By Linda O’Brien, J.D., LL.M.
In an action by a wheel manufacturer against a competitor for manufacturing and selling purportedly counterfeit products, the manufacturer was not entitled to a new trial following a jury verdict finding that its registered trade dress was invalid as functional and/or lacking secondary meaning, the federal district court in Yakima, Washington has decided. However, the manufacturer’s motion for judgment as a matter of law was granted on the defendant’s fraud counterclaim (OTR Wheel Engineering, Inc. v. West Worldwide Services, Inc., October 5, 2016, Suko, L.).
OTR Wheel Engineering, Inc.—a manufacturer and distributor of wheels and wheel components—and its affiliate, F.B.T. Enterprises Inc., filed suit against West Worldwide Services, alleging trademark infringement and trade secret misappropriation resulting from West’s manufacture, importation, and sale of tires purportedly to be counterfeits of OTR’s Outrigger brand tires.
Following a trial in June 2016, a jury found by a preponderance of the evidence that OTR’s registered trade dress was invalid as functional and/or lacking secondary meaning and found by clear and convincing evidence that the registration had been procured by fraud. The jury also found by a preponderance of the evidence that West had removed or obscured the "Outrigger" trademark name on Outrigger tires and awarded OTR over $967,000 in actual damages. OTR moved for judgment as a matter of law on the fraud counterclaim and for a new trial on the registered and unregistered trademark. West moved for judgment as a matter of law on the false designation of origin claim.
Fraud counterclaim. The court first determined that there was not clear and convincing evidence to support the jury finding that OTR committed fraud in procuring its registration. A trademark is obtained fraudulently under the Lanham act only if the applicant knowingly makes a false, material representation with the intent to deceive the USPTO. Here, the court explained, there was no clear and convincing evidence from which the jury could have reasonably concluded that F.B.T. Enterprises in its application for the registration falsely stated that no other person, firm, corporation, or association had the right to use the applied-for mark in commerce. There was expert testimony that the Outrigger tire tread was distinct from the competitor’s tread, and that the first use of the Outrigger tread design was in 1998, whereas the first appearance of the competitor’s tread design was in 2002.
Trade dress. However, a preponderance of the evidence supported the jury’s finding that OTR’s Outrigger tire tread trade dress was functional and/or lacked secondary meaning and therefore was invalid, according to the court. The jury was not bound by the registration and the presumptions of functionality and secondary meaning that accompanied it. The court stated that the jury’s verdict finding that OTR’s registered tire tread trade dress was invalid was not contrary to the clear weight of the evidence, was not based on false or perjured evidence, and a new trial was unnecessary to "prevent the miscarriage of justice." All of OTR’s arguments in support of a new trial pertained to the issue of functionality. Even if OTR’s registered tire tread trade dress was nonfunctional, it would still be invalid if it lacked secondary meaning, in the court’s view.
False designation of origin. The court also found that there was substantial evidence in the record from which the jury could have reasonably concluded that West engaged in "reverse passing off" in violation of the Lanham Act. In denying West’s motion for judgment as a matter of law, the court explained that there was evidence of West’s owner’s email communications that a Solideal Outrigger mold using blank spring plates to cover up the Outrigger trademark name and other identifying information was used to produce a blank development tire that West submitted for testing. Moreover, OTR’s expert performed an analysis of a genuine Outrigger branded tire and an unmarked tire originating from West. The expert testified that, although there were structural differences in the two tires due to different manufacturers, it did not mean that the development tire that West submitted for testing was not a genuine Outrigger tire.
There also was substantial evidence, the court noted, that Outrigger was the "origin" of the development tires West submitted for testing and that the development tires were an altered genuine Outrigger product. Thus, it logically followed that the jury could have reasonably determined that a customer would be confused as to the true source of the development tires, particularly when all the customer saw was a tread that was identical to the Outrigger tread and could not see the internal makeup of the tire, the court concluded.
The case is No. 2:14-cv-00085-LRS.
Attorneys: John Christopher Lynch (Lee & Hayes, PLLC) for OTR Wheel Engineering Inc. and F.B.T. Enterprises Inc. Christine Lebron-Dykeman (McKee Voorhees & Sease PLC) and Kevin Blair Hansen (Livengood Alskog PLLC) for West Worldwide Services Inc.
Companies: OTR Wheel Engineering Inc.; F.B.T. Enterprises Inc.; West Worldwide Services Inc.
MainStory: TopStory Trademark WashingtonNews
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