Posted onApril 13, 2020byHenry Sneath|Comments Off on #3M® Sues NJ Based #PerformanceSupply, LLC for #N-95 Mask #Trademark Infringement and #Covid Related #PriceGouging
Plaintiff #3M® Company filed suit in the USDC SDNY on Friday against New Jersey based Performance Supply, LLC alleging Trademark Infringement, Unfair Competition, False Endorsement, False Designation of Origin, False Advertising, Trademark Dilution, NY State Law Deceptive Acts and Practices, and seeking Injunctive Relief and Exemplary Damages. 3M indicates in the suit that any recovery of damages will be donated to Covid-19 related charities. See the Complaint as filed here:
3M claims that Performance Supply falsely tried to obtain a purchase order and sell through a quote to the City of New York, millions of #N-95 Respirator Masks to be used in the battle against #Covid-19. Performance allegedly used the 3M marks (including the TM phrase “3M Science. Applied To Life”®) and 3M references liberally in its proposal and sought to confuse and deceive NY City into believing that Performance Supply and 3M were aligned and working together on the offer to sell masks. Further, the lawsuit alleges that Performance engaged in price gouging in seeking to charge NY prices that were 500-600% above 3M’s list price.
3M alleges that its marks are incontestable, arbitrary and strong and have long been associated with safety masks and equipment. They stress that during this Corona virus crisis, 3M HAS NOT INCREASED ITS PRICES and that this marks a strong comparison to Performance which is accused of price gouging and other business torts under both Federal and NY State Laws. Performance, sought a purchase order from NY through a quote sent to NY’s procurement director. In its formal quote, Performance states that “acceptance of the purchase order is at the full discretion of 3M…” This is alleged by 3M to show a false designation of origin and false endorsement by 3M of the quote. 3M is represented by Mayer Brown LLP.
Posted by Henry M. Sneath, Esquire Co-Chair Litigation Practice Group and Chair of the IP Practice Group: Houston Harbaugh, P.C. 401 Liberty Avenue, Pittsburgh, Pa. 15222. Sneath is also an Adjunct Professor of Law teaching two courses; Trade Secret Law and the Law of Trademarks and Unfair Competition at Duquesne University School of Law. Please contact Mr. Sneath at 412-288-4013 or email@example.com.
This week the United States Supreme Court determined that a jury should decide the issue of whether “tacking” can be used by a trademark holder to assert a priority position.
In Hana Financial, Inc. v. Hana Bank, No. 13-1211 (decided January 21, 2015), Hana Financial sued Hana Bank for trademark infringement. Hana Bank asserted the doctrine of tacking as a defense, claiming that its mark came first. This argument is relevant because under trademark law, rights in a trademark are determined by the date of the mark’s first use in commerce. In other words, the party who uses a mark in commerce first is given priority over other users. The doctrine of tacking arose from courts’ recognition that trademark users ought to be able to modify their marks over time without losing priority (for instance, think of the Aunt Jemima mark: The mark dates to 1893 but Aunt Jemima has changed her appearance over the years. Thanks to the tacking doctrine, the owner of the mark, currently Quaker Oats Company, keeps that 1893 priority date. Fun Fact: The Aunt Jemima mark actually changed trademark law in the United States. (See this article for details.) A trademark holder may use “tacking” when the original and revised trademarks are “legal equivalents” in that they create the same, continuing commercial impression. In short, tacking applies when a consumer considers both marks to be the same despite a modification.
The Supreme Court, in an opinion delivered by Justice Sotomayor, concluded that because the tacking inquiry operates from the perspective of an ordinary purchaser or consumer, a jury should make the determination of whether the modified mark creates the same, continuing commercial impression. Prior to this ruling, there had been a split in the federal circuit courts as to whether tacking was a question for the jury or the court. The Supreme Court has now decided the issue. Note, that the Supreme Court did acknowledge that the issue of tacking could still be decided by a judge on a motion for judgment as a matter of law or on a motion summary judgment under the right set of facts.
So which bank won? Hana Bank. Hana Bank convinced a jury that the doctrine of tacking applied to its mark such that it had priority over Hana Financial. Based on the Supreme Court’s ruling, the jury verdict will stand.
Law360 and CNBC reported this week about the social media backlash that occurred when Lagunitas Brewing Co. brought a trademark suit against Sierra Nevada Brewing Co. over the use of “IPA” on labels for India Pale Ale. The backlash was so great that Lagunitas moved to dismiss its lawsuit just two days after it filed the suit.
For those of you who practice in the area of trademark law, you might quickly jump to the conclusion that the suit was a weak one given that the term IPA sounds very “descriptive” or “generic” at first glance. However, the suit wasn’t that simple. Lagunitas didn’t just oppose the use of “IPA” on the label, and in fact there are a lot of beers out there with “IPA” on the label (yes, I’ll admit I’m pretty well aware of these other beers having tried a few myself). Lagunitas’ objection was the way in which Sierra Nevada designed its logo, which allegedly looked very similar to Lagunitas’.
Whether Lagunitas would have ultimately prevailed in a court of law is up for debate. However, Lagunitas appeared to be losing in the court of public opinion and that was enough to push it to withdraw the suit. This is an interesting issue for IP practitioners to keep in mind in those cases where a client’s business is dependent upon favorable public opinion.
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Contact our Pittsburgh Intellectual Property, Data Security, Trade Secret, DTSA and Technology Attorneys at Houston Harbaugh, P.C. through IP and Litigation Sections Chair Henry M. Sneath at 412-288-4013 or firstname.lastname@example.org. While focusing first on health care and prevention issues for family, friends and employees, we are also beginning to examine the overall Covid Law related issues in business litigation, contract force majeure, trusts and estates litigation and insurance coverage issues that will naturally follow the economic disruption of the Covid-19 pandemic.
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