Antitrust Law Daily Wrap Up, ADVERTISING—S.D.N.Y.: False advertising claims against insulated bottle ‘knock-off’ manufacturer don’t hold water, (Jan 18, 2018)

By Edward L. Puzzo, J.D.

In challenges by the manufacturer of reusable insulated beverage bottles to a manufacturer of similar bottles, the federal district court in New York City declined to dismiss plaintiff's claims of trade dress infringement, dismissed the defendant's counterclaim seeking cancellation of plaintiff's marks, dismissed plaintiff's claims of deceptive acts and false advertising under New York state law, dismissed claims of false designation of origin and unfair competition in violation of the Lanham Act, but declined to dismiss the unfair competition claims brought under New York state law (Can't Live Without It, LLC v. ETS Express, Inc., January 16, 2018, Rakoff, J.).

Plaintiff Can't Live Without It, LLC, doing business as S'well Bottle sells S'well and S'ip brand reusable insulated beverage bottles. S'well registered the bottle's shape and cap as trade dress with the United State Patent and Trademark Office (USPTO). ETS Express sold the Force brand reusable insulated beverage bottles, with a shape nearly identical to that of the S'well bottle.

Trade dress infringement; mark cancelation. S'well brought claims against ETS for trade dress infringement under both the Lanham Act and New York state law. ETS moved to dismiss these claims and counterclaimed for cancelation of S'well's marks.

The Lanham Act protects only distinctive, nonfunctional trade dress, the court stated. Because S'well registered its trade dress with the USPTO, the burden is on ETS, as the defendant in an infringement action, to rebut the presumption that the trade dress is distinctive and nonfunctional, the court stated.

ETS argued that the bottle shape was not distinctive nor associated with any single source, identifying over 130 different sources of bottles in the same shape. But the court stated that, despite the number of "knock-offs," S'well was able to present substantial evidence that the public associated the particular shape with S'well, and presented further evidence that ETS salespersons themselves referred to their Force bottle as an "S'well knockoff."

ETS also argued that the bottle shape was functional, with mouths large enough for ice cubes and small enough to sip from, and a round shape and tapered top that was easiest to manufacture. But these assertions were not self-evident, the court stated, and such benefits may be available in other shapes as well.

The court stated that for purposes of S'well's claims of trade dress infringement, there was a genuine dispute as to whether S'well's trade dress was distinctive and nonfunctional. The evidence was sufficient, however, to deny ETS' motion for summary judgment on its counterclaim. Therefore, the court denied ETS' counterclaim seeking cancellation of S'well's marks.

Likelihood of confusion. Even if S'well's marks were valid, the court stated, it cannot prevail on a claim for trade dress infringement unless potential customers are likely to confuse ETS' Force bottle with the S'well bottle or believe that S'well is associated with the Force bottle. Evaluating the facts using the eight factors of Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961), the court found that ETS and S'well participated in the same markets, that there was the possibility and instances of post-sale confusion as to the source of goods, that ETS knew of the S'well bottle before it started selling its Force bottle and that it changed its design to make it more similar to the S'well bottle. These factors demonstrated, at a minimum, a genuine dispute regarding whether purchasers would confuse Force bottles for S'well bottles, the court found. Therefore, the court denied ETS' motion for summary judgment on S'well's trade dress infringement claims.

False advertising. S'well also brought claims against ETS for deceptive acts and false advertising under New York state law. The primary criteria for such claims must be consumer injury, the court stated. Ordinary trademark disputes are not considered to pose significant risk of harm to the public. The courts also distinguish between what are essentially contract disputes versus practices that have a broader impact on consumers at large. The court concluded that S'well had not shown that there was a genuine dispute as to whether the allegedly infringing ETS bottles were inferior to S'well's bottles so as to harm the public. Therefore, the court granted ETS' motions to dismiss these claims.

Unfair competition. Finally, S'well brought claims against ETS for false designation of origin and unfair competition in violation of the Lanham Act and unfair competition under New York state law. S'well sought summary judgment as to liability only, while ETS sought to dismiss.

The court stated that even if, as alleged, ETS employees actually provided Force bottles to distributors seeking S'well bottles without informing them, and even if ETS representatives really did suggest in emails to distributors that Force bottles were a type of S'well bottle, ETS' alleged use of S'well's mark was not "in commerce" as defined within the circuit. Therefore, ETS cannot be found to have violated the Lanham Act and S'well's false designation and unfair competition claims under the Lanham Act must be dismissed, the court ruled.

However, the court continued, S'well's unfair competition claim under New York state law did not need to meet the Lanham Act "use in commerce" limitation. New York law requires that the mark plaintiff is seeking to protect must be valid. Although ETS suggested that S'well's mark had become generic and was no longer protected, that position was not beyond dispute, the court noted.

S'well alleged that the evidence showed that ETS salespeople regularly fielded orders from distributors for S'well bottles, fulfilled those orders with Force bottles, and never explained that the two were not the same. ETS countered that distributors generally used "S'well" to refer to the shape of the bottle, not the brand. The court concluded that a reasonable juror could find for either party on this evidence, making summary judgment inappropriate for either party on S'well's New York unfair completion claim.

The case is No. 1:17-cv-03506-JSR.

Attorneys: Mara J. Gassmann (Ballard Spahr LLP) for Can't Live Without It, LLC d/b/a S'well Bottle. Bradford Earl Mattes (Kleinberg & Lerner, LLP) for ETS Express, Inc.

Companies: Can't Live Without It, LLC; ETS Express, Inc.

Cases: Advertising NewYorkNews