In direct contrast to a decision by the U.S. Court of Appeals for the Fourth Circuit from one month prior (see IP Update, Vol. 13, No. 9) in a case brought by the same plaintiff, Georgia-Pacific Consumer Products (GP) and involving the same claims for contributory trademark infringement, the U.S. Court of Appeals for the Eighth Circuit recently affirmed a district court’s grant of summary judgment against GP, finding no likelihood of confusion by consumers. Georgia-Pacific Consumer Products LP v. Myers Supply, Inc., Case No. 09-2980 (8th Cir., Sept. 15, 2010) (Benton, J.) (Beam, J. concurring-in-part and dissenting-in-part).

Plaintiff GP designs and manufacturers paper products and dispensers. In 2002, GP introduced its "enMotion" brand automated touchless paper towel dispenser, designed to use GP’s proprietary, "fabric-like" paper toweling. The dispensers bear GP’s marks "enMotion," "Georgia-Pacific" and a stylized "GP." GP leases the enMotion dispensers to janitorial supply distributors, who sublease them to end users such as hotels and restaurants. The leases and subleases expressly provide that only enMotion brand paper toweling may be used in the dispensers. A sticker and warranty card inside the dispensers state that only GP-brand towels may be used.

GP has brought several suits in efforts to halt the "stuffing" of enMotion dispensers with non-GP branded paper toweling. GP brought claims of contributory trademark infringement and unfair competition against one of its competitors, von Drehle, in the U.S. District Court for the Eastern District of North Carolina when von Drehle began manufacturing and selling to distributors an inferior paper toweling for use in GP’s enMotion dispensers. The 4th Circuit vacated and remanded a district court’s grant of summary judgment to defendant, finding that to the extent that defendant knowingly created its towels for use in GP’s enMotion machines and supplied them to distributors knowing that they would be used as such, the defendant may be liable for trademark infringement. The 4th Circuit agreed with GP that its reputation may suffer if it could not control the quality of toweling used in the enMotion dispensers.

GP also sued a distributor of von Drehle’s paper toweling, Myers Supply, in the U.S. District Court for the Western District of Arkansas. The court entered judgment for Myers on GP’s contributory trademark infringement after a bench trial. The court determined that although Myers knew its customers were stuffing the enMotion dispensers with non-GP brand towels, there was no infringement because GP failed to show likelihood of confusion. On appeal, GP argued that the district court improperly dismissed its survey evidence, which had also been offered in the 4th Circuit case. The 8th Circuit affirmed the district court’s holding for defendant. In so doing, the 8th Circuit agreed that GP’s survey evidence, allegedly showing a confusion level of 23 percent, was entitled to little probative weight in light of its methodological flaws. Myers also offered a survey that showed an 11 percent confusion level, which is a level that has been found sufficient for trademark infringement liability in prior cases. However, the 8th Circuit noted that the probative value of both surveys were outweighed by multiple forms of evidence indicating that it is a common and acceptable practice to "stuff" paper towels of one brand in an unleased dispenser bearing the marks of a different brand. One of GP’s regional managers testified that this was an acceptable practice, and GP’s own catalogues indicated that GP sold paper towels to fill dispensers made by other companies.

Practice Note: Although GP lost in the 8th Circuit, suppliers who sell universal type paper toweling for use in GP’s proprietary enMotion dispensers may face liability for contributory trademark infringement if GP can demonstrate that consumers do associate the quality of non-GP brand towels with GP based upon the GP marks displayed on the dispenser.

The 8th Circuit decision suggests that a defendant may successfully counter survey results indicating an appreciable amount of consumer confusion by presenting solid evidence that prevailing practices in the particular industry at issue work to eliminate consumer confusion.