IP Law Daily ‘Capsule’ registration for cell phone cases canceled for lack of distinctiveness
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Wednesday, June 12, 2019

‘Capsule’ registration for cell phone cases canceled for lack of distinctiveness

By John W. Scanlan, J.D.

There was a rebuttable presumption that the registered mark was inherently distinctive, but not that it had acquired secondary meaning. A competitor established that the mark was merely descriptive, and the mark owner failed to provide evidence of secondary meaning.

A cell phone case maker’s trademark registration for the term "Capsule" was not valid because the mark was merely descriptive and had not acquired a secondary meaning, the U.S. Court of Appeals for the Seventh Circuit ruled in affirming a district court’s decision canceling the registration. Disclosure errors made by the defendant were harmless error and did not prejudice the trademark owner (Uncommon LLC v. Spigen Inc., June 11, 2019, St. Eve, A.).

Uncommon, LLC manufactures and sells cell phone cases. In December 2009, Uncommon began marketing its "CAPSULE" line of cases, with its first sale made in July 2010. Uncommon applied to register the mark in 2012, and the registration was approved in 2013.

Spigen, Inc. also manufactures and sells cell phone cases, and made its first sale of its "capsule" brand line of cases in June 2010, eventually developing a "Capsule" family of cases. Between 2014 and 2016, it registered three marks: "Capsule Capella," "Capsule Solid," and "Air Capsule," with the first two considered descriptive in part, but the USPTO declined to register "Rugged Capsule" and "Capsuled Ultra Rugged." Uncommon brought federal and state trademark infringement and unfair competition claims against Spigen; Spigen countersued to cancel Uncommon’s registration. Spigen disclosed two experts: Doug Bania, an expert who would testify regarding the lack of confusion, the descriptiveness of the mark, secondary meaning, and damages; and Kirk Martensen, a non-testifying expert who would conduct a consumer survey upon which Bania would rely. The disclosure stated that Martensen would testify if needed. Spigen sent Uncommon a two-page disclosure of his credentials, and later sent Bania’s report along with Martensen’s consumer survey. Uncommon deposed Bania but did not ask to depose Martensen.

After both parties moved for summary judgment, Uncommon argued that the survey could not be considered because no expert could testify regarding its methodology. Spigen filed a declaration regarding its methodology that largely contained information it had already disclosed. The district court ruled that Spigen’s failure to disclose Martensen as a testifying expert was harmless error and that the survey was sufficiently reliable based upon the declaration. The court then canceled Uncommon’s registration because "capsule" was descriptive and lacked a secondary meaning. It also found a lack of confusion and decided in favor of Spigen on all claims. Uncommon appealed.

Disclosure failures. The Seventh Circuit agreed that Spigen’s disclosure failures were harmless error and had resulted from a misunderstanding as to how to admit expert evidence. It was clear that Uncommon was not surprised because it had been provided all information required by Rule 26 except the designation of Martensen as a testifying expert, but Uncommon knew that Martensen could testify but did not depose him, and the fact that the survey used one format instead of another, but Uncommon did not explain why this distinction was significant. Uncommon argued that it was prejudiced, but the court found that Uncommon had strategically waited until the summary judgment stage to make its arguments when it could have acted earlier. Any prejudice to Uncommon was foreseeable and curable.

Descriptiveness. Although Uncommon was entitled to a presumption that its registered mark was at least suggestive, Spigen established that "capsule" was descriptive and that there was no question of material fact on this issue. At least 10 competitors used "capsule" in their case names, the appendix contained more than 100 pages of cases using "capsule" in some way, and one competitor was named Capsule Case Co. The prevalence of the term in the market meant that it could not be inherently distinctive. No evidence supported Uncommon’s argument that the market’s use of "capsule" reflected its competitors’ attempt to freeload on Uncommon’s goodwill with consumers. Applying the "degree of imagination" test, the court found "capsule" descriptive because it directly conveyed the ideas of coverage, storage, and protection that characterize cell phone cases. While the Seventh Circuit agreed with Uncommon that the district court had relied too heavily upon dictionary definitions in finding descriptiveness, it observed that the dictionaries had provided more evidence that "capsule" described cell phone cases.

Secondary meaning. The court found that Uncommon had waived its secondary meaning argument because it presented no affirmative evidence and mentioned the issue only once in its summary judgment briefing. Even without waiver, no factfinder could reasonably conclude that a substantial number of customers associated "capsule" with Uncommon’s products. The Martensen survey showed that "capsule" had not acquired a secondary meaning, as only 6 percent of consumers were familiar with it as a brand name, only 14 percent could connect it to cell phone cases when prompted, and only 1 percent associated it with Uncommon.

The Seventh Circuit instructed the parties and the district court that Uncommon was not entitled to a presumption of validity regarding secondary meaning. Under the Lanham Act, a registration owner is entitled to either a presumption that the mark is inherently distinctive or that it has acquired distinctiveness, not to both presumptions. Because the mark was registered without evidence of secondary meaning, it was presumed to be inherently distinctive and no secondary meaning presumption applied.

Likelihood of confusion. Applying a seven-factor test, the Seventh Circuit found that while the factors involving similarity of the marks, similarity of the products, and degree of care customers are likely to use in distinguishing among product makers slightly favored Uncommon, the remaining factors decisively favored Spigen. Uncommon’s mark was weak because it was not distinctive, the company did not possess robust economic and marketing power, and the "capsule" mark does not feature prominently on either company’s cases. Uncommon presented no evidence of customer confusion. Furthermore, there was no evidence that Spigen used "capsule" to pass off its cases as Uncommon’s—Spigen had used the mark almost as long as Uncommon had and Spigen was unaware of Uncommon’s trademark before Uncommon filed suit.

This case is No. 18-1917.

Attorneys: Edward L. Bishop (Bishop Diehl & Lee, Ltd.) for Uncommon, LLC. Heedong Chae (Lucem PC) and Karl W. Roth (Roth Law Group LLC) for Spigen, Inc.

Companies: Uncommon, LLC; Spigen, Inc.

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