Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ohio: Portable heater maker could not enjoin sales of compatible attachments, (Mar 8, 2016)

By Cheryl Beise, J.D.

Portable propane heater manufacturer Enerco Group was denied a preliminary injunction, barring an inventor from selling compatible attachments, because the company failed to show a strong likelihood of success on its Lanham Act false advertising and trademark infringement claims, the federal district court in Cleveland has decided (Enerco Group, Inc. v. Deutsch, March 3, 2016, Boyko, C.).

Enerco Group, Inc. manufactures a line of portable propane “Buddy Heaters,” used by outdoorsmen and fishermen in enclosures like tents, cabins, and ice huts. Enerco’s heaters are sold under registered trademarks, including Portable Buddy®, Hunting Buddy®, and Big Buddy®. The Buddy Heaters contain an oxygen depletion sensor (“ODS”) safety feature, which detects oxygen levels and shuts off the heater before dangerous levels of carbon monoxide are reached. In 2011, Enerco developed a warming tray for its heaters, but abandoned the idea because it was concerned that consumers would use the tray to cook food, which could interfere with the heating element or the ODS or cause the heater to tip over.

Luther Deutsch (d/b/a LD’s Hotrack, LLC) sells warming attachments under the name “Hotrack” in three sizes to fit popular models of portable propane heaters. Deutsch also applied for a patent for a “Grill Attachment for Portable Heaters.”

On January 28, 2016, Enerco sued Deutsch, asserting claims for false advertising, trademark infringement, and unfair competition under the Lanham Act, and violation of the Ohio Deceptive Trade Practices Act. Enerco moved for a temporary restraining order and preliminary injunction to prevent Deutsch from advertising and selling his Hotrack products.

The court denied Enerco’s motion, finding that the company failed to satisfy its burden of establishing “a strong likelihood of success on the merits” of its false advertising and trademark infringement/unfair competition claims.

False advertising. Enesco argued that Deutsch’s statements in promoting his Hotrack product were false or misleading because they implied that his Hotrack grill attachment was safe for cooking various foods and for consumer use in conjunction with the Buddy Heaters. According to Enesco, Deutsch’s use of the terms “Big Hotrack” and “Hunting Hotrack” falsely associated his unsafe products with Enesco, causing it to suffer damage to its sales, business reputation, and goodwill.

The court disagreed. It was not false or misleading for Deutsch to state that his Hotracks products were available in sizes to fit the most popular models of portable propane heaters. The court also noted that Deutsch provided evidence that his Hotracks did not create an unstable heating surface; they could more than five pounds of weight when attached to a heater. Hotracks also included a grease shield that covered the area directly above the heating element and ODS sensor. Each Hotrack model was accompanied with instructions and safety warnings. Finally, there was no evidence that any customer had complained about their Hotracks products.

Trademark infringement. Enerco asserted that Deutsch chose the words “Hunting” and “Big” to describe the size of his Hotracks in order to confuse consumers and trade off the good will and reputation associated with Enerco’s registered marks. Deutsch admitted that the terms were chosen to signify the portable heaters upon which to attach the cooking/warming racks.

The court did not agree with Enerco. First, Enerco’s “HUNTING BUDDY” mark registration disclaimed the word “HUNTING.” “In light of this clear disclaimer, Plaintiff’s contention that the term in Defendant’s advertising, ‘Hunting Hotrack,’ is infringing, appears quite weak,” the court said. In addition, the word “Big” is a generic or descriptive term which, standing alone, was unlikely to support a Lanham Act violation. Second, Deutsch never used the term “Buddy” in the advertising materials for his “Regular,” “Big,” or “Hunting” Hotrack products. Finally, there was no evidence of actual consumer confusion. In fact, Deutsch’s website contained a written disclaimer stating, “Mr. Heater and Enerco are in no way affiliated or liable for any issues due to LD’s Hotrack.”

The court acknowledged that the parties offered related goods to the same class of customers (outdoorsmen, hunters, fishermen) through the same marketing channels. It also recognized that loss of good will, future sales, market share, business reputation, and customer relationships were intangibles that did not easily lend themselves to mathematical calculation. In addition, the public had an interest in safety and freedom from consumer confusion.

“Nevertheless, balancing all the factors required for the issuance of extraordinary relief,” the court concluded that Enesco did not demonstrate “a strong likelihood of success on the merits by clear and convincing evidence.” Enesco’s motion for injunctive relief was accordingly denied.

The case is No. 1:16-cv-00213-CAB.

Attorneys: Anastasia J. Wade (Brouse McDowell LPA) for Enerco Group, Inc. Debra J. Horn (Meyers, Roman, Friedberg & Lewis) for Luther Deutsch d/b/a LD's HotRack, LLC.

Companies: Enerco Group, Inc.; LD's HotRack, LLC

Cases: Advertising OhioNews