Addressing a jury verdict concerning reverse passing off, fraud on the US Patent and Trademark Office (PTO), and trade dress validity and pleading, the US Court of Appeals for the Ninth Circuit affirmed the district court's judgment in a case involving sellers of industrial tires, finding that defendant's use of a competitor's tire mold to make its own tires created a likelihood of confusion. OTR Wheel Eng'g v. West Worldwide Servs., Case Nos. 16-35897, -35936 (9th Cir. July 24, 2018) (Clifton, J).
OTR sold an industrial tire known as Outrigger and owned registered trade dress for the Outrigger tire tread design. West also sold industrial tires. West contacted OTR's manufacturer about making a 355-size tire, and OTR's manufacturer informed West that it would take months to complete a mold. West then asked OTR's manufacturer to make 355-tires for it using OTR's mold, but to buff out any identifying information. OTR's manufacturer ultimately agreed to West's proposal, and West sold tires made by using OTR's mold. As a result, one customer stopped purchasing 355-tires from OTR and started buying them from West.
OTR sued West for reverse passing off, trade dress infringement and trade dress counterfeiting under the Lanham Act. At trial, the jury found West liable for reverse passing off, but not liable for trade dress infringement or trade dress counterfeiting. The jury also found that OTR's tire tread trade dress was invalid and obtained through fraud on the PTO. The district court set aside the jury's determination that OTR had obtained its trade dress registration through fraud, but otherwise entered judgment based on the jury's verdict and ordered the PTO to cancel OTR's trade dress registration. West appealed, and OTR cross-appealed.
Reverse passing off occurs when a manufacturer or seller of goods or services misrepresents someone else's goods or services as its own. West argued that it could not be liable for reverse passing off because, under the Supreme Court of the United States Dastar decision, it merely copied OTR's tire rather than passing it off as its own. The Ninth Circuit rejected that argument, relying on West's requests to OTR's manufacturer to use OTR's tire mold and then West's sale of those tires as its own. Given the substantial similarities between the two tires, the Ninth Circuit also found that the jury's finding of a likelihood of confusion was supported by substantial evidence.
West argued that the district court wrongly set aside the jury's finding that OTR committed fraud on the PTO in securing a trade dress registration for the Outrigger tire's tread pattern. West pointed to two pieces of evidence to support its claim: a declaration from OTR submitted to the PTO showing that the Outrigger tire tread pattern had acquired distinctiveness, and an internal email touting the tire tread's self-cleaning ability, indicating that the Outrigger tire tread was functional and not eligible for trade dress registration (or protection). The Ninth Circuit found that the declaration did not constitute fraud because, even if the statements in the declaration were unsupported, the PTO did not rely on the declaration registering OTR's trade dress. With respect to the email suggesting the functionality of OTR's trade dress, the Ninth Circuit rejected the argument that OTR had omitted any material facts from the PTO—indeed, OTR had already informed the PTO that the tread design made the tires self-cleaning and was only seeking to protect the angle of the tread with its registration. The Ninth Circuit thus agreed that the district court properly set aside the jury's verdict on this claim.
The Ninth Circuit also affirmed the jury's finding that OTR's tire tread trade dress was invalid because it was functional or not distinctive. OTR argued that the jury found its trade dress invalid solely because the jury had found that OTR had committed fraud on the PTO, which was later set aside by the district court. The Ninth Circuit disagreed, finding there was substantial evidence to support the jury's finding based on functionality.
Finally, the Court addressed OTR's argument that the district court erred in refusing to instruct the jury on unregistered trade dress because OTR had failed to plead an unregistered trade dress claim. OTR argued that it had sufficiently pleaded such a claim by citing Section 43(a) of the Lanham Act (15 USC § 1125(a)), but the Ninth Circuit disagreed. Section 43(a) applies to registered and unregistered marks and trade dress, and the Court found that OTR had failed to put West on sufficient notice of its unregistered trade dress claim. The Ninth Circuit clarified that OTR's unregistered trade dress claim was only barred to the extent it was broader than OTR's registered trade dress claim.
Tread Lightly: Tire Company's Use of Competitor's Mold Is Reverse Passing Off
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