Bar Journal - Spring 2006
Federal Court Practice: Prosecuting Trademark Infringement & ECF
By: Attorney Timothy J. Ervin
How do you protect a client’s valuable trademark rights against infringement in today’s global marketplace? If you think the hardest part is clearing a trademark for use, think again. Just as important as securing rights to use intellectual property is the ability to protect those rights against infringement. With the advent of the internet, trademark, copyright, patent, and publicity right holders face the daunting task of policing and protecting their intellectual property rights from the near daily assault of would-be infringers. While some major internet host sites such as eBay have developed programs specifically designed to address infringement,1 these programs, in and of themselves, do little to protect the intellectual property right holder.
This article discusses how trademark holders who have secured a federal registration of their marks can avail themselves of a powerful weapon in the form of an ex-parte seizure order under the Lanham Act.2 Part I defines what constitutes a trademark, as compared to other intellectual property. Part II discusses trademark infringement, enforcement of a trademark holder’s rights, and the criteria for obtaining ex-parte relief under the Lanham Act, as well as the benefits of registering a mark under New Hampshire’s Model State Trademark Act. Finally, Part III addresses the commencement of an action for trademark infringement in the United States District Court and compliance with the Administrative Procedures for Electronic Case Filing (ECF).
I. Definition of a trademark
Under the Lanham Act a trademark is defined as: “any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those sold by others.”3 While the definition on its face appears to be straightforward, in practice, it can become much more complicated. As Judge Learned Hand has explained: [A] trademark is not property in the ordinary sense, but only a word or symbol indicating the origin of a commercial product. The owner of the mark acquires the right to prevent the goods to which the mark is applied from being confused with those of others and to prevent his own trade from being diverted to competitors through their use of misleading marks. There are no rights in a trademark beyond these.4 Trademarks are not rights in gross, but rather symbols of the public’s confidence or “goodwill” in a particular product.5
II. Trademark Infringement
Under the Lanham Act, infringement of a trademark is defined as the “use in commerce (of) any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or (where persons without authorization ) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.”6 Infringement arises where the use of a mark by another “carries with it a likelihood of confusing an appreciable number of reasonably prudent purchasers exercising ordinary care.”7
Most often the relief available for infringement is the issuance of an injunction to enjoin and restrain the infringing conduct.8 However, the remedies available to the trademark holder under Section 1116 are not limited to injunctive relief.9 Congress recognized the inherent difficulties for trademark holders to be able to determine and prove the extent of the infringement of their marks where an infringer is provided notice and has the opportunity (and the motive) to conceal the true extent of their infringement.10 In response to the near daily assault upon the holders of famous trademarks, the United States Congress enacted the provisions of 15 U.S.C. 1116(d) in order to protect trademark owners. The legislative purpose underlying §1116(d) is manifest from the Joint Statement of the congressional committees:
The purpose of the ex-parte seizure provision is to provide victims of trademark counterfeiting with the means of ensuring that the courts are able to exercise their jurisdiction effectively in counterfeiting cases. Testimony before both the House and Senate Judiciary Committees established that many of those who deal in counterfeits make it a practice to destroy or transfer counterfeit merchandise when a day in court is on the horizon. The ex-parte seizure procedure is intended to thwart this bad faith tactic, while ensuring ample procedural protections for persons against whom such orders are issued. In essence, both the Senate and House bills permitted issuance of an ex-parte seizure order if the applicant could show that the Defendant would not comply with a lesser court order, such as a temporary restraining order, and that there was no means of protecting the court’s authority other than to seize the property in question on an ex-parte basis.11
As any practitioner knows, most courts are often loathe to grant ex-parte relief and so a strong command of the requirements of Section 1116(d) and the relevant case law is essential to moving forward to obtain ex-parte relief. Section 1116 (d) provides in pertinent part that: “In the case of a civil action (for counterfeiting) the court may, upon ex-parte application, grant an order under subsection (a) of this section pursuant to this subsection providing for the seizure of goods and counterfeit marks involved in such violation and the means of making such marks, and records documenting the manufacture, sale or receipt of things involved in such violation.” A party moving for issuance of an ex-parte seizure order must satisfy all of the criteria set forth in Section 1116(d)(4)(B), which provides: “[t]he court shall not grant [a seizure application] unless - the court finds that it clearly appears from specific facts that - (i) an order other than an ex-parte seizure order is not adequate to achieve the purposes of section 1114 of this title; (ii) the applicant has not publicized the requested seizure; (iii) the applicant is likely to succeed in showing that the person against whom seizure would be ordered used a counterfeit mark in connection with the sale, offering for sale, or distribution of goods or services; (iv) an immediate and irreparable injury will occur if such seizure is not ordered; (v) the matter to be seized will be located at the place identified in the application; (vi) the harm to the applicant of denying the application outweighs the harm to the legitimate interests of the person against whom seizure would be ordered of granting the application; and (vii) the person against whom seizure would be ordered , or persons acting in concert with such person, would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person.”
The statutory requirements of 1116 (d) are rigid and should be strictly followed. Specifically, before moving for an ex-parte seizure order the applicant is obligated to notify the United States Attorney for the judicial district in which the action is sought of the intended seizure action.12 It is good practice to attach a copy of the notice letter along with a certified mail receipt demonstrating proof of notice to the U.S. Attorney, as an exhibit to the Complaint. In addition, the applicant must post a surety bond in an amount deemed adequate by the court.13 The application must further be based upon an affidavit or verified complaint.14 The proposed order must contain findings of fact and conclusions of law to support the order; must contain a description of the matter to be seized and a description of each location where such matter is to be seized; set forth a time period not to exceed seven (7) days after which the order is dated during which the seizure must occur; recount the amount of security required to be provided; and set forth a date for a further hearing to take place which shall not be sooner than ten (10) days after the order is issued nor later than fifteen (15) days after the order is issued.15
Once the petitioner has complied with the statutory requirements, the memorandum of law submitted in support of the application should contain a detailed argument of each of the respective factors supporting why the requested relief is warranted. While at first, ex-parte relief may seem extraordinary to the court, in the trademark infringement context, courts have consistently granted applications for ex-parte seizure orders to prevent the passing off of infringing merchandise to the public.16 The rationale for granting ex-parte relief was enunciated in the seminal case of In re Vuitton et Fils S.A.17 where the court found that “dumping of counterfeit goods or transfer of counterfeit goods to unknown third parties is a common practice in the counterfeiting industry.” Other courts have gone on to note that: “Defendants in such counterfeiting cases often raise spurious, if any, defenses, and have few or no discoverable assets from which a monetary award of damages can be satisfied.”18 One of the strongest statements supporting the granting of ex-parte seizure orders was expressed by the Fifth Circuit Court of Appeals when the Court stated: “Consent restraints have been entered but not abided . . . While it appears that they [defendants] may have harvested some crop since the litigation commenced, they have infringed another’s land in the raising of it and, though under court order to account for its proceeds, they refuse. . . The spectrum of products which have been prey to this contagion appear to be limited only by the perimeters of human imagination. Designer clothing, well-known watches, major credit cards, and even such consumer items as Mazola corn oil have been slavishly copied. The public is deceived daily.”19 Such precedent is instrumental in framing the underlying rationale for the court for the application for an ex-parte seizure order, and for providing the court with a level of comfort in knowing that the relief being requested is backed by a mountain of precedent.
After having physically secured the infringing products, documents, and records in the possession of the infringing party, which will detail the extent of the infringement after executing the ex-parte seizure order, the next step is to assess the information to determine the extent of the damages to which the trademark holder is entitled. Generally, the trademark holder is entitled to recover the infringer’s profits, any damages sustained by the trademark holder, and the costs of the action.20 Under the Lanham Act, attorneys’ fees are recoverable, but only in “exceptional circumstances.”21 Conversely, New Hampshire’s statutes provide for the recovery of attorney’s fees “as a matter of course and only to plaintiffs, and offers enhanced damages automatically upon a showing that the violation was willful or knowing.” 22 Thus for trademark holders that have registered their mark in New Hampshire the potential for recovery of attorney’s fees and enhanced damages is sufficiently stronger than attempting to recover this relief under the Lanham Act alone.
On the Trail of Bogus Bob Marley Merchandise
An ex parte seizure provides the ability to simultaneously raid different locations. In Florida, in a matter involving counterfeit Bob Marley T-shirts, we effectuated a simultaneous raid on 12 locations with the assistance of 24 U.S. Marshals, resulting in the seizure of some 8,000 infringing T-shirts, as well as the manufacturing screens and artwork used to create them. We were able to secure purchase orders and invoices, resulting in a six-figure settlement for the client.
In a seizure conducted in Boston at a bootleg poster printing company, we were able to seize over 37,000 infringing posters (which violated both trademark and copyrights of the plaintiffs) depicting Frank Sinatra, Bob Marley, Pearl Jam, the works of Salvador Dali, the band Nirvana, and the movies Reservoir Dogs and Army of Darkness, just as the posters were being readied for shipment to college campuses throughout the U.S. We also located and seized the master discs used to create the infringing posters, as well as printing schedules and sales records, resulting in a preliminary injunction and a $200,000 settlement.
Copyright Fifty Six Hope Road Music, Ltd. Used with permission.
The Marley family sponsored a benefit concert in Ethiopia, marking the family’s first return to that country in over 20 years. Three weeks later, surrepitiously taped footage of the concert was being sold in the U.S. using the Marley trademark and copyrighted images. After setting up a “dummy buy” of product in San Diego, CA, we seized over 8,000 copies of the bootleg DVD. The litigation is pending in the U.S. District Court in San Diego.
- Jay Lee
III. Jurisdiction In Federal Courts For Trademark Matters
Several statutes provide for original jurisdiction in the district courts of the United States over trademark matters. Under the Lanham Act the district courts are vested with original jurisdiction under 15 U.S.C. §1121, which provides in relevant part that: “the district . . . courts of the United States shall have original jurisdiction . . . of all actions arising under this chapter, . . .” The district courts are also vested with original jurisdiction under 28 U.S.C. § 1338, 28 U.S.C. § 1331, and 28 U.S.C. § 1332. In cases where a federal trademark holder has either secured a state trademark registration or is bringing claims for common law trademark infringement, the district courts have pendent jurisdiction over all state law claims pursuant to 28 U.S.C. § 1367. In ex-parte seizure actions where the trademark holder will be seeking an immediate order to seize any and all infringing goods and related records, venue arises pursuant to 28 U.S.C. § 1391 (b).
Effective June 1, 2004 all documents filed in the United States District Court in New Hampshire (with limited exception) are to be filed electronically.23 Moreover, all attorneys admitted to practice in the United States District Court in New Hampshire who intend to appear in a matter before the Court are obligated to register as filers under the Electronic Case Filing (or “ECF”) system.24 This includes attorneys admitted on a pro hac vice basis.25 Case opening documents such as a civil action cover sheet, complaint and notice of removal may be filed electronically,26 or may be filed conventionally. However, if the case opening documents are filed conventionally by an attorney, an electronic copy in .pdf format must be filed within 48 hours.27
An action seeking the issuance of an ex-parte seizure order cannot be filed electronically in the District Court in New Hampshire, as ex-parte pleadings such as a request for an ex-parte seizure order under 15 U.S.C. 1116 (d) may only be filed conventionally.28 However, ex-parte pleadings are scanned and added to the court’s electronic docket after they are conventionally filed.29 In addition, pursuant to 15 U.S.C. 1116(d)(8), an ex-parte seizure order and related documents are to be filed under seal until such time as the person against whom the order is sought has the opportunity to appear and contest such order. However in the United States District Court in New Hampshire, documents filed under seal may only be filed conventionally.30
As one commentator has described the situation, “Experience in hundreds of cases has shown that it is extremely likely that a counterfeiter, upon being apprised of the institution of a lawsuit by the trademark owner, will conceal his infringing merchandise and either destroy or conceal all records relating to this merchandise, thereby frustrating implementation of the trademark owner’s statutory and common law rights.”31 Accordingly, in light of the burgeoning problem of trademark infringement and the difficulty faced by trademark holders in protecting their trademark rights, Congress and the courts have embraced ex-parte seizure orders in order to enable trademark holders to curtail infringement by permitting immediate seizure of infringing goods and holding the same as security to satisfy a judgment - most often leaving immediate seizure of all infringing products as the only meaningful relief available to the trademark holder.
1. Vero Program.
2. 15 U.S.C. §1051, et. seq. Marks that are adopted and used in the State of New Hampshire may be registered under RSA 350 A:3 and A:4.
3. 15 U.S.C. §1127. RSA 350-A:1 I defines the term “trademark” as “any word, symbol or device or any combination thereof adopted and used by a person to identify goods made or sold by him and to distinguish them from goods made or sold by others.”
4. Industrial Rayon Corp. v. Dutchess Underwear Corp., 92 F.2d 33 (2nd Cir. 1937).
5. Premier Dental Products v. Darby Dental Supply Company, 794 F.2d 850, 854 (3rd Cir. 1986).
6. 15 U.S.C. §1114 (a) (b).
7. Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO v. Winship Green Nursing Ctr., 103 F.3d 196, 201 (1st Cir. 1996). In determining confusion the First Circuit has identified the following factors that must be considered: 1) the similarity of the marks; 2) similarity of the goods; 3) channels of trade; 4) channels of advertising; 5) class of prospective purchasers; 6) evidence of actual confusion; 7) defendant’s intent in adopting the mark; and 8) strength of the mark. Winship Green, 103 F.3d at 201; Pignons S.A. de Mecanique de Precision v. Polaroid Corp., 657 F.2d 482, 487 (1st Cir. 1981).
8. 15 U.S.C. §1116; However, claims for infringement are not limited to equitable relief. See, Attrezzi, LLC v. Maytag Corporation, No. 05-2098 and No. 05-2181 (lst Cir. Jan. 27, 2006) “An infringement claim for damages is a common- law rather than an equitable claim . . .”
9. 15 U.S.C. §1116 (d).
10. Joint Statement, 130 Cong.Rec. at H12080, reprinted in Gilson, 4 Trademark Protection and Practice, §34 at 34-622. See also H.R. 997, 98th Cong., 2d. Sess., 19 (1984).
11. Joint Statement, 130 Cong.Rec. at H12080, reprinted in Gilson, 4 Trademark Protection and Practice, §34 at 34-622. See also H.R. 997, 98th Cong., 2d. Sess., 19 (1984).
12. 1116 (d) (2).
13. 1116(d) (4) (A).
14. 1116 (d) (3) (A).
15. See 1116 (d)(5)(A-E), see also 1116 (d) (10) (A).
16. See, United States v. Bohai Trading, Co., 45 F.3d 577 (1st Cir. 1995); Fimab-Finanziaria Maglificio v. Helio Import/Export, 601 F.Supp. 1 (S.D. Fla. 1983); Vuitton v. White, 945 F.2d 569 (3rd Cir. 1991) (holding failure to grant ex-parte order where moving party has demonstrated prima facia showing under Lanham Act constituted reversible error) (further citations omitted).
17. 606 F.2d 1 (2nd. Cir. 1979).
18. Helio, 601 F.Supp at 2.
19. CPC International Inc. v. Albury Sales Co. 504 F.Supp. 549 (S.D. Fla. 1980) (fake Mazola corn oil), appeal dismissed (5th Cir. 1981).
20. 15 U.S.C. 1117 (a).
21. Attrezzi, supra; see also, Scott Fetzer Co. v. House of Vacuums, Inc., 381 F.3d 477, 490 (5th Cir. 2004).
22. Attrezzi, supra citing RSA 358-A:10.
23. AP 2.1(a).
24. AP 6.1(a).
25. AP 6.1(b).
26. AP 2.4(a).
27. AP 2.4(a).
28. See AP 3.4.
29. AP 3.4.
30. AP 3.3.
31. Bainton, Seizure Orders: An Innovative Judicial Response to the Realities of Trademark Counterfeiting, 73, Trademark Rep. 459, 464 (1983).
Attorney Timothy J. Ervin is a partner and founding member of the law firm of Gallant & Ervin, LLC in Chelmsford, Massachusetts. He is admitted to practice in Massachusetts and New Hampshire, and appears regularly before the federal district courts throughout the country on intellectual property matters. Gallant & Ervin serves as intellectual property counsel to the Estate of Bob Marley and the Marley family. The author would like to acknowledge the assistance of Attorney Jay V. Lee of Gallant & Ervin, a member of the Bar Journal Editorial Advisory Board, in connection with this article.