Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Utah: Trademark infringement allegations did not support Utah Unfair Practices Act violation, (Jan 6, 2014)

By Cheryl Beise, J.D.

A trademark owner’s allegations of wilful trademark infringement were insufficient to support a claim under Utah Unfair Practices Act (“UUPA”), the federal district court in Salt Lake City, Utah has decided (Icon Health and Fitness, Inc. v. Relax-a-Cizor Products, Inc., January 2, 2014, Furse, E.).

Relax-a-Cizor Products, Inc., d/b/a The Stick/RPI of Atlanta (“RPI”) owns the registered trademark “THE STICK” for goods identified as “hand held body massage devices, namely, non-electric rolling pins attached with hand grips.”

In 2011, RPI learned of a similar massage product marketed as the “MASSAGE STICK” and sold by Gold’s Gym International (“GGI”). In January 2012, RPI sent a cease-and-desist letter to GGI, stating that its product infringed RPI’s “THE STICK” trademark.

In response, GGI and Icon Health & Fitness, Inc. (“Icon”) filed suit against RPI, seeking a declaratory judgment that their use of “MASSAGE STICK” did not infringe RPI’s “THE STICK” mark. RPI counterclaimed for various causes of action.

Before the court was the plaintiffs’ motion to dismiss RPI’s ninth counterclaim asserting violations of the Utah Unfair Practices Act (“UUPA”) based on the plaintiff’s alleged trademark infringement. Essentially, RPI argued that its allegations—that the plaintiffs’ “deliberate, knowing, and willful use of RPI’s mark and the reputation and goodwill associated therewith to distribute, market, [to] sell their ‘MASSAGE STICK’ in violation of the Registration”—sufficed to state a claim under the UUPA.

The UUPA enjoins “[u]nfair methods of competition in commerce or trade.” The UUPA’s declaration of policy states that its purpose “is to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition, by prohibiting unfair and discriminatory practices by which fair and honest competition is destroyed or prevented…” and that the Act is to be “liberally construed that its beneficial purposes may be subserved.”

Based on the UUPA’s policy statement, RPI asked the court to interpret the scope of the UUPA broadly to include a violation based on trademark infringement. However, despite the UUPA’s broad policy language, Utah courts generally interpreted the UUPA narrowly, the court said, because the statute explicitly describes the specific anticompetitive behavior it prohibits, such as advertising goods one cannot supply (Utah Code Ann. § 13-5-8).

Moreover, a narrow interpretation of the UUPA was endorsed by the Utah Supreme Court in Garrard v. Gateway Fin. Servs., Inc., 207 P.3d 1227 (2009). In Garrard, Utah’s high court found that the state legislature “intended the [UUPA] to apply only to anticompetitive behavior” as opposed to all commercial activity. The Utah Supreme Court declined to expand the UUPA to reach activity by a party that was not a competitor of the plaintiff. Similar to the plaintiff in Garrard, RPI did compete with ICON and GGI, the court said.

RPI also argued that the UUPA should be read to make trademark infringement unlawful because the Lanham Act and UUPA share similar language. To support the argument that the UUPA applies to trademark infringement, RPI cited Klein-Becker USA, LLC v. Englert, No. 2:06-CV-378 TS, 2011 WL 147893 (D. Utah Jan. 18, 2011), aff’d, 711 F.3d 1153 (10th Cir. 2013). Klein-Becker, however, was inapposite because it only dealt with the issue of damages under the UPPA and did not reach the issue of whether the UUPA permits a state cause of action for trademark infringement.

The court therefore declined to extend the UUPA beyond the unfair and discriminatory practices expressly prohibited by the Act itself. Because RPI’s conclusory allegations of a UUPA violation and its generalized assertion of trademark infringement failed to state a claim under the UUPA, RPI’s UUPA claim was dismissed. As the claim could not be cured by amendment, the dismissal was with prejudice.

The case is No. 1:12-CV-00017-EJF

Attorneys: David R. Wright (Maschoff Brennan PLLC) for Icon Health & Fitness. Alan L. Edwards (Kunzler Needham Massey & Thorpe) for Relax-a-Cizor Products.

Companies: Icon Health & Fitness, Inc.; Gold’s Gym International; Relax-a-Cizor Products, Inc.

Cases: StateUnfairTradePractices UtahNews