Friday, April 17, 2009

Traverse Internet Law Federal Court Report: March 2009 Trademark Infringement Cases

The facts are unproven allegations of the Plaintiff and all commentary is based upon the allegations, the truthfulness and accuracy of which are likely in dispute.

FILED: 3/26/2009

Another keyword advertising case. Yes, it is trademark infringement.

Allstar Marketing is a company that rolled out the “Snuggie” which is a fleece blanket with attached sleeves. These have been prominent in television commercials and the sales of the product have exceeded $35 million in just over six months. The Defendants are alleged to have begun marketing a competing blanket under the name “Snuggle”, and alleged to be purchasing sponsored links in the Google AdWords program and presenting its own ad when users search for the Plaintiff’s blanket.

The Plaintiff alleges false designation of origin, unfair competition and false advertising under the U.S. Trademark Act, federal trademark dilution, unfair competition and false advertising under the California Business Code, common law unfair competition, federal trademark infringement, common law unfair competition, and copyright infringement. Extensive injunctive relief is requested as well as compensatory and punitive damages and an award of attorneys’ fees and costs. Traverse Internet Law Cross-Reference Number 1299.

FILED: 3/23/2009

All of the circuit courts around the country, which is the level immediately below the Supreme Court, are now in agreement that keying competing ads when a trademarked term is searched on Google is a form of trademark infringement. There are many sites with the same problem Amazon apparently has, and as a business protecting your trademark it is wise to be reviewing all of the paid advertising that could be directing traffic to competitor’s products or services, even if those competing products are on retail websites.

Video Professor has been in the business of developing, marketing, and distributing for sale to retailers and the general public computer learning products including video tapes and CD-ROMs for over twenty years. The Defendant, Amazon, is alleged to be purchasing AdWords ads keyed to the term “Video Professor”, even though the term has been trademarked by the Plaintiff. Video Professor alleges that when a user clicks on the advertisement link he is taken to a webpage on Amazon’s website which advertises a number of computer learning products that directly compete with the Plaintiff. In fact, Video Professor alleges that the first six products listed on Amazon’s page are computer learning CDs sold by one of Video Professor’s major competitors.

The lawsuit claims false designation of origin and false representation under the Trademark Act, trademark infringement, violations of the Colorado Consumer Protection Act, unfair competition, tortious interference with business relationships, and common law trademark infringement. The suit requests an accounting, the imposition of a constructive trust upon illegal profits, temporary, preliminary, and permanent injunctive relief prohibiting Amazon from presenting its ads when the Plaintiff’s name is searched, damages, restitution, disgorgement of profits, punitive damages up to three times the amount of actual damages, triple damages and attorneys’ fees, and cost of the suit. Traverse Internet Law Cross-Reference Number 1300.

FILED: 3/16/2009

This case is a good example of why it is important to establish clear guidelines for marketing by your publishers or affiliate marketers. If you are running an affiliate marketing program, not only do you have an obligation to establish clearly defined specifications for performance which should prohibit the use of competitor’s names in any type of marketing, but you must do so in such a way that your business is not seen as “controlling” your affiliate marketers or they will be seen as agents and your business will be liable. This is an area ripe for litigation over the coming years. Establish clearly defined rules, do not control the details of an affiliate marketer’s performance, and implement a compliance program to avoid this type of alleged misconduct from creating virtually unlimited liability for your business.

Alaven is in the business of developing, manufacturing, marketing, and selling non-prescription pharmaceutical drug products, dietary supplements, herbal supplements, and intestinal cleanser products. The Plaintiff holds extensive federally registered trademarks in product names. The Defendant is alleged to be operating, controlling, supervising, and directing Internet based advertising and promotional activities through an affiliate program. The affiliates are loading up metatags and are optimizing the affiliate sites with the Plaintiff’s trademark protected product names and diverting business to the Defendant. Plaintiff characterizes Defendant’s conduct as an “illicit metatag practice”. Some of the sites are “comparison” websites or sites that use the Plaintiff’s trademarks in a type of review of the competitor’s product preceding the sales pitch by Defendant’s affiliates to users to purchase the Defendant’s products.

The lawsuit alleges federal trademark infringement, federal unfair competition, false designation of origin, federal false advertising under the trademark laws, trademark dilution, common law trademark infringement, state trademark dilution and injury to business reputation, deceptive trade practices under the Georgia Uniform Deceptive Trade Practices Act, tortious interference with prospective business and economic advantage, and common law unfair competition. Significant in the prayer for relief is a request that all affiliate marketers be enjoined from using the Plaintiff’s trademarks, and that the court award compensatory and punitive damages, triple damages, attorneys’ fees, court costs, and other extensive relief to address the alleged misconduct of the Defendant and its affiliates. Traverse Internet Law Cross-Reference Number 1301.

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