Fuel Clothing Co. ("Fuel") produces and markets sports apparel that embodies the "skate, snow, surf, moto[cross], music and racing lifestyle." However, Fuel is not so anti-establishment when it comes to protecting its intellectual property. Indeed, while Fuel's sponsored athletes are shredding the fresh powder, you can often find Fuel's lawyers hanging ten in the courthouse, vigorously defending Fuel's trademarks against other apparel companies. The latest battle over the FUEL mark involves Nike.
Fuel owns the trademark for the word FUEL for clothing goods, and in February 2012 brought claims against Nike for trademark infringement and unfair competition relating to Nike's fitness tracker products. According to the complaint, Nike used the term "Fuel" in connection with its NIKE+FUELBAND electronic wristband that tracks physical activity metrics including calories and steps taken, and sold promotional t-shirts with phrases such as "Fuel it up" and "Fuel the people." Nike also registered the trademarks "NIKE+FUELBAND" and "NIKEFUEL" in several classes such as health monitoring devices, watches and bracelets, but not apparel (the class in which the FUEL mark is registered). Nike's branding efforts most certainly fueled the lawsuit, but in this particular judicial footrace, Nike proved to be in better shape. See Fuel Clothing Co., Inc. v. Nike, Inc., 2014 WL 1155402 (D.S.C. Mar. 20, 2014).
In May 2013, Nike moved for summary judgment on two separate grounds: First, Nike argued that Fuel had abandoned its mark through naked licensing, whereby a licensor that exercises insufficient quality control over its licensee's use of a trademark can lose rights in its mark; and, second, Nike argued that Fuel could not show that there is a likelihood of consumer confusion stemming from Nike's use of the FUEL mark.
Fuel raced to a quick lead as the court rejected Nike's affirmative defense of abandonment, whereby Nike argued that some of Fuel's prior agreements in which it permitted certain third parties to use the "Fuel" mark in their products were naked licenses. The court rejected Nike's summary judgment motion on the issue, finding a reasonable jury could interpret the prior agreements to sufficiently restrict the licensees' use of Fuel's mark.
However, Nike refueled and ultimately took the checkered flag as the court granted Nike summary judgment dismissing Fuel's trademark infringement and unfair competition claims, finding no likelihood of confusion. In reaching its decision, the court considered the following factors:
- Strength of Fuel's Mark: The court found that while Fuel's mark is "inherently distinctive," it is commercially weak since consumers would not necessarily associate the mark with the company. In fact, Nike presented evidence of over 1,000 federal trademark registrations that included the word "Fuel," with at least fifteen of those registrations belonging to the same class as Fuel's registration.
- Similarity of Marks: The court noted that Nike's use of FUEL is always paired with the "NIKE" mark or "swoosh," or the "NIKE+FUELBAND" mark, which lessens any consumer confusion due to the textual similarity of the marks.
- Similarity of Goods: As the evidence suggested, the NIKE+FUELBAND is an electronic device unlike anything Fuel ever sold or plans to sell, and sold at a higher price point than Fuel's leather wristbands. As such, the court found that the NIKE+FUELBAND and Fuel's leather wristbands are functionally and aesthetically distinc,t and while Nike's promotional t-shirts are within the scope of Fuel's mark, the t-shirt sales account for less than 1% of all the NIKE+FUELBAND-related sales.
- Similarity of Sales Channels: The court concluded that the NIKE+FUELBAND and Fuel's goods generally were not sold in the same trade channels -- Nike sells the NIKE+FUELBAND exclusively in Nike and Apple stores and on the internet, while Fuel sells its apparel products through its own store, in small retailers, and the internet.
While the court declined to dismiss Fuel's trademark dilution claim due to inadequate briefing of the issue, in a subsequent Consent Order and Final Judgment, Fuel stipulated to the dismissal of the dilution claim in exchange for Nike's withdrawal of its counterclaim seeking to declare Fuel's trademarks invalid.
With surfing as popular as ever – even on the East Coast – the waters are crowded, as swamis and gremmies vie for the best waves. Similarly, the sports apparel and sporting goods market is crowded with countless brands each vying to be the Big Kahuna and ride the next big marketing wave. Not surprisingly, the energetic term "Fuel" is widely sought after. However, at least in this instance, the district court found Fuel's fiery claims little more than smoke.