard from several witnesses that Plaintiffs did nothing to protect their trademark or trade name use by Defendants for several years, despite being aware of Defendants’ competing restaurants even before the first of such restaurants opened in early 2006.”[13] 

To illustrate the extent to which relations between the parties had deteriorated, Defendant Chau heard from Ms. Michelle Chun, an employee of the plaintiffs’ restaurants.[14]  In a phone call, according to Chau’s testimony, “Ms. Chun told him to not bother her chef and to not walk on 57th Street,”[15] where one of the New York MR CHOW restaurants are located.  “[H]e was very upset about being told to avoid walking on the street.”[16]  For further example, Plaintiffs brought suit in late 2009,[17] asserting a myriad of legal theories against numerous defendants over the course of an original and three amended complaints.  The first amended complaint included claims, dismissed in November 2009, “for civil trespass and corporate espionage, alleging that ‘an Asian male disguised in a chef’s jacket entered the premises of the Mr. Chow restaurant [in Miami Beach] without authorization and proceeded into the Mr Chow kitchen.’”[18]  “Plaintiffs alleged that the person was sent there for the ‘sole purpose of spying on behalf of the Defendants’ Miami Beach restaurant.’”[19]

District Court Proceedings

Despite a larger number of claims having been asserted in the pleadings against a larger number of defendants, the jury wound up deliberating upon 11 counts against 7 defendants.[20]  Plaintiffs presented a twelfth count, dilution under § 43(c) of the Lanham Act (Count V), for resolution by the district court only.[21]  Defendants counterclaimed for defamation and for cancellation of the ‘402 Registration, but prevailed on neither at trial.[22] 

Among the 11 counts considered by the jury were claims for trademark infringement (Count I), trade name infringement (Count II), trade dress infringement (Count III), false advertising under § 43(a) of the Lanham Act (Count IV), and “unfair competition by deceptive conduct” (Counts VII and IX).[23]   After a trial spanning a 5-week period in January and February 2012,[24] the jury found in Plaintiffs’ favor only as to Counts IV, VII, and IX,[25] assessing monetary awards as follows:
  • $520,451.00 for plaintiff TC Ventures, Inc. (owner of Mr. Chow Restaurant in New York City), to be paid by defendant Davé 60 NYC, Inc.[26]; and
  • $500,000.00 for plaintiff Michael Chow, to be paid by defendant Stratis Morfogen.[27]
The parties then filed the following post-trial motions:
  1. Plaintiffs’ motion for new trial as to Counts I and II;
  2. Defendants’ motion for a judgment as a matter of law (“JMOL”) as to Counts IV, VII, and IX;
  3. Plaintiffs’ motion for injunctive relief as to Counts IV, VII, and IX;
  4. Plaintiffs’ motion for injunctive relief as to Count V;
  5. Plaintiffs’ motion to increase damages;
  6. Both parties’ motions for attorneys’ fees; and
  7. Both parties’ motions for costs.
In the October 24 Order, the U.S. District Court for Southern District of Florida resolved those motions as follows:
  1. Denied.
  2. Granted in part, but only to extent that award of $500,000 to Michael Chow would be set aside.
  3. Denied.
  4. Denied.
  5. Denied.
  6. Denied.
  7. Granted in part.  All defendants other than Davé 60 NYC, Inc. may recover costs of defending against Plaintiffs’ claims.  Plaintiff TC Ventures entitled to costs of prosecuting its false advertising and “unfair competition by deceptive conduct” claims.  All Plaintiffs entitled to recover costs of defending against Defendants’ unsuccessful counterclaims.
The court then entered a Final Judgment consistent with its post-trial rulings in the October 24 Order.

District Court’s Rationale in Resolving New Trial, JMOL, and Injunction Motions

The only motions discussed in further detail here, beyond the comments stated above, are the first four listed.

Plaintiffs’ Motion for New Trial on Trademark & Trade Name Counts

The court considered these claims together, as the parties “agree[d] that in this case the relevant factors for considering whether Plaintiffs established a likelihood of confusion as to the alleged infringement of the trademark and the trade name are identical.”[28]

In its course of citing Eleventh Circuit precedent on standards for analyzing motions for a new trial, the court stated that it “properly defers to the jury unless their verdict is against the great weight of the evidence.”[29]  In light of these standards, the court upheld the jury’s verdict.

The court proceeded to weigh the evidence associated with each likelihood-of-confusion factor asserted by the Plaintiffs, beginning with evidence of actual confusion.  In the Eleventh Circuit, “evidence of actual confusion is the best evidence of a likelihood of confusion.”[30] The court remarked that plaintiffs only submitted the following evidence in support of this factor, and made the assessments of that evidence quoted here:[31]
  • Newspapers that allegedly told readers that Philippe Chow restaurants were “Mr. Chow”.  The court assessed the exhibits and determined that the newspapers cited by Plaintiffs did not equate the restaurants as argued.  A blog post on a New York Post website described Defendants’ New York restaurant as “Mr. Chow’s famous Chinese restaurant, Philippe.”  The court did not find that evidence significant because “the author herself did not go to the restaurant,” instead sending two people there on a blind date.[32]  A New York Times blog post referring to a press release by Defendants in a survey of New York restaurants met with similar treatment: “The author is not identified as a customer of the restaurants, and this brief mention may have been insufficient to convince the jury that this was evidence of actual confusion by relevant customers.”[33] 
  • Other website (blog) postings. 
    • “Of the other exhibits offered by Plaintiffs,” stated the court, “all appeared on websites . . . with an unknown readership, or on an open website to which the public can post a comment . . . and, as such, may have been viewed by the jury as of little persuasive value in determining that actual consumers were confused.”[34]
    • The court further reasoned: “Plaintiffs did not establish that the persons writing these blog postings or comments were actual consumers of the Plaintiffs’ restaurants, with the possible exception of the ‘Lisa M.’ who posted a comment on yelp.com, nor did they establish that the reading audience, which might include actual customers of Plaintiffs’ restaurants – was confused.”[35] 
    • Summarizing its views of this evidence, as well as the newspaper evidence mentioned above, the court concluded: “The jury simply may not have viewed these exhibits as evidence of actual confusion by the relevant consuming public, or may not have found that any confusion indicated in these exhibits had been caused by Defendants’ use of ‘Philippe by Philippe Chow.’”[36]
  • Alleged in-person statements by customers expressing confusion.  “The evidence offered through Plaintiffs’ employees suggested that some diners at Plaintiffs’ restaurants apparently had desired originally to dine at Defendants’ restaurants but arrived at Plaintiffs’ restaurants, diners ordered dishes which were not served at Plaintiffs’ restaurants but claimed that they had ordered the dish on a prior visit (obviously, at Defendants’ restaurants), etc.”[37]
    • “Without specifics as to the consumers’ basis for confusion, e.g., the record is silent as to what caused these customers’ confusion, the jury might have found that the confusion was not based on Defendants’ allegedly infringing use of ‘Philippe by Philippe Chow.’”[38]
    • The court questioned whether it was correct in even admitting this testimony at trial in the first place, “since it generally was introduced without specific information as to when the statements by customers were made, or which customers made such statements.”[39]
  • Alleged statements made by Defendants’ employees.  As examples, the court mentioned: (i) a statement in which a defendant employee answered “yes” when asked over the phone whether that restaurant was “Mr. Chow”; and (ii) a statement by a reservations agent to a private investigator that “people make that mistake all the time.”[40]  The court remarked: “the jury reasonably could have found this evidence to be unpersuasive.”[41]
    • The court viewed statement (i) as “not exactly misleading, nor is it relevant evidence of any confusion by customers.”[42]
    • Statement (ii), indicated the court, “may have been viewed by the jury as an offhand or isolated remark” and “not direct evidence of actual confusion by customers of either Plaintiffs’ or Defendants’ restaurants.”[43]  Here again did the court question its prior evidentiary ruling in admitting a statement over a hearsay objection: “I probably should have excluded this evidence at the time, as a reservations agent is not an agent of the party to the extent that they do not have the authority to bind the party on a critical issue in this litigation . . . .”[44]
“As to the similarity of the marks,” said the court, “there was little or no evidence that the Defendants ever used the specific mark ‘Mr. Chow.’”[45]  The court viewed the evidence at trial as having “clearly established that the prominent term in the Defendants’ restaurants’ trade name is Philippe by Philippe Chow.”[46]  Furthermore, added the court, since the Plaintiffs did not take action until almost 4 years after the opening of Defendants’ restaurants, “the jury may have determined that Plaintiffs themselves did not find much similarity between [the parties’ marks].”

The court’s assessment other likelihood-of-confusion factors did not lead to any finding that the jury’s verdict was against the weight of evidence presented on any of those factors.  Nor did the Plaintiffs prevail on their alternative ground for a new trial on Counts I and II, namely, alleged misconduct by Defendants and their counsel.  As a result, the Court denied Plaintiffs’ motion for a new trial on those counts.

Defendants’ JMOL Motion on False Advertising and Related Unfair Competition Counts

“At trial, Plaintiffs offered evidence of two categories of allegedly false advertising: (1) statements by (or at the direction of) Defendant Morfogen to restaurant critics/reviewers in December 2005 that Defendant Chau was the mastermind of the dishes and the architect of the menu at the Mr Chow restaurants and that Defendant Chau was a chef acclaimed by top critics, and (2) the purchase of search terms on internet search engines which resulted in the Philippe restaurants appearing in searches for ‘Mr Chow’ restaurants.”[47]

Defendants’ JMOL motion argued that Plaintiffs presented no evidence of actual damages required to sustain a false advertising claim, and also asserted that the jury’s damage awards to TC Ventures, Inc. and to Michael Chow, individually, were duplicative.[48]

The court devoted little space regarding asserted false advertising category (1), holding that “[t]here was sufficient evidence that certain statements reported in the media were without basis in fact,” and observing that “Defendant Morfogen appears inclined toward exaggeration,” pointing to inaccurate public statements by Mr. Morfogen about court rulings.[49]

Regarding category (2), the court acknowledged: “The Eleventh Circuit ‘has not determined whether the purchase of Google AdWords can be considered a use in commerce for purposes of 15 U.S.C. § 1125(a).’”[50]  According to the court, Plaintiffs offered no testimony “as to whether such sponsored links had resulted in consumers going to Defendants’ restaurants as a result of confusion when their original intention was to dine at a Mr Chow restaurant.”[51]  Nevertheless, the court observed that the law in this area is unsettled, and that although one Eleventh Circuit decision hinted that the use of another’s mark as a “meta tag” might not always be actionable by itself, “the jury had a legally sufficient basis for its verdict as to this claim.”[52] 

The court was more sympathetic to Defendants’ duplicative damages argument, finding that the jury had mistakenly awarded damages to Mr. Chow individually because the verdict form was confusing and did not correspond to the jury instructions.[53]  Thus the court set aside the $500,000 award to Mr. Chow.[54]

In sum, the court only granted the part of Defendants’ JMOL motion directed to the duplicative damages; it denied that motion in all other respects.

Plaintiffs’ Motion for Injunctive Relief as to False Advertising and Related Unfair Competition Counts

Though Plaintiffs successfully resisted Defendants’ JMOL motion as to these counts, they did not obtain the injunctive relief they sought.  The court observed that the most recent conduct alleged as false advertising was Defendants’ purchase of internet search terms, which occurred “two or more years before the trial of this case.”  Consequently, characterizing injunctive relief as an “extraordinary remedy” that was unnecessary in that case, the court denied Plaintiffs’ motion.[55]

Plaintiffs’ Motion for Injunctive Relief as to Dilution Count

As mentioned previously, Plaintiffs elected have Count V decided by the court only, not by the jury (see Note 21, supra).  The court dispensed with that count in less than a page, holding that the insufficiency of evidence to sustain Plaintiffs’ trademark and trade name claims, coupled with consideration of separately-applicable standards for dilution, rendered the court unable to find for Plaintiffs.  As a result, the court denied Plaintiffs’ motion.[56]

The pending appeal in the Eleventh Circuit is Michael Chow et al. v. Chak Yam Chau et al., No. 12-15994-E (docketed 11/28/12).  


[1] Michael Chow et al. v. Chak Yam Chau et al., No. 1:09-cv-21893-WMH, Dkt. 387, Order on Post-Trial Motions (10/24/12), hereinafter “Oct. 24 Order,” at p. 5.
[2] See generally id., Oct. 24 Order.
[3] MCEL is also the named owner on U.S. Trademark Registration No. 3,558,956, for the mark MR CHOW® (without the period after “MR”) for chopsticks, and has pending applications for MR CHOW for other goods.
[4] Oct. 24 Order at 8 n.11.
[5] Id. at 36.
[6] Id. at 7 & 28-29.
[7] Id. at 29.
[8] Id. at 28.
[9] Id. at 38-39.
[10] Id. at 30.
[11] Id. at 31.
[12] Id. at 28.
[13] Id. at 31.
[14] Id. at 3 & 33.
[15] Id. at 33.
[16] Id. at 34.
[17] Id. at 30.
[18] Id. at 2.
[19] Id. at 2 n.2. 
[20] Id. at 9- 11.
[21] “[T]his claim did not go to the jury because Plaintiffs instead asked this Court to rule on the matter, arguing that the claim sought solely injunctive relief.”  Id. at 56;  see also id. at 8 n.12.
[22] Id. at 5-6 &11.
[23] Id. at 9-11.
[24] Id. at 4.
[25] Michael Chow et al. v. Chak Yam Chau et al., No. 1:09-cv-21893-WMH, Dkt. 349, Verdict Form, at pp. 2-3.
[26] Verdict Form at 6; October 24 Order at 5.
[27] Verdict Form at 7.
[28] October 24 Order at 16.
[29] Id. at 17.
[30] Frehling Enter., Inc. v. Int’l Select Group, Inc., 392 F.3d 1330, 1340 (11th Cir. 1999).
[31] See October 24 Order at 18.
[32] Id. at 19 n.24.
[33] Id. at 20 n.26.
[34] Id. at 20-21.
[35] Id. at 22;  see also id. at 21-22 (quoting Caliber Auto. Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC, 605 F.3d 931, 936 (11th Cir. 2010) (“‘Short-lived confusion or confusion of individuals casually acquainted with a business is worthy of little weight while confusion of actual customers of a business is worthy of substantial weight.’”) (other citation omitted)).
[36] October 24 Order at 22.
[37] Id. at 24.
[38] Id.
[39] Id. at 23 n.31.
[40] Id. at 25.
[41] Id.
[42] Id. (footnote omitted).
[43] Id. at 26.
[44] Id. at 25 n.34.
[45] Id. at 28.
[46] Id. at 30 (underline in original).
[47] Id. at 46 (footnote omitted).
[48] Id. at 44-45.
[49] Id. at 47.
[50] Id. at 49-50 (quoting S. Grouts & Mortars v. 3M Co., 575 F.3d 1235, 1250 (11th Cir. 2009)).
[51] Id. at 49.
[52] Id. at 50.
[53] Id. at 51.
[54] Id. at 55.
[55] Id.
[56] Id. at 56.

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