Big Beer, Craft Beer, and Trademark Infringement: Harm to Premium Brands

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As the craft beer market continues to expand in popularity and threaten the market share of older “macrobrewery” giants like Molson Coors and Anheuser Busch, courts have seen increased legal disputes in the beer industry as brands fight for both their independence and the attention of consumers.  Most recently, Molson Coors has been sued in federal court in San Diego by Stone Brewing Co., one of the oldest and largest independent craft brewers in the United States.  In its complaint, Stone Brewing claims that Coors is infringing the “STONE” trademark by rebranding Coors’ sub-premium, low cost “Keystone” brand as “KeySTONE,” with a particular emphasis on the single word “STONE” in packaging and marketing materials.  Because of this, Stone Brewing alleges, Coors is sowing consumer confusion between the two brands.

Keystone Rebranding Comparison from Stone Complaint

Unless there is a swift settlement, one can assume that Stone Brewing will make good on the threat in its complaint that it will move for a preliminary injunction in order to stop the sale of Coors’ “KeySTONE” branded products during the pendency of the lawsuit.  A motion for a preliminary injunction is often a critical juncture in such trademark infringement lawsuits, and Stone Brewing will need to show that it will be “irreparably harmed” if the injunction is not granted.  This showing has in recent years become more difficult, as courts no longer presume irreparable harm when the plaintiff shows that consumers are likely to be confused by trademark infringement, but rather require an additional showing of likely irreparable harm.  “Irreparable harm” (also known as “irreparable injury”) generally means injuries that cannot be readily compensated by money damages, and since money damages are usually available for trademark infringement this standard presents special hurdles for infringement plaintiffs that can be difficult to overcome early in a case.

To show irreparable harm, one argument Stone Brewing will likely make is that its “premium brand” is being tarnished by confusion with Coors’ “value brand.”  This argument is presaged throughout Stone Brewing’s complaint (referring to Keystone’s beers as “watered down” and “fizzy yellow offerings,” as opposed to Stone Brewing’s “bold” and “artisanal” products).  The argument, which has been judicially adopted in relatively few cases, is essentially that the premium or niche brand is irreparably harmed by the association with the value, mass-market brand, which usually is of lesser quality.

Conkle, Kremer & Engel, which has experience in both trademark litigation and issues specific to beer production, distribution, and marketing, has succeeded in making this premium-vs.-value argument in federal courts in California.  For example, in Moroccanoil, Inc. v. Zotos International, Inc. (230 F. Supp. 3d 1161 (USDC C.D. Cal. 2017)), a 2017 trademark infringement case with similarities to the dispute between Coors and Stone Brewing, CK&E represented the manufacturer of Moroccanoil Treatment, a luxury oil-infused hair care product sold in distinctive packaging.  The defendant Zotos, part of a large personal care products conglomerate, had created a low-cost “value” hair oil product called “Majestic Oil” that, in addition to its similar name, used packaging that was a close likeness of Moroccanoil’s trade dress.

CK&E, in its successful motion for preliminary injunction, argued that sales of low-cost “value” Majestic Oil products would erode Moroccanoil’s carefully-built premium image.  The presentation included evidence establishing that once a product is no longer perceived by consumers as “premium,” it is difficult or even impossible for the seller to regain that perception.  The court agreed with CK&E and Moroccanoil, finding a likelihood of irreparable harm and granting a preliminary injunction against further sale of the Majestic Oil products.

Preliminary injunctions can be dramatic turning points in infringement cases.  In Moroccanoil’s case, the court’s preliminary injunction prevented Zotos from any further sales, advertisement or distribution of its infringing products, and required Zotos to recall all of its infringing products already in the market.  As could be predicted, the case settled swiftly thereafter and Zotos made permanent substantial changes to its product name and packaging to avoid infringing Moroccanoil’s intellectual property rights.

Click here to learn more about CK&E’s Moroccanoil v. Zotos matter or contact CK&E attorneys who work on beer industry matters, such as the brand protection that can make or break participants in the crowded craft beer market, including John Conkle, Evan Pitchford and Zachary Page.

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The Conkle Firm Addresses The Future of Fashion

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On January 30, 2018, the USC Gould Law School presented “The Future of Fashion,” a panel discussion co-hosted by the IP & Technology Law and Art Law Societies at USC.  Conkle, Kremer & Engel attorney Aleen Tomassian was one of the expert panelists invited to discuss the current state of intellectual property law as it affects the fashion industry, and to discuss how recent court decisions affect the future of the industry.

USC Panel – Aleen Tomassian (Center)

A major point of discussion involved the impact of the Supreme Court’s recent Varsity Brands v. Star Athletica decision, a copyright case that concerned design features on cheerleading uniforms.  Historically, articles of clothing have not generally afforded copyright protection because they are considered “useful articles.”  But the Supreme Court held that the design features of the uniforms in issue were protectable because they were works of art which could be imagined separately from the useful article into which they were incorporated.    Many have suggested that the holding in Star Athletica signals that broad copyright protection would be available for articles of clothing.  But the USC panel discussion made  clear that Star Athletica affirmed that copyright protection is available for design elements as distinct from “useful articles,” and the recognized protection is not available to clothing in general.

The panel addressed the unique intellectual property issues that the fashion industry faces.  There was a broad discussion about the economic and moral impact of “copycat” designs on society and the effects of “knockoffs” on innovation.  Since fashion designs are not specifically protected under U.S. law, the conversation highlighted how attorneys skilled in fashion law use a combination of available forms of protection, including copyright, trademark, trade dress and design and utility patents.  A recent example is the pending case of Puma SE v. Forever 21, Inc., USDC Central District of California Case No. 2:17-cv-02523, in which Puma asserts that it has distinctive shoe designs in a line called Fenty Shoes that is promoted by singer Rhianna.  Puma contends that Forever 21 engaged in deliberate copying of some of its Fenty Shoes designs, notably the popular “Creeper”, “Fur Slide” and “Bow Slide” models.  To protect its designs, Puma alleged infringement of design patents, trade dress and false designation of origin under the Lanham Act, and copyright.  Puma’s copyright claims attempt to leverage the Star Athletica decision by contending that certain elements of the Fenty Shoes “can be perceived as a two- or three-dimensional works of art separate from the Fenty Shoes” and “would qualify as protectable pictorial, graphic, or sculptural works – either on their own or fixed in some other tangible medium of expression.”   Under the Star Athletica standard, to allow this type of copyright infringement claim, the court will have to determine that “the separately identified feature has the capacity to exist apart from the utilitarian aspects” of the shoe.  “If the feature is not capable of existing as a pictorial, graphic, or sculptural work once separated from the useful article” – the shoe – then it is a utilitarian feature and not subject to copyright protection.

The attorneys at Conkle, Kremer & Engel have years of experience navigating the complex legal and intellectual property issues faced by clients in the fashion industry.  Our attorneys help clients protect their brands to ensure their continued success in this demanding and fast-paced industry.

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The Conkle Firm’s “Spa Weekend” at the International Salon and Spa Expo

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On January 27th and 28th, 2018, attorneys from Conkle, Kremer & Engel attended the International Salon and Spa Expo (ISSE), which is hosted annually by the Professional Beauty Association (PBA).  At ISSE, CK&E attorneys met with clients and other beauty professionals to help them expand their business frontiers and address concerns about intellectual property, regulatory compliance, and  contractual relations.  CK&E attorneys also relished the opportunity to observe first-hand the latest trends and exciting new spa and cosmetic products.

Sheet masks and other Korean beauty products continued to be as popular as they have been in the past few years. But more palpable this year at ISSE was the recent movement towards “inclusive beauty,” emphasizing a range of culturally enlightened products that appeal to a wider range of consumers of different ethnicities, ages, genders and abilities.  Exhibitors displayed a wide range of products intended for people with all skin and hair types and colors.  Many brands showcased hypoallergenic and natural products with few ingredients, suitable for use on consumers with allergies or medical conditions.  There were also more personal care products geared towards men than there have been in previous years.

ISSE offered a wide array of complimentary educational programs related to the beauty industry, including classes regarding the importance of social media presence for artists and brands.  CK&E attorneys remain ready to provide their clients with legal assistance in the ever-changing world of social media by keeping up to date on developments in social media.  At ISSE, attorneys Evan Pitchford and Desiree Ho attended “Getting It Right On Instagram,” a seminar hosted by long-time beauty industry executive and social media guru Gordon Miller, CEO of Hairbrained, an online community for craft hairdressers and colorists to connect and share their work.

For next year, PBA has already announced that it will launch STYL on January 26-28, 2019, a new event that PBA promises is not an expo or convention, but rather “STYL is an experience where the leaders, learners, students, owners and the beauty industry come together from across the country.”

CK&E is proud to be a member of the PBA and other professional beauty organizations, and is delighted to be in its third decade of helping domestic and international businesses of all sizes grow and evolve to meet their goals in an efficient and cost-effective manner.

Desiree Ho, Glen Pacek, Karl Sweis and Evan Pitchford at Sweis Moroccanoil booth

CK&E attorneys Mark Kremer and Amanda Washton sample industry trends at ISSE

Gordon Miller (far right) of Hairbrained moderates Instagram panel

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The Conkle Firm Trending At Indie Beauty Expo

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Conkle, Kremer & Engel attorneys Amanda Washton and Desiree Ho attended the Indie Beauty Expo in Los Angeles to take note of emerging trends in the beauty industry.  More than 100 brands exhibited their products at  this event, many of which recognized a key trend in the beauty market – consumers are becoming increasingly attentive to what is in their products and where their money is going.  Countless brands touted business practices such as sharing profits with charitable causes, as well as product features like “vegan,” “natural,” and “organic.”  The simpler the ingredient list, the better.  The product packaging and displays reflected this gravitation towards simplicity – minimalist typography, clean lines in the artwork, and monochromatic color schemes.

As more companies hop onboard the “organic” and “natural” train, beauty brands should be careful about their advertising and labeling to avoid drawing adverse attention of regulators and others policing the market.  Conkle, Kremer & Engel has published multiple blog posts throughout the years concerning “natural” and “organic” product claims.  Selling “natural” products in California can be particularly hazardous without the right guidance – “natural” ingredients may be subject to Proposition 65, as CK&E has explained in the past.  Manufacturers would do well to remember that the California Supreme Court has warned, particularly in claims of organic contents, “labels matter.”

With decades of beauty industry experience helping companies grow and protect their businesses, CK&E attorneys routinely guide clients through the process of complying with Proposition 65 and other complex regulatory schemes.

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Counterfeits Can Take the Joy Out of the Holidays

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As the holiday shopping season reaches peak fervor and consumers seek out the best deals available on hot products, gift-givers are more at risk of purchasing counterfeit products of all kinds.  Recently, news articles have warned of counterfeit Fingerlings – the latest “it” toy – along with fake versions of popular electronics, clothing, personal care products, and many other types of goods.  Government bureaus like the U.S. Customs and Border Patrol regularly release holiday bulletins advising of the escalating volume of phony products entering the United States (for example, https://www.ice.gov/news/releases/buyer-beware-counterfeit-goods-and-holiday-shopping-season).  Counterfeits are far from harmless.  Not only are these counterfeit goods generally inferior to authentic products in both quality and safety, fake products are fraud, theft, and infringements of valuable trademarks and other intellectual property.  Sales of counterfeit products can even be criminal.

As a consumer, what can you do to help ensure you’re receiving the genuine article?  The most obvious method is to avoid unfamiliar sources and to buy directly from the manufacturer’s website or from an authorized retailer whenever possible.  If buying on websites like Amazon and eBay (where products are often actually sold by unrelated third parties), it helps to make sure that the seller of the product is the manufacturer or Amazon itself, not an unknown third party.  Often times, third party sellers do not have the ability or desire to properly perform checks on the goods they are selling, and in many cases the third party sellers never actually possess the products – when they receive your order they simply forward the product from a warehouse they have never even seen.  While outlets like Amazon and eBay have some anti-counterfeiting policies and procedures, experience has shown that not every fake product will be screened out.  Consumers should also check the price of the goods to ensure that it is not abnormally low, and examine the packaging and presentation of the product as depicted on the website to help determine whether the product might be fake or foreign-labeled goods.  Compare the look of the product offered with the same product on the manufacturer’s website – if it’s different, that’s a red flag.  Consumers should also not hesitate to contact the manufacturer if they suspect that they have received counterfeit or foreign-labeled goods – in addition to being the primary victims, consumers are often the first line of defense in the fight against counterfeiting.

As a manufacturer or trademark owner, what can you do when you discover your products being sold in an unauthorized channel, with risk of counterfeiting?  Conkle, Kremer & Engel has extensive experience helping manufacturers and distributors to investigate and, when necessary, litigate counterfeit and other trademark- and intellectual property-infringement claims.  CK&E attorneys are well-versed in the careful initial steps that should promptly be taken when sales of illicit products are suspected.  If the seller is cooperative, litigation can often be avoided.  But if the seller is not, that is a strong indicator that the seller has been selling, and will continue to sell, infringing products unless stopped through litigation.  Whatever you choose to do, consult experienced counsel and decide on your course of action promptly – unreasonable delays can seriously harm your ability to protect your rights.

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The Conkle Firm and Social Media Influencers at Beautycon LA 2017

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On August 13, 2017, Conkle, Kremer & Engel attorneys Amanda Washton, Desiree Ho, Aleen Tomassian, Heather Laird and paralegal Chelsea Clark attended Beautycon in Los Angeles, both to assist clients and to observe first-hand the latest trends in the beauty industry. In addition to the thousands of youthful fans and future beauty marketing gurus in attendance, more than 100 brands and over 70 “creators” were featured at the two-day festival.

An annual gathering, Beautycon serves as a space for beauty industry participants to interact with young fans. As the popular beauty ideal moves away from the conventional toward one that is more inclusive and identity based, with the help of a talented team of influencers Beautycon advocated for authenticity – a sentiment to which all attendees could relate.

Beautycon heavily emphasized the growing trend of using social media influencers and celebrity endorsements to connect with consumers.  In exchange for a prized “like” on Instagram, many vendors gifted product samples or even full product lines.  Beautycon exemplified the partnerships that are possible between beauty businesses and social media influencers.  There were plenty of celebrities, “exclusives” and photo-ready backdrops on hand for influencers’ selfies and videos.  There were a number of forward-thinking panels on social media topics, including using beauty-oriented social media platforms to deliver positive self-esteem and diversity messages.  Beautycon demonstrated that connecting brands with social media influencers is rapidly becoming vital to the success of emerging beauty businesses.

For businesses, working with social media influencers involves a host of practical and legal issues and considerations.  Areas of concern can include contracts, copyrights, trademarks, privacy, rights of publicity, false advertising claims, regulatory issues and even trade libel and defamation, among other issues.  With continually evolving social media platforms and issues, it is essential that cosmetics and personal care products companies fully consider the implications of both their social media activities and those of the influencers they seek to help them promote their brands.  CK&E attorneys are excited to participate in dynamic events like Beautycon to help their beauty industry clients meet their needs in the shifting landscape of social media.  (And as the photos show, it doesn’t hurt to partake in a little of the fun, either.)

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The Conkle Firm Attends Cosmoprof North America’s Exhibition in Las Vegas

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On July 9, 2017, the attorneys of Conkle, Kremer & Engel attended Cosmoprof North America’s annual exhibition in Las Vegas, both to assist clients and to observe first-hand the latest trends in the beauty and personal care industry.  Tens of thousands of professionals attended the three-day exhibition, which featured over 1,150 exhibitors from 38 countries. CK&E attorneys attend to connect with clients and others in the cosmetics, personal care, packaging, labeling and professional beauty markets, to help clients secure distribution agreements, and to learn about the newest industry innovations.

This year, brands dedicated to “green” products were showcased as consumers continue to be interested in eco-friendly beauty and technology.  Skincare brands also made a strong showing as consumers have been increasingly interested in anti-aging and other preventative products and technologies.  Facial mask and dedicated ethnic products made a particularly strong showing this year.  Globalization of the beauty market is readily apparent – Euromonitor International has an excellent detailed analysis of recent international growth in the beauty and personal care industry on a global scale:  http://blog.euromonitor.com/2017/05/reimagining-growth-in-the-global-beauty-industry.html

CK&E’s attorneys pride themselves on effectively and efficiently assisting clients of all sizes with brand protection and growth and regulatory compliance, both domestically and internationally.  CK&E is an active member of the Professional Beauty Association, and other important industry trade organizations.

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The Conkle Firm Wins Injunction Prohibiting Trade Dress Infringement by Zotos

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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. Just four months later, CK&E 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., 230 F. Supp. 3d 1161 (USDC C.D. Cal. 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.

To learn more about the case, contact the CK&E attorneys who lead the team for Moroccanoil, Mark Kremer, Evan Pitchford and Zachary Page.

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The Conkle Firm Visits ISSE

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Attorneys from Conkle, Kremer & Engel were on hand as the Professional Beauty Association (PBA) hosted the International Salon and Spa Expo (ISSE) on January 28th-30th, 2017 at the Long Beach Convention and Entertainment Center.  Tens of thousands of industry professionals attended this year’s ISSE show, which featured booths and displays from hundreds of manufacturers and distributors.  CK&E attorneys were pleased to be able to assist clients and meet with professionals in the beauty industry.  CK&E attorneys particularly focus on helping beauty industry participants develop and grow their businesses, such as by expanding into overseas markets or negotiating with distributors. CK&E attorneys are proud members of the PBA, which advances the professional beauty industry by providing members with education, charitable outreach, government advocacy, events and more.

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Trade Secrets: Part 2 of CKE Article on Restraints of Trade

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As described in earlier posts, Conkle, Kremer & Engel represents commissioned sales representatives (“reps”) and manufacturers or distributors (often termed “principals”) who contract with them.  Contracts drafted by manufacturers or distributors often include post-termination non-competition clauses, which can be tricky for both parties.  California generally disallows non-competition clauses as unlawful restraints of trade, but it is nonetheless possible to have effective trade secret agreements that can substantially restrict a former rep from working with competitors.  In addition, reps and principals often work across state lines and many states allow post-termination non-competition terms that are “reasonable” in scope.  Principals and reps must be conscious of which state’s law controls their agreement, and the state venue in which any dispute would be determined by a court or arbitrator.

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.

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