IP Law Daily Chabad-Lubavitch publisher failed to show that ‘Kehot’ logo was infringed by Chabad minority group
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Friday, January 15, 2016

Chabad-Lubavitch publisher failed to show that ‘Kehot’ logo was infringed by Chabad minority group

By Mark Engstrom, J.D.

The Kehot Publication Society (the publishing division of the Hasidic Chabad-Lubavitch community and a division of Merkos L’Inyonei Chinuch, Inc.) was not entitled to injunctive relief against Vaad L’Hafotzas Sichos and Zalman Chanin (a minority group within the Chabad community) for the alleged infringement of its “Kehot” logo, which was registered as a trademark by Merkos L’Inyonei Chinuch (Merkos), the federal district court in Brooklyn has ruled (Vaad L’Hafotzas Sichos, Inc. v. Kehot Publication Society, January 14, 2016, Block, F.). Because Merkos failed to prove its counterclaims for trademark infringement, trademark dilution, and unfair competition, injunctive relief was denied and the counterclaims were dismissed.

The death of Rabbi Menachem Mendel Schneerson (“the Rebbe”) in 1994 caused a leadership crisis in the Chabad-Lubavitch community. Rabbi Yehuda Krinsky assumed the direction of the Kehot Publication Society and Merkos L’Inyonei Chinuch, but no one became “Rebbe” (master). After the death of the Rebbe, Vaad began to drop the appellation “of blessed memory” after references to the Rebbe’s name in Vaad’s next publication of the Rebbe’s “sichos” (teachings). Vaad’s decision was consistent with its belief that the Rebbe was the Messiah and still lived.

Merkos’s publications continued to include the appellation. Because Merkos did not subscribe to Vaad’s belief that the Rebbe was the Messiah, Merkos sought to enjoin Vaad’s use of the Kehot logo because Merkos did not want to be associated with Vaad’s messianic beliefs.

Trademark Infringement

Because the court had already affirmed—in a prior opinion—that Merkos was the owner of the Kehot logo, Merkos’s claim of federal trademark infringement required Merkos to show that Vaad’s use of the logo was likely to cause consumer confusion. Consequently, the court conducted a likelihood of confusion analysis that considered eight confusion factors: (1) the strength of the Kehot mark; (2) the similarity of the parties’ marks; (3) the proximity and competitiveness of the parties’ products; (4) evidence that Merkos could “bridge the gap” by developing a product for sale in Vaad’s product market; (5) evidence of actual consumer confusion; (6) evidence that Vaad had adopted the Kehot logo in bad faith; (7) the quality of the parties’ products; and (8) the sophistication of consumers in the relevant product market.

Strength of mark. The court noted that the Kehot logo was an original image that was fanciful and inventive. Nevertheless, other entities had used the logo—and continued to use it—in the production of books for sale in the Hasidic community. For that reason, the logo was not a strong source identifier for Merkos. The court thus concluded that the strength of mark factor did not favor Merkos.

Similarity of marks. Because the logos used by Merkos and Vaad were essentially identical, the second confusion factor—the similarity of the parties’ marks—favored Merkos.

Proximity, competitiveness of products. The evidence showed that, except for the omission of the appellation “of blessed memory” after the Rebbe’s name in Vaad’s publications, the books that were sold by Merkos and Vaad were identical. In addition, Vaad and Merkos targeted the same market (the Hasidic community). For those reasons, the proximity and competitiveness of the parties’ products favored Merkos.

Bridging the gap. The fourth factor—evidence that Merkos might “bridge the gap” by developing a product for sale in Vaad’s publishing market—was inapplicable, the court explained, because the parties’ products were in competitive proximity.

Actual confusion. Merkos submitted, as evidence of actual confusion, six email communications that prospective customers had sent to the customer service email address of the Kehot Publication Society. The emails asked questions about books that were published by Vaad. In addition, Rabbi Joseph Friedman, a Merkos director, had testified that Merkos had received “many more emails” that were similar to the six that were proffered as evidence.

In the court’s view, however, the probative value of the emails was limited. Significantly, the persons who wrote those emails did not testify, and the court did not know what had caused them to believe that Merkos was the publisher of the Vaad publications. Although the confusion that was evident in the emails could have been caused by Vaad’s use of the Kehot logo, the confusion in the emails could also have been caused by the fact that Merkos published books that were very similar to the Vaad publications that were referenced in the emails.

Rabbi Mendel Sharfstein testified that individual members of the Hasidic community would be reluctant to interact with him—and with the Merkos activities that he was involved in—if they thought that Merkos believed that the Rebbe was the Messiah. In the court’s view, however, that testimony did not compel the conclusion that consumer confusion was caused by Vaad’s use of the Kehot logo. Because the internal dispute over whether the Rebbe was the Messiah was well known in the Hasidic community, individuals in the community would likely ask about Merkos’s beliefs, whether or not Vaad had used the Kehot logo.

Because Merkos failed to proffer sufficient evidence of actual consumer confusion, the actual confusion factor disfavored Merkos.

Bad faith. According to Merkos, Vaad had acted in bad faith because: (1) Vaad continued to publish documents with the Kehot logo after Vaad had received two letters from Merkos that chastised him for omitting the disputed appellation after the Rebbe’s name and (2) Vaad had prior knowledge of Merkos’s use of the Kehot logo.

The court acknowledged that the letters from Merkos to Vaad showed that Merkos members were outraged by the omission of the appellation, and further showed that Merkos had instructed Vaad to “immediately repair this in the next pamphlet.” However, the Merkos letters did not demand that Vaad stop publishing under the Kehot logo. In fact, the letters did not even mention the Kehot logo.

Considering Vaad’s longstanding permission to publish, and its practice of publishing, under the Kehot logo, the court decided that Vaad’s disregard of Merkos’s instruction to include the disputed appellation did “not necessarily establish” that, from that point forward, Vaad was intentionally infringing on Merkos’s trademark.

In addition, Vaad continued to publish its pamphlets without the appellation because Vaad believed that: (1) the Rebbe had granted it permission to use the Kehot logo and (2) Merkos did not have the authority to alter the Rebbe’s instructions. Even if Vaad’s belief was mistaken, that mistake did not constitute bad faith, according to the court.

For all of those reasons, the court concluded that Vaad did not adopt the Kehot logo in bad faith. The bad faith factor thus favored Vaad.

Product quality. Because the parties’ publications were identical—except for the disputed appellation—the “quality of products” factor favored Merkos.

Sophistication of consumers. The only evidence of consumer sophistication was obtained when Rabbi Yehuda Krinsky, who had assumed the direction of Kehot and Merkos after the Rebbe’s death—candidly admitted that “those who [we]re interested in the Hasidic life” were aware of Vaad’s litigation, and further admitted that there were “many” in the community who were “savvy enough” to recognize the difference between a document that was published by Merkos and one that was published by Vaad. For those reasons, the court concluded that the “sophistication of consumers” factor did not favor Merkos.

Balancing the factors. Three factors favored Merkos (the similarity of the parties’ marks, the proximity and competitiveness of the parties’ products, and the quality of the parties’ products); three factors disfavored Merkos (the strength of the Kehot mark, the evidence of actual confusion, and the asserted bad faith of Vaad); and two factors were either inapplicable or were not worthy of much weight (bridging the gap and consumer sophistication).

However, the court assigned significant weight to the fact that the logo’s function as a source identifier was never strong because numerous organizations had been publishing under it since the 1940s. Further, Merkos did not provide convincing evidence of actual consumer confusion because Vaad had been using the logo, without permission, for 20 years.

Those two factors, when added to the court’s conclusion that Vaad did not act in bad faith, outweighed the fact that Vaad had published works with the identical logo, on identical products (except for the disputed appellation), and in the same market, according to the court.

In the court’s view, Merkos failed to show a likelihood of consumer confusion, and thus failed to prove its Lanham Act claim for trademark infringement.

Laches

Even if Merkos showed a likelihood of consumer confusion, injunctive relief would be barred by the doctrine of laches. Significantly, the court had previously decided that Vaad was entitled to a presumption of laches based on Merkos’s delay in bringing an infringement action against Vaad, and Merkos’s attempts to overcome that presumption—by showing that the delay was reasonable under the circumstances—were unavailing.

Trademark Dilution and Unfair Competition

Merkos asserted a claim for dilution under New York’s General Business Law, which protected only “extremely strong” trademarks. Because the strength of the Kehot logo as a source-identifying mark was greatly diminished by the “numerous entities” that had had published under the mark since the 1940s, the court could not conclude that the Kehot logo was an extremely strong mark that was protected by New York law. The dilution claim was therefore dismissed.

Merkos’s claims of unfair competition under New York common law and New York General Business Law also failed. Because the court concluded that Vaad did not act in bad faith or in a deliberately misleading manner, the claims for unfair competition were dismissed.

The case is No. 10-CV-4976 (FB) (JO).

Attorneys: Mitchell C. Shapiro (Brandon Jon Isaacson) for Vaad L’Hafotzas Sichos, Inc. and Zalman Chanin. J. Christopher Jensen (Cowan, Liebowitz & Latman, P.C.) for Kehot Publication Society.

Companies: Vaad L’Hafotzas Sichos, Inc.; Kehot Publication Society

MainStory: TopStory Trademark NewYorkNews

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