In September 2016, Conkle, Kremer & Engel attorneys filed a case on behalf of Moroccanoil against Zotos International, Inc. for trademark infringement by its “Majestic Oil” products. By January 2017, CK&E had obtained a Preliminary Injunction against Zotos’ competing products, and within days the case was over.
A Preliminary Injunction is a powerful litigation tool that can immediately stop a defendant from selling products during the litigation. Securing a Preliminary Injunction at the beginning of the case often brings a prompt settlement, as the defendant must decide whether to settle or to fight over the product packaging that it cannot sell.
Getting a Preliminary Injunction can be challenging because the plaintiff must show that it is likely to win the case, and that it will be irreparably harmed if the defendant’s products are allowed in the market while the case proceeds to trial. Recently, courts have made Preliminary Injunctions tougher to get by raising the standards for showing irreparable harm.
In Moroccanoil’s case, the Preliminary Injunction prohibited Zotos from selling its Majestic Oil products in packaging that was confusingly similar to Moroccanoil’s distinctive trade dress. Zotos is a subsidiary of Shiseido America. Drawing on its knowledge of the beauty industry, CK&E’s presentation of irreparable harm to Moroccanoil’s reputation proved effective – the Court found that continued sales of Majestic Oil products would erode Moroccanoil’s premium position in the hair care market as a professional brand. The Court’s Order granting Moroccanoil’s Motion for Preliminary Injunction is available here, and is published at Moroccanoil, Inc. v. Zotos Int’l, Inc., No. CV167004DMGAGRX, ___ F. Supp. 3d ___, 2017 WL 319309 (USDC CD Cal. Jan. 19, 2017).
On the heels of the Preliminary Injunction, the parties settled the case with Zotos agreeing to pay a substantial portion of Moroccanoil’s attorneys’ fees and to drop the confusingly similar trade dress of the Majestic Oil products. In total, the case was fully resolved within 6 months of filing, and the only litigation activity was CK&E’s Motion for the Preliminary Injunction.
CK&E attorney Eric S. Engel earlier contributed an article to the October 2016 edition of Agency Sales Magazine, published by the Manufacturers’ Agents National Association (MANA) to help reps and principals understand and grapple with the non-competition/restraint of trade issues that they face. In November 2016, the second installment of this article, Trade Secret Protection in Rep Agreements, was published in Agency Sales Magazine to further explain the related issues of trade secret protection in the principal-rep relationship, and how trade secret concerns can limit the ability of a rep to compete with his or her principal during or after termination of the representation.
CK&E is proud to be able to assist reps and principals to negotiate the sometimes difficult legal issues that can help or hinder their effective partnership in serving their customers.
In a class action, a critical juncture is reached when the plaintiff files a motion to ask the court to certify a class. Without a class certification, the action is just an individual claim, often with little value on its own. In Delgado v. Cars 4 Causes, CK&E was able to present compelling evidence and legal arguments that the claims of the prospective class members did not have sufficient common issues of fact, and that the proposed class members were not sufficiently ascertainable, to permit class certification. When class certification is denied, courts often allow the plaintiff a second or third chance to modify his class definition or otherwise amend his claims in order to meet the class certification requirements. But in Delgado v. Cars 4 Causes, CK&E was able to present such solid evidence and legal argument that the court was convinced of the futility of any such additional chances for the plaintiff. As a result, the court denied Delgado’s motion for class certification
“with prejudice.” This permanent denial of class certification ended the plaintiff’s effort to pursue a class action against Cars 4 Causes.
CK&E attorneys have substantial experience and success in defending class actions ranging from consumer unfair competition, false advertising and CLRA claims, to employment wage and hour claims.
The DTSA will provide businesses with more effective new tools to protect their sensitive information from misappropriation. In the context of trade secrets, misappropriation is generally considered the acquisition of hidden information through some improper means . The broadly structured language of the DTSA extends its protection to “all forms and types of financial, business, scientific, technical, economic, or engineering information” so long as (1) the owner has taken reasonable steps to keep the information secret and (2) the information derives its value from that secrecy. The DTSA largely tracks the concepts of trade secrets that have long existed in most states. But under the DTSA, plaintiffs will be able to bring claims for misappropriation of trade secrets in federal court.
Previously, trade secrets have been an outlier in the world of intellectual property. Unlike copyright, patent and trademark claims, which receive the wider benefit and protection of federal court jurisdiction, trade secret claims have mostly been litigated in state court. The problem with this has been that, given the diffuse and global nature of business and commerce, state courts are often not the best venue for intellectual property claims. If a misappropriation occurs across state or national borders, a federal court is better suited to address such jurisdictional conflicts.
To gain access to the DTSA, and federal court jurisdiction, all that is required is that the “trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” This is generally a very low threshold, as most products and services these days are used or intended for use in at least interstate commerce – only the most localized of businesses would not be able to meet this minimal requirement.
The DTSA will confer on trade secret holders a greater ability to pursue misappropriation beyond the borders of the United States, and can even pursue remedies before the International Trade Commission. In addition, a secondary benefit gained from access to the federal court system is a potential for more uniform decisions and precedent than the more disparate and varied state courts decisions.
Another interesting development that the DTSA will usher in relates to injunction and damages. Injunctions are often sought in trade secret cases to prevent the information at issue from being disclosed. Previously, under the Uniform Trade Secrets Act (UTSA), which almost all states have adopted in some form or another, the injunction would end when the trade secret ceased to exist or after an amount of time necessary to stop any potential commercial advantage being gained from a misappropriation. The DTSA however contains no such limitation, which presumably will give courts more discretion in applying an extended injunction. Also, where the UTSA allows for double damages in cases of “willful and malicious misappropriation”, the language of the DTSA has upped this to treble damages.
Perhaps the biggest tool in the DTSA tool belt is the ability to seek ex parte civil seizures. What this means is that a plaintiff can, without giving a defendant notice, seek the seizure of property if the plaintiff can demonstrate that the defendant, or someone working in concert with the defendant, is likely to “destroy, move, hide, or otherwise make such matter inaccessible to the court”. This type of ex parte seizure is a powerful new tool that will likely allow trade secret holders to better combat harm associated with a misappropriation. And being a powerful tool, it may be subject to misuse among competitors.
Conkle, Kremer & Engel attorneys stay current on developments that may be important to their clients concerned about commercial and intellectual property issues. If you have questions about the DTSA or other aspects of trade secret or intellectual property protection, we would be glad to hear from you.
Aside from California’s general false labeling laws, there are specific laws and regulations regarding organic product labeling. The California Organic Products Act (COPA), generally requires that multi-ingredient cosmetics labeled or sold as organic contain at least 70% organically produced ingredients. But COPA is designed to work in concert with Federal regulations that direct baseline standards for production, labeling and sale of organic products. The California Supreme Court recently addressed whether the Federal regulations of organic products in some manner preempt or supersede California’s consumer protection laws, so that only the very limited Federal remedies can be pursued when there are alleged violations of organic labeling laws.
In Quesada v. Herb Thyme Farms, Inc., the California Supreme Court determined that California’s general laws prohibiting labeling misrepresentation do not conflict with the Federal laws concerning organic production, labeling and sale, but rather complement those Federal laws by allowing additional remedies to be pursued when those laws are broken by fraudulent organic product labeling. The Supreme Court observed that “permitting state consumer fraud actions would advance, not impair” the goals of providing “a level playing field” to manufacturers of organic products and “enhance consumer confidence in meaningful labels and reduce the distribution network’s reluctance to carry organic products.” From this perspective, where products are fraudulently mislabeled as organic, “the prosecution of such fraud, whether by public prosecutors where resources and state laws permit, or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence.”
The result for manufacturers, distributors and resellers is that organic product labeling can create concerns at multiple levels, including federal and state regulatory liability, and class actions under strong state consumer protection laws. All those involved in the chain of manufacturing and distribution of products labeled as organic should consult with experienced counsel to protect themselves from potential adverse outcomes that can come from several directions. Conkle, Kremer & Engel attorneys are well versed in helping their clients proactively avoid and resolve such problems.
To be eligible for registration on the Principal Register, certain marks, such as descriptive marks, surnames, geographic terms and certain types of trade dress, must acquire “secondary meaning.” “Secondary meaning” means that public primarily sees the mark as identifying the source of the product rather than the product itself. Registration on the Principal Register gives a mark’s owner several benefits, including:
Marks that are actually in use in the United States, but that do not qualify for the Principal Register because they have not yet acquired secondary meaning, may be registered on the Supplemental Register. As you might expect, registration on the Supplemental Register does not provide the same protection as registration on the Principal Register. For example, registration on the Supplemental Register does not create a presumption of ownership or validity; give others constructive notice of ownership; support a later claim of incontestability; imply an exclusive right to use the mark; or allow the mark’s owner to request that products bearing the mark be excluded from import into the United States.
So why bother with the Supplemental Register? The primary benefit of a registration on the Supplemental Register is that a subsequent application for a confusingly similar mark for related goods may be refused by the USPTO. The owner of a Supplemental Registration may also use the registered ® symbol on the products listed in the registration. Further, a registration on the Supplemental Register allows the owner to register the mark in other countries that offer reciprocal trademark rights. And, in the event that a Supplemental Registration’s owner is successful in an infringement action, the owner may be entitled to certain monetary and equitable relief that might otherwise be unavailable.
Given the relative advantages of ownership of a registration on the Principal Register, an applicant should always seek registration on the Principal Register first. But, if the USPTO refuses registration for lack of secondary meaning, an applicant should consider amending the application to the Supplemental Register to ensure the protections discussed above. Keep in mind that if a mark’s owner believes that the mark registered on the Supplemental Register has acquired distinctiveness, a new application for registration on the Principal Register is required.
Conkle, Kremer & Engel assists companies in all aspects of intellectual property protection, including U.S. and international trademark registrations and enforcement of trademark rights.
This problem has become so widespread and severe that the World Intellectual Property Organization (WIPO) published a list of known international trademark registration scams. The USPTO keeps a similar scammer database, identifying the following organizations that sent non-USPTO solicitations, prompting consumer complaints to the USPTO:
In October 2014, a New York firm successfully won a lawsuit against “Patent & Trademark Agency LLC” for unfair competition and deceptive marketing practices, putting the company out of business. A Final Consent Judgment was entered against Patent & Trademark Agency LLC, by which it agreed to permanently discontinue marketing and selling trademark registration or renewal services in the United States.
If you receive any unexpected email or correspondence regarding a trademark registration, you should immediately contact the USPTO or your counsel to verify the veracity of the sender and the correspondence. Conkle, Kremer & Engel assists individuals and companies in all aspects of intellectual property protection, including the filing and maintenance of trademark registrations – and we know how to discriminate legitimate vendors from scammers.
DINP is found is many soft plastic and vinyl products. DINP is used as a plasticizer in a wide variety of products including apparel, footwear, sporting goods, gloves, fashion accessories, school supplies, shower curtains, bath mats and other home accessories, garden hoses, toys, vinyl flooring, and electrical wire and cables.
DINP was added to the Proposition 65 list of chemicals on December 20, 2013 as a chemical known to the State of California to cause cancer. By law, the warning requirements go into effect one year after the listing. Accordingly, the Proposition 65 warning requirement for products causing an exposure to DINP will start on December 20, 2014.
Businesses that manufacture, sell, or distribute products in California containing DINP are required to provide a warning to consumers that the product contains a chemical known to the State of California to cause cancer. The warning is required unless the exposure is so low as to pose no significant risk to cancer. The Office of Environmental Health Hazard Assessment (OEHHA) has not established a safe harbor level for DINP.
The phthalate DINP is presently banned in certain children’s toys and products in concentrations of greater than 0.1 percent under the Consumer Product Safety Improvement Act (CPSIA) of 2008. Other phthalates that are already on the Proposition 65 chemical list include di (2-ethylhexyl) phthalate (DEHP), di-n-butyl phthalate (DBP), di-n-hexyl phthalate (DnHP), butyl benzyl phthalate (BBP) and di-isodecyl phthalate (DIDP).
Companies that have not reformulated their products to remove DINP, or that fail to provide a Proposition 65 warning on products containing DINP, by December 20, 2014 are at risk of receiving a “Notice of Violation” from private enforcers seeking tens of thousands of dollars in penalties and attorneys’ fees. A Notice of Violation typically precedes a lawsuit for violation of Proposition 65.
Conkle, Kremer & Engel has extensive experience in the area of Proposition 65. CK&E provides businesses with legal counseling and guidance on compliance with Proposition 65. CK&E also regularly assists businesses in responding to Notices of Violation and defending claims for violation of Proposition 65 in litigation.