U.S. Court of Appeals for the Ninth Circuit, Bluetooth SIG Inc. v. FCA US LLC, Docket No. 21-35561

Trademark

 

First Sale Doctrine

 

 

The first sale doctrine applies when a trademarked product has been incorporated in a new product

 

Certification Marks

 

 

 

Appeal from the United States District Court for the Western District of Washington

 

Interlocutory Appeal

 

Per Curiam Opinion

 

 

 

This interlocutory appeal concerns the scope of the first sale doctrine in trademark law. Defendant-appellant FCA US LLC invoked the first sale doctrine as a defense to trademark claims asserted against it by plaintiff-appellee Bluetooth SIG Inc.  (“the SIG”). After granting summary judgment for the SIG on the first sale issue, the district court certified the following question to us:  does the first sale doctrine apply “when a trademarked product has been incorporated in a new product?”  We answer “yes,” and we accordingly vacate the district court’s summary judgment and remand for further proceedings.

 

 

The SIG is a nonprofit that administers standards for short-range wireless technology. The SIG owns the word mark, “Bluetooth,” the design mark, and the composite.

 

 

To use any of these marks, a product manufacturer must join the SIG, execute a licensing agreement, submit declarations of compliance, and pay fees. Manufacturers of technological components are subject to     testing requirements, but end product manufacturers may not need further testing if they incorporate a previously qualified product. FCA makes cars under the brands Fiat, Chrysler, Dodge, Jeep, and Ram.

 

 

FCA vehicles contain Bluetooth-equipped head units. Those head units are manufactured by third-party suppliers and have been qualified by the SIG, but FCA has not taken the further steps required by the SIG to qualify the Bluetooth capabilities of its cars. FCA uses the SIG’s marks on its head units and in product publications. The SIG brought trademark claims against FCA, and FCA asserted numerous defenses, including under the first sale doctrine. Ruling on cross-motions for summary judgment, the district court found triable issues on whether (1) the Bluetooth word mark is generic, (2) there was a likelihood of confusion under the nominative fair use doctrine, (3) the SIG had abandoned its marks in the automotive industry through naked licensing, and (4) laches applied.

 

 

1 The word and composite are certification marks, which are “owned by one person and used by others in connection with their goods and services to certify quality, regional or other origin.”  McCarthy on Trademarks and Unfair Competition § 19:91 (5th ed. 2022).

 

 

After vacating a trial date set in September 2020 due to the COVID-19 pandemic, the district court certified for interlocutory appeal whether the first sale doctrine applies “when a trademarked product has been incorporated into a new product.” A motions panel of this court granted FCA’s petition for interlocutory appeal. The district court then stayed proceedings pending resolution of this appeal. We have jurisdiction under 28 U.S.C. § 1292(b).

 

 

Under the first sale doctrine, “with certain well-defined exceptions, the right of a producer to control the distribution of its trademarked product does not extend beyond the first sale of the product.” Sebastian Int’l, Inc.  v. Longs Drug Stores Corp., 53 F.3d 1073, 1074 (9th Cir. 1995) (per curiam). “Trademark rights are ‘exhausted’ as to a given item upon the first authorized sale of that item.” McCarthy on Trademarks and Unfair Competition § 25:41. The district court’s narrow view of the first sale doctrine was based on our statement in Sebastian that “it is the essence of the ‘first sale’ doctrine that a purchaser who does no more than stock, display, and resell a producer’s product under the producer’s trademark violates no right conferred upon the producer by the Lanham Act.” 53 F.3d at 1076.

 

 

Sebastian never purported to articulate the outer bounds of the first sale doctrine. It simply captured that the unauthorized resale of genuine goods presents an easy case for protecting a downstream seller. See id. (explaining that “when a purchaser resells a trademarked article under the producer’s trademark, and nothing more, there is no actionable misrepresentation under the statute.”).

 

 

Binding precedent extends the first sale doctrine beyond what Sebastian described as the doctrine’s “essence.” The first sale doctrine in trademark law derives from Prestonettes, Inc. v. Coty, 264 U.S. 359 (1924). See Au-Tomotive Gold Inc. v. Volkswagen of Am., Inc., 603 F.3d 1133, 1136 (9th Cir. 2010). Prestonettes itself applied the first sale doctrine to conduct exceeding the resale of genuine goods. In Prestonettes, the defendant was a cosmetics manufacturer that purchased genuine powder manufactured by the plaintiff, and then “subjected it to pressure, added a binder to give it coherence and sold the compact in a metal case.” 264 U.S. at 366. The Supreme Court held that trademark law did not prohibit the defendant from using the plaintiff’s mark “collaterally, not to indicate the goods, but to say that the trade-marked product is a constituent in the article now offered as new and changed.”  Id. at 369. So long as the public was “adequately informed” who modified the powder, the Court reasoned, the public was “likely to find it out” if the defendant’s process degraded the quality of the plaintiff’s powder. Id. Following Prestonettes, we applied the first sale doctrine to a retailer’s repackaging of a manufacturer’s trademarked goods. In Enesco Corp. v. Price/Costco Inc., we held that the first sale doctrine protected a retailer that resold porcelain dolls in allegedly inadequate packaging to the extent the repackaging was disclosed. 146 F.3d 1083, 1086–87 (9th Cir. 1998). We explained that “if the public were adequately informed that Price/Costco repackaged the figurines and the figurines were subsequently chipped, the public would not likely be confused as to the cause of the chipping.” Id. at 1087 (citing Prestonettes, 264 U.S. at 369).

 

 

Under Prestonettes and Enesco, the first sale doctrine applies when a mark is used to refer to a component incorporated into a new end product.

 

 

Both Prestonettes and Enesco focused on a seller’s disclosure of how a trademarked product was incorporated and explained that the first sale doctrine places limits on a seller’s liability to the extent that adequate disclosures are made. See Prestonettes, 264 U.S. at 368 (explaining that a trademark “does not confer a right to prohibit the use of the word or words” and cannot be used “to prevent its being used to tell the truth”); Enesco, 146 F.3d at 1086–87 (holding that the first sale doctrine did not apply to the extent the product manufacturer sought to compel disclosure of how the product was repackaged but did apply to the extent further relief was sought); see also Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 130 (1947) (citing Prestonettes and explaining that “full disclosure” of alterations to a manufacturer’s product “gives the manufacturer all the protection to which he is entitled”). In addressing the role of disclosure at oral argument, the parties disagreed about whether FCA had adequately disclosed its relationship with, and qualification to use, Bluetooth technology. Because the district court never reached this fact-intensive issue, we remand for the district court to address it in the first instance.

 

 

In addition to precedent, that conclusion is supported by influential treatises. See McCarthy on Trademarks and Unfair Competition § 25:35.50 (“Use of an ingredient trademark is proper so long as consumers are not confused or deceived into thinking that the maker of the ingredient is responsible for the nature or quality of the finished product.”); Callmann on Unfair Competition, Trademarks and Monopolies § 22:51 (4th ed. 2021) (“The seller of the finished product is allowed to use the supplier’s mark to identify the source of such parts or materials. . . .  But the manufacturer of the new product or combination may not mislead the public regarding the extent of the new product composed of that ingredient. . . .”).

 

 

Relying on our statement in Au-Tomotive Goldthat the first sale doctrine is “generally focused on the likelihood of confusion among consumers,” 603 F.3d at 1136, the SIG also argues that summary judgment can be affirmed because the district court determined that a triable issue exists as to likelihood of confusion. The first sale doctrine “accommodates between the strong and potentially conflicting forces” of, on the one hand, protecting good will and preventing confusion, and on the other, “preserving an area for competition by limiting the producer’s power to control the resale of its product.”  Sebastian, 53 F.3d at 1075. In the context of pure resales, that balance is easily struck because “confusion ordinarily does not exist when a genuine article bearing a true mark is sold.” NEC Elecs. v. CAL Circuit Abco, 810 F.2d 1506, 1509 (9th Cir. 1987). But under Prestonettes and Enesco, in the context of incorporated products, how those conflicting purposes are reconciled will depend in some way on how a seller uses the mark of the incorporated product in connection with a new product. While our jurisdiction is not strictly limited to the certified question, see Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199, 205 (1996), the district court is better positioned to address these questions in the first instance with the benefit of briefing and specific analysis of how FCA uses the SIG’s marks.

 

 

Accordingly, we VACATE the district court’s grant of summary judgment to the SIG on the first sale issue and we REMAND for further proceedings.

 

 

For the same reason, we decline to reach the other alternate ground on which the SIG asks us to affirm – the exceptions to the first sale doctrine.  Because the district court concluded that the first sale doctrine was categorically inapplicable in the incorporation context, it never addressed the SIG’s arguments on the exceptions. The district court may consider these arguments on remand.

 

 

 

 

Secondary authorities: McCarthy on Trademarks and Unfair Competition § 25:35.50; Callmann on Unfair Competition, Trademarks and Monopolies § 22:51 (4th ed. 2021).

 

 

 

 

(U.S. Court of Appeals for the Ninth Circuit, April 6, 2022, Bluetooth SIG Inc. v. FCA US LLC, Docket No. 21-35561, for Publication)

 

U.S. Court of Appeals for the Ninth Circuit, Shana Becerra, v. Dr Pepper/Seven Up, Inc., Docket No. 18-16721

California Consumer Fraud

Advertisement

Labeling

Packaging

Reasonable Consumer Test

Unfair Competition

California Law

The panel affirmed the district court’s dismissal of plaintiff’s third amended complaint alleging that Dr Pepper/Seven Up, Inc. violated various California consumer-fraud laws by branding Diet Dr Pepper using the word “diet.”

The panel held that the allegations in the complaint failed to sufficiently allege that reasonable consumers read the word “diet” in a soft drink’s brand name to promise weight loss, healthy weight management, or other health benefits. The panel held that diet soft drinks are common in the marketplace and the prevalent understanding of the term in that context is that the “diet” version of a soft drink has fewer calories than its “regular” counterpart. Just because some consumers may unreasonably interpret the term differently does not render the use of “diet” in a soda’s brand name false or deceptive. Accordingly, because plaintiff had not sufficiently alleged that Diet Dr Pepper’s labeling was false or misleading, dismissal was proper.

The second amended complaint raised five causes of action: (1) violations of the California False Advertising Law, Cal. Bus. & Prof. Code §§ 17500 et seq.; (2) violations of the California Consumers Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq.; (3) violations of the California Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq.; (4) breach of express warranty in violation of Cal. Com. Code § 2313(1); and (5) breach of the implied warranty of merchantability in violation of Cal. Com. Code § 2314.

Becerra’s claims under the California consumer- protection statutes are governed by the “reasonable consumer” test. Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008). Under this standard, Becerra must “show that members of the public are likely to be deceived.” Id.; see also Bank of West v. Superior Court, 833 P.2d 545, 553 (Cal. 1992). This requires more than a mere possibility that Diet Dr Pepper’s label “might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner.” Lavie v. Procter & Gamble Co., 129 Cal. Rptr. 2d 486, 495 (Cal. Ct. App. 2003); see id. at 492 (rejecting a “least sophisticated consumer” standard). Rather, the reasonable consumer standard requires a probability “that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Id.

When considering the term in its proper context, no reasonable consumer would assume that Diet Dr Pepper’s use of the term “diet” promises weight loss or management. In context, the use of “diet” in a soft drink’s brand name is understood as a relative claim about the calorie content of that soft drink compared to the same brand’s “regular” (full- caloric) option. See Geffner, 928 F.3d at 200 (“the ‘diet’ label refers specifically to the drink’s low calorie content; it does not convey a more general weight loss promise” (footnote omitted)). And considering “diet” as a proper noun—as in Diet Dr Pepper—does not further Becerra’s argument. In common usage, consumers know that Diet Dr Pepper is a different product from Dr Pepper—different not only in name, but in packaging and, importantly, taste.

Becerra argues that, regardless of the common understanding of the word, dismissal was still improper because she alleged a plausible misunderstanding of the word. But we have previously affirmed dismissal of claims based on similar unreasonable assumptions. In Ebner, the plaintiff claimed that a net-weight statement on packaging for a lip balm was deceptive because the design of the dispenser left twenty-five percent of the product inaccessible. 838 F.3d at 961. We held that similar dispensers were “commonplace in the market,” such that a reasonable consumer “understands the general mechanics of these dispenser tubes and further understands that some product may be left in the tube” even when pushed all the way up. Id. at 965. “A rational consumer would not simply assume that the tube contains no further product” when he or she could see the remaining product in the tube. Id. at 966. And even if some consumers would make that assumption, the packaging was not deceptive just because some consumers could unreasonably misunderstand the product. Id.

(…) As the Second Circuit pointed out when considering a nearly identical complaint, “the use of physically fit and attractive models using and enjoying advertised products is so ubiquitous that it cannot be reasonably understood to convey any specific meaning at all.” Geffner, 928 F.3d at 200.

Counsel for Defendant-Appellee:

Evan A. Young (argued), Baker Botts L.L.P., Austin, Texas; Van H. Beckwith, Baker Botts L.L.P., Dallas, Texas; Ariel D. House, Baker Botts L.L.P., San Francisco, California; for Defendant-Appellee.

(U.S. Court of Appeals for the Ninth Circuit, December 30, 2019, Shana Becerra, v. Dr Pepper/Seven Up, Inc., Docket No. 18-16721, For Publication)

Swiss Customs, Temporary Importation, New Directive 10-60

Swiss Customs

Temporary Importation

ATA Carnet

New Directive 10-60, with Effect Jan. 1, 2019

Inward Processing Procedure

Professional Equipment under the Istanbul Convention

Packaging

VAT

Republication

https://www.ezv.admin.ch/ezv/en/home/information-companies/declaring-goods/importation-into-switzerland/temporary-importation.html

The temporary admission procedure is intended for foreign goods which are used in Switzerland only for a limited period of time and which are not to be released into free circulation.

The temporary admission procedure is one of the monitored customs procedures.

In comparison with a permanent importation, the temporary admission procedure is often more time-consuming and involves additional costs. In many cases, permanent importation with final settlement of the applicable import duties could be less expensive and easier.

Basic Requirements

In order to be entitled to use the temporary admission procedure, the following basic requirements must be met:

• The goods must be intended for reexportation.
• The goods can be identified.
• The goods will be re-exported unaltered. Only goods maintenance measures during the temporary admission are permitted. If you wish to repair or process goods, you should use the inward processing procedure. Information can be found at Processing traffic.
• You adhere to the bans, restrictions and conditions.

Further information on the basic requirements can be found in paragraph 2 of Directive 10-60 (temporary admission procedure) (PDF, 1 MB, 04.12.2018). 

Value Added Tax

Value Added Tax is payable on remuneration for the temporary use of the goods. This applies to rent etc. Taxation ensues when the goods are re-exported (taxation of consideration).

ATA Carnet

https://www.ezv.admin.ch/ezv/en/home/information-companies/declaring-goods/importation-into-switzerland/temporary-importation/ata-carnet.html

The ATA Carnet is an international customs document. It is used for the temporary importation, exportation and transit of goods. The customs formalities for Switzerland and foreign countries can be completed with this customs document. When crossing the border, you do not need to request a national customs document, nor do you need to provide the customs authorities with a surety.

ATA Carnets can be obtained from chambers of commerce and industry. Security for the applicable import duties is provided to the issuing body. A Carnet is valid for one year.

The ATA Carnet can be used for multiple border crossings. The holder of the ATA Carnet always has the possibility of bringing all or only some of the goods into Switzerland or back abroad.

You can use the ATA Carnet primarily for:

• Goods that you wish to present at an official exhibition.
• Commercial samples for display purposes or taking orders (watches, jewelry, clothes, shoes etc.).
• Professional equipment under the Istanbul Convention. For this to apply, your place of residence must be abroad and you must personally bring the goods into Switzerland and use them.

In the following cases, however, you must use a Customs declaration for temporary admission ZAVV. The ATA Carnet cannot be used.

• Goods which are the object of a rental agreement with a person who is resident or domiciled in Switzerland;
• Machines and appliances:
• - for civil engineering and construction;
• - for agriculture and forestry;
• - for the professional manufacturing of other goods (e.g. industrial machinery for manufacturing jam, electronic parts, etc.);
• - for packaging goods (automated machinery for packaging of foodstuffs, bottling beverages, etc.);
• - for exploiting natural resources (drilling rigs and machinery for locating water and petrol in the ground, etc.).

Further information on the ATA Carnet can be found in paragraph 4.12 of Directive 10-60 (temporary admission procedure) (PDF, 1 MB, 04.12.2018). 

Packaging & Foreign Standards

Packaging & Foreign Standards

Republication : https://www.export.gov/article?id=Foreign-Standards-and-Certification

Packaging and Recycling Laws:

https://www.export.gov/search#/search/articles?q=labeling%20and%20marking&_k=s3909v

European CE Marking Guidance:

https://2016.export.gov/cemark/eg_main_017267.asp

Onerous or Discriminatory Certifications, Standards and Regulations:

File an online complaint with the Trade Compliance Center:

https://tcc.export.gov/Report_a_Barrier/index.asp

Contact the U.S. trade Representative in Washington DC:

https://ustr.gov/

OTR Wheel Engineering, Inc. v. West Worldwide Services, Inc., Docket No. 16-35897

Trademark: Designation of origin: Passing off: Reverse passing off: Trade dress: Confusion: Competition law: Consumer law: Packaging: Design: Copyright:

(…) OTR sells tires for industrial use. One of OTR’s products is a tire called the “Outrigger.” OTR obtained a registered trademark on the Outrigger name and a registered trade dress on the Outrigger tire tread design.

OTR Wheel and Samuel West are competitors in the business of selling industrial tires. West asked one of OTR’s suppliers to provide him with sample tires from OTR’s molds, and he asked the supplier to remove OTR’s identifying information from the tires. West wanted to use the tires to obtain business from one of OTR’s customers. OTR sued West, asserting various claims under the Lanham Act and state law.

(…) The primary issue before us is whether West can be found liable for reverse passing off under the Lanham Act. (…) (False Designation of Origin: Reverse Passing Off) (…) Pursuant to the Supreme Court’s opinion in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), a claim for reverse passing off cannot be brought to prevent the copying of intellectual property. We conclude that West did not simply copy OTR’s intellectual property but passed off genuine OTR products as his own, so we affirm the judgment holding him liable for reverse passing off ((…) The jury could therefore conclude that the development tires were taken from part of an anticipated OTR (Solideal) order and were genuine OTR products, not just copies).

(…) The panel affirmed the district court’s rejection of a proposed jury instruction asserting a claim for infringement of an unregistered trade dress. The panel explained that a registered claim converts to an unregistered claim if the registration is invalidated; thus, a plaintiff does not need to separately plead the identical unregistered claim. But where the unregistered claim would cover something more than the registered claim, a plaintiff must put a defendant on notice of such through the pleadings.

The Lanham Act prohibits conduct that would confuse consumers as to the origin, sponsorship, or approval of goods or services. See Slep-Tone Entm’t Corp. v. Wired for Sound Karaoke & DJ Servs., LLC, 845 F.3d 1246, 1249 (9th Cir. 2017); see also TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28 (2001). To prevent consumer confusion, the Act allows the producers of goods and services to enforce trademark rights. 15 U.S.C. §§ 1114, 1125(a); see also Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 209–10 (2000). A trademark is “any word, name, symbol, or device. . . used or intended to be used to identify and distinguish goods from those manufactured or sold by others and to indicate the source of the goods.” 15 U.S.C. § 1127. In addition, the Lanham Act protects more than words and symbols. It also protects a product’s “trade dress,” which includes the packaging, dressing, and design of a product. TrafFix Devices, 532 U.S. at 28; Wal-Mart, 529 U.S. at 209.

Section 43(a) of the Lanham Act prohibits a person from using “in commerce any word, term, name, symbol, or device. . . which . . . is likely to cause confusion . . . as to the origin. . . of his or her goods.” 15 U.S.C. § 1125(a). The term “origin” in section 43(a) lends itself to two causes of action for “passing off” based on false designation of origin: passing off and reverse passing off. “Passing off . . . occurs when a producer misrepresents his own goods or services as someone else’s. ‘Reverse passing off,’ as its name implies, is the opposite: The producer misrepresents someone else’s goods or services as his own.” Dastar, 539 U.S. at 27 n.1.

(…) In Dastar, the Supreme Court explained that the term “origin” in section 43 “refers to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.” Id. at 37. Thus, a reverse passing off claim cannot be brought to prevent the copying of intellectual property. Copying is dealt with through the copyright and patent laws, not through trademark law. Id. At 33–34.

(…) To prove a claim under section 43(a), a plaintiff must establish a likelihood of consumer confusion. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780 (1992). Thus, in order to prevail on its claim for reverse passing off, OTR was required to prove that consumers would likely be confused as to the origin of Outrigger tires that had their identifying information removed. The likelihood of confusion inquiry “generally considers whether a reasonably prudent consumer in the marketplace is likely to be confused as to the origin or source of the goods or services.” Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1209 (9^th Cir.2012). Thus, the jury had to determine whether a hypothetical consumer would likely be confused. Evidence of actual confusion was not required. Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1151 (9th Cir. 2011). The jury was shown pictures of an OTR production tire and the West development tire. Comparing the two tires, a reasonable jury could conclude that consumers would be confused by tires that lack the identifying information.

(U.S. Court of Appeals for the Ninth Circuit, July 24, 2018, OTR Wheel Engineering, Inc. v. West Worldwide Services, Inc., Docket No. 16-35897, J. Clifton)

1 ) Trade dress : terme juridique qui se rapporte à des caractéristiques de l'aspect visuel d'un produit ou de son emballage, donnant une indication de l'origine du produit aux consommateurs. Trade dress peut être enregistré, comme une marque (ici une partie du design d’un pneu).

2 ) Les bases légales des actions en violation du droit à la marque. Le Lanham Act ne protège pas que la marque comprise comme combinaison de mots et de symboles. Il protège aussi le « trade dress » du produit, notion qui inclut le « packaging », le « dressing » et le design du produit.

3 ) Un exemple de « reverse passing off ». Notions et bases légales de « passing off » et de « reverse passing off » : ces concepts juridiques visent à combattre la confusion portant sur l’origine d’un produit.

4 ) Notion de confusion du consommateur.

5 ) Si dans la procédure en violation du droit à la marque l’enregistrement de celle-ci est déclaré invalide, la procédure peut se poursuivre, la marque dont la violation est alléguée n’étant plus considérée comme enregistrée. Le demandeur ne pourra cependant faire valoir que les allégués et les moyens de droit qui découlent de ses mémoires.