Earlier this week, Converse launched an all-out offensive to combat what it considers counterfeit and knock-off versions of its Chuck Taylor All-Star line of sneakers. Reports peg the number as at least 22 separate lawsuits against more than 30 companies, both in district court and at the International Trade Commission (the “ITC”). The defendants read like a who’s who list in the fashion or retail world: Wal-Mart, Skechers, H&M, Ralph Lauren, Ed Hardy, Fila, and others. An image below, courtesy of the New York Times, shows the Converse All Star (left) next to the Fila version (middle) and Skechers (right):
And the view from the back, with a slight change in positioning from the front view
(From left to right: Converse, Skechers, Fila)
Halfway through one of the articles, I realized that even I had fallen victim to one of the defendants. I purchased these guys about a year and a half ago:
Making a direct comparison, there are certainly similarities. The white sole, the toe bumper, and the midsole cap all match up with the claimed mark in Converse’s registration. Other similarities include the placement of the brand name on the back sole as well as the contrasting use of a white sole with a solid colored top. However, there are no laces or other similarities with the toe box, mid-sole, or any portion other than the rubber sole.
There certainly will be a lot of digital ink spilled on this lawsuit as there are a number of interesting legal issues. But one item that isn’t discussed as frequently in the trademark is the role that the ITC can play as part of a robust intellectual property enforcement strategy.
As noted above, Converse filed a complaint (small ‘c’ complaint) with the ITC, alleging similar facts as those in the district court complaints. The relevant statutory provision is 19 U.S.C. Sec. 1337 (aka Section 337 of the U.S. Tariff Act). The ITC provides a distinct forum with unique advantages for certain situations. The ITC Trial Lawyers Association has a helpful FAQ here. One of the primary differences of an ITC proceeding is that it utilizes in rem jurisdiction based upon the presence of imported goods. The ITC will consider claims of trademark, patent, and copyright infringement, as well as trade secret misappropriation and a limited number of other business torts. Once an investigation is instituted, it is conducted similar to a Trademark Trial and Appeal Board or district court proceeding. There is an Administrative Law Judge, discovery, motion practice, and a trial. A major difference, though, is that an ITC staff attorney can participate throughout the process in order to ensure that the public interest is protected (also, no jury). Decisions of the ITC can be appealed to the U.S. Court of Appeals for the Federal Circuit and the decisions (decisions are also subject to official “disapproval” by the President, but this rarely occurs).
If the plaintiff is successful, the ITC can issue permanent exclusion orders or cease and desist orders. Exclusion orders prevent the importation of the articles at issue in the proceeding (and potentially those of third-parties). The cease and desist order can enjoin defendants from certain activities within the United States. There are no damages available at the ITC.
Proceedings at the ITC may not always be available or a cost effective means of trademark enforcement. The ITC is most appropriate for consumer goods. And because money damages are not available, the volume of imported infringing goods must be large enough to justify the cost and expense of an ITC proceeding. The proceedings are also helpful where a trademark is unregistered and therefore cannot be recorded with the U.S. Customs and Border Protection division of the Dept. of Homeland Security.
There are a number of potential benefits to an ITC proceeding:
- The process has a compressed schedule and often is concluded within a year;
- Although damages aren’t available to the plaintiff, violations of an exclusion order carry up to a $100,000 fine per violation;
- The ITC can enforce unregistered trademark rights as well as copyright, patent, trade secret, and general unfair competition claims; and
- The ITC can issue exclusion orders that are not subject to the “irreparable harm” standard for traditional injunctive relief.
The last bit is worth highlighting. In light of the Supreme Court decisions in eBay v. MercExchange, 547 U.S. 388 (2006), and Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), district courts and appellate courts have begun raising the bar for plaintiffs to obtain injunctive relief for trademark infringement. For decades, most jurisdictions provided a presumption of irreparable harm upon a successful showing of a likelihood of confusion in a trademark infringement action. The Ninth Circuit reversed this long-standing case law in Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc. Although the plaintiffs appealed, the Supreme Court denied cert on October 6, 2014.
Depending on the fate of the presumption of irreparable harm in trademark cases, practitioners may want to take note of the remedies available at the ITC as the ease of obtaining an injunction upon a successful showing of likelihood of confusion may change the calculus as to whether an ITC proceeding would be worthwhile. Although the ITC isn’t as well-known as the other players in the game, if the other circuits follow the Herb Reed lead, the ITC may soon become an all-star in the minds of trademark lawyers around the country.