Otter Products Ratchets Up Its Enforcement of Counterfeit Otterbox Phone Cases

 Recently, Otter Products LLC, the maker of specialty mobile phone cases including their DEFENDER®, COMMUTER® and IMPACT SERIES® line of products, has stepped up its enforcement actions against buyers and sellers of alleged counterfeit goods bearing their federally registered trademarks.   To date, approximately 30 trademark infringement lawsuits have been filed against John Does and named individuals in the Central District of California, the Eastern District of New York and District of Colorado alleging the sale of counterfeit phone cases sold online including by Amazon marketplace, eBay and Craigslist sellers and retailers. 

Additionally, law firms retained by Otter Products have sent hundreds, if not thousands, of letters to suspected counterfeit sellers alleging multiple intellectual property violations including violation of the Lanham Act, federal trademark infringement, false designation of origin, unfair competition, false or misleading advertising, unfair business practices and unjust enrichment.  Many of these letters allege illegal dealings in counterfeit Otterbox products as confirmed by the inspection of phone cases by an investigator who purchased a case online from the seller.  Moreover, these letters often make an offer of settlement should the seller wish to resolve the matter in lieu of being sued in a state that is typically not their home state.

 If you’ve received a letter from a law firm retained by Otter Products, it is best to consider hiring an attorney that has experience representing sellers of alleged counterfeit goods so that you can better understand your options and determine if settlement is the best course of action.  

Business Lawsuit Roundup

New Connecticut business litigation decisions and lawsuits of interest for February 2011:

Appellate Decisions:

Schirmer v. Souza

The Appellate Court upheld an award in favor of the plaintiffs on claims of unjust enrichment concerning renovations to a residence on defendants' property. In a somewhat strange set of facts, the plaintiffs loaned money to the occupants of a home thinking they had title when the defendants actually had title. The defendants sold the house after the renovations.  Plaintiffs expected  over $100,000 from the sale of home to cover the renovation costs and instead got nothing.  Plaintiffs sued an recovered   based on unjust enrichment. 

Gateway, Kelso and Co. v. West Hartford No. 1, LLC

The Appellate Court upheld denial of summary judgment holding that a court finding in a pre-judgment proceeding could not provide the basis for summary judgment.  Plaintiff moved for a prejudgment remedy and it was denied because the defendant raised a defense based on the plaintiff's failure to be licensed.  The defendant then tried to use that same ruling to obtain a judgment in the case.   The trial court denied the motion finding that the earlier ruling was not sufficient.  The Appellate Court upheld the denial of summary judgment and agreed that the ruling in the prejudgment remedy proceeding could not be the basis of the summary judgment ruling.

Tzovolos v. Wiseman

The Appellate Court adopted the trial court's findings in full in this case involving two complex commercial disputes over the ownership and security interests in restaurant equipment.  The plaintiffs alleged breach of a purchase and sale agreement and a promissory note related to the equipment. The most significant aspect of the decision is the trial court's decision to hold the individual defendants liable for the corporate defendants.

Trial Decision:

Directory Assistants, Inc. v. Albano

This case was filed in the federal district court over breach of a non-compete agreement.  The parties reached a stipulated settlement requiring the defendant to either file for bankruptcy or pay plaintiff $66,000.00 by way of a stipulated judgment.  At the time of the settlement agreement, the defendant was not sure of his ability to file for bankruptcy.  After agreeing to settle, the defendant either changed his mind or was not able to file for bankruptcy.  The defendant then tried to back out of the settlement.  The trial court ruled in plaintiff's favor following arguments on a motion to enforce the settlement agreement. The court ruled that a litigant cannot agree to a settlement and then change his mind after the fact.  The court entered judgment.

New Lawsuits:

Coach, Inc. v. Tropical Sun, LLC, et al

This is a trademark infringement action under the Lanham Act, and a copyright infringement act under the Copyright Act. The action is brought by  Coach , well known for its leather made products like handbags and wallets. Coach owns several trademarks in various classes for its goods dating back to 1963 for leather goods and wallets. Coach alleges that its trademark is famous.  Coach also alleges that many of the combinations or design elements on its products are "protected works" under the Copyright Act.  Coach alleges that the defendants are selling look a likes from a retail store in Connecticut. 

The lawsuit gives some insight as to how trademark owners can police their products.  In this case, Coach sent a private investigator into the store to purchase the fake Coach products.  The products were retailing for far less than Coach's genuine products.

Jacqueline Millan v. AIG

This is a whistleblower lawsuit.  Ms. Millan alleges she was fired from AIG Financial Products after identifying irregularities in AIG stock trading. She alleges that she was employed as a compliance associate and reported the irregularities to her supervisor and then was "shut out of the investigation and subjected to intimidation."  She alleges she was fired shorty thereafter.  The complaint seeks recovery for retaliatory discharge under Sarbanes-Oxley Act and Connecticut's whistleblower law (31-51q).  The irregularities related to AIG employee stock trades at time when AIG was considering bankruptcy.

YouTube Metadata Evidence in Connecticut Trademark Lawsuit

The smoking gun evidence in a trademark lawsuit filed in US District Court in Connecticut is allegedly metadata from a YouTube video.  Here is the lawsuit.  In the lawsuit , Tuscan Leveling, Inc. alleges that Roynette, Inc. stole its trademarked concept for a level tiling process.  According to the Complaint:

  • Tuscan is an Iowa based business that markets and provides a "unique tile installation method." 
  • Tuscan's tiling process is subject to a pending patent and trademark application and has identified the Tuscan Leveling System as its trademark.
  • Roynette is a Connecticut  based business that markets and solicits over the Internet.  Roynette advertised the sale of a competing tile leveling system over the Internet through a YouTube video that was identical to the the Tuscan leveling system.
  • The metadata from the YouTube video shows the Tuscan Leveling System trademark in "human readable form."   (Note: you can see the readable form in the attachment to the Complaint)
  • The metadata would permit Internet consumers to search for Tuscan and end up finding the Roynette video and product.   Roynette puts the product it is selling by hyperlink directly adjacent to the Tuscan trademark.

The Complaint seeks damages, attorney's fees, and an injunction.   Roynette has not yet responded to the lawsuit.

Nothing unusual about a YouTube video surfacing as evidence, but this one may be a first, at least in Connecticut.  This case is unique because the evidence is not the video itself but the metadata with the video.  Metadata is typically described as data about data.   YouTube allows you to edit or add metadata to a video.  The metadata, descriptions, or titles for the videos can show up in response to search terms on search engines such as Google or even YouTube.  The allegation here is that Roynette used Tuscan's trademark name to attract consumers searching on the Internet for tile leveling. 

 In this case, it was not only consumers who found Roynette, but it seems they attracted Tuscan too. 

 

Law Firm Lawsuit Highlights Need For Businesses To Take Caution With Website Content

 A recent decision by the United States Court of Appeals for the Ninth Circuit serves as reminder of the types of litigation that can arise from simply maintaining a website. Although the decision involved a dispute between two law firms, the facts could easily be related to competing businesses. 

The case involved Brayton Purcell, LLP, a California law firm that successfully sued another law firm for copyright infringement based on website content.   Brayton Purcell had copyright protection for its substantial website content on elder law.  According to the decision, a competitor law firm must have liked the content because the competitor copied the content verbatim for its own website.  This resulted in an undisclosed arbitration ruling in favor of Brayton Purcell.

Any business with a website should consider having a legal review done to determine if potential problems exist with the website's content.  Facing a lawsuit over a website is one the problems I discussed in a recent lecture on 5 Technology Bombs That Can  Sink Your Business.

There are many ways that a website can lead to litigation.  Stanley Jaskiewicz authored an excellent article for E-Commerce Law & Strategy featured on Law.com related to "clearing" rights to publish content on websites.  He cited a simple example of how a business website can infringe a copyright by merely copying and pasting a photograph from one website to the business' website.  In the process, the business might infringe the rights of the original photographer and the website owner.

A basic legal compliance review for a website can avoid this type of problem.  It starts with a risk assessment of the website and its content, including a review for potential claims involving: 

  • Copyright & Trademark infringement.  Copying from the the look and feel, content, and slogans from another website are some of the ways you can run afoul of copyright and trademark laws.
  • Defamation & Disparagement.  Posting content that is defamatory or disparaging of a competitor could result in litigation because the statements could be viewed by millions.
  • Unfair Trade Practices.  This type of claim is usually a tag along to some other actionable conduct.  This claim is often used to obtain an injunction or to recover greater damages and attorney's fees.
  • False Advertising and Misrepresentation.  A website should be viewed no differently than traditional advertising.  False claims can bring lawsuits from consumers who make decisions based on website content.
  • Domain Name Disputes.  These disputes often occur when two companies want a similar domain name.  Depending on a variety of facts, one company may have greater rights to use the name regardless of who registers the name first.

Here are some tips to avoid a lawsuit concerning website content: 

  • Conduct a risk assessment.   This includes an audit and inventory of the website content.
  • Obtain "clearance" rights. If any of your content might violate copyright or trademark laws, you should seek to obtain clearance to use the material.  This involves the concept of searching out property right holders or authors and seeking permission or paying for use of the content.  
  • Avoid use of protected materials.  For example, do not copy another website verbatim as the law firm did in the California case.  This might seem like a no brainer but many people believe that anything posted on the Internet somehow loses its copyright and trademark protection. 
  • Protect your content.  In the California case, it was noted that the law firm had copyrighted its online content.     The law firm also monitored for any other website copying its content by use of Copyscape website.  Copyscape allows a user to input a website address or specific page to search the web for plagiarism. 
  • Cooperation or settlement.  Lawsuits involving property rights for website content usually begin with one website owner sending another a "cease and desist letter."  This is a demand that an owner take down infringing material.  One way to avoid a lawsuit is to simply agree and take down the material.  Alternatively, you might be able to reach an agreement for use of the material. 

The bottom line is that your business does not need the headache of a lawsuit over a website.  Taking caution from the beginning with website content can help eliminate the risk.