Defendant used plaintiff’s trademark on its website to compare its product to plaintiff’s competing product, and plaintiff sued for trademark infringement and dilution. The district court granted defendant’s motion to dismiss based on the allegations in plaintiff’s complaint and in the examples of defendant’s use of plaintiff’s mark in the exhibits to the complaint. The court held that defendant’s use of its competitor’s trademark was nominative fair use because the mark was used to distinguish the parties’ products, and there was no likelihood of consumer confusion.
Plaintiff Architectural Mailboxes, LLC (“AM”) sold metal mailboxes under the licensed trademark OASIS. Defendant Epoch Design, LLC (“ED”) sold competing mailboxes. AM alleged that ED used the OASIS mark on its website to divert customers to ED’s stores, and that ED used an OASIS mailbox at trade shows and in its stores to make false and misleading statements about the OASIS mailbox. AM sued for trademark infringement and dilution, among other claims. ED filed a motion to dismiss AM’s complaint in its entirety.
The district court granted ED’s motion to dismiss AM’s infringement, dilution, and false-designation-of-origin claims, but refused to dismiss AM’s false-advertising claim. ED argued that its use of OASIS to refer to AM’s products was a nominative fair use of that mark, and the court agreed. Nominative fair use applies when (1) the product is not readily identifiable without use of the mark; (2) the defendant uses no more of the mark than necessary; and (3) the defendant does not falsely suggest that he is sponsored or endorsed by the trademark owner.
AM argued that ED did not meet this test and, in any event, this issue was not appropriate for resolution on a motion to dismiss. ED relied on the Sixth Circuit’s 2009 decision in Hensley v. Propride, holding that the defendant’s use of the HENSLEY surname of its competitor’s former designer to advertise trailer hitches designed by the same person for defendant was a noninfringing, nominative fair use of the name. In Hensley, the Sixth Circuit affirmed the district court’s grant of the defendant’s motion to dismiss because the complaint did not allege facts sufficient to show that the defendant’s use of the HENSLEY name created a likelihood of confusion. The Sixth Circuit also looked to the exhibits attached to the plaintiff’s complaint. Specifically, the defendant’s print ads included a disclaimer that Hensley was no longer affiliated with the plaintiff, and provided the defendant’s telephone number and website address. The defendant’s website, as well as an eBay listing, provided information on Hensley’s separation from the plaintiff and his new relationship with the defendant. For these reasons, the Sixth Circuit concluded that the defendant’s use of the HENSLEY mark did not create a likelihood of consumer confusion.
Applying Hensley to this case, the court stated that the exhibits attached to AM’s complaint “lead to the same conclusion, namely that [AM] failed to allege sufficient facts to demonstrate a likelihood of confusion.” Specifically, the excerpts from ED’s website clearly identified AM as the manufacturer of the OASIS mailbox, and even indicated that “OASIS is a registered trademark of Architectural Mailboxes” (emphasis added by the court). The court also agreed with ED that it did not seek to create an affiliation, connection, or sponsorship between itself and AM’s products, because all of ED’s statements about the OASIS mailbox were negative and critical (i.e., ED would not want to associate itself with a competitor’s inferior product). According to the court, ED’s intention in using the OASIS mark was instead to draw a “clear distinction” between its products and AM’s OASIS products. The court thus held that AM did not allege facts sufficient to support its infringement claims.
The court was careful to note that other district courts in the Ninth Circuit have declined to dismiss trademark-infringement claims based on nominative fair use at the pleading stage. However, it also noted that one district court dismissed an infringement claim based on the descriptive-fair-use defense, which was upheld by the Ninth Circuit. Although the court recognized that descriptive fair use is not the same defense as nominative fair use, the Ninth Circuit’s decision indicated that courts may resolve fair-use issues at the pleading stage. Accordingly, the district court dismissed AM’s infringement and false-designation-of-origin claims. The court also dismissed AM’s dilution claim because the Lanham Act expressly provides that “[a]ny fair use, including a nominative or descriptive fair use,” may not be actionable as dilution. However, the court denied ED’s motion to dismiss AM’s false-advertising claim because AM sufficiently alleged that ED made false statements on its website about AM’s OASIS mailboxes.
Although the court granted ED’s motion to dismiss AM’s claims for infringement, false designation of origin, and dilution, it did give AM leave to file an amended complaint to attempt to cure the pleading deficiencies discussed above, failing which the court would dismiss the claims with prejudice and without further leave to amend.
This decision is important because it provides infringement defendants with some hope of dismissing trademark claims on nominative-fair-use grounds at an early stage of the case. At the same time, this decision emphasizes the need for plaintiffs to exercise care in drafting their complaints and deciding which exhibits to include to lower the risk of an early dismissal on nominative-fair-use grounds.