Famous Horse Inc. v. 5th Avenue Photo Inc., 2010 WL 4117673 (2d Cir. Oct. 21, 2010)
Incontestable Trademark Newsletter - November/December 2010
Article by Anna Balichina*
ABSTRACT
Defendants sold counterfeit third-party jeans to plaintiff. After plaintiff discovered that the jeans were counterfeit and stopped purchasing them from defendants, defendants told other potential customers that plaintiff was a satisfied customer. The Court of Appeals for the Second Circuit reversed the district court's dismissal of plaintiff's false-endorsement and unfair-competition claims. As to false endorsement, the appeals court held that to survive a motion to dismiss, plaintiff only needed to show that consumers believed that plaintiff sponsored or otherwise approved of the defendants' use of plaintiff's mark, as opposed to source confusion. The Second Circuit also held that plaintiff sufficiently pleaded its false-endorsement claim under Section 43(a) by alleging defendants' unauthorized use of plaintiff's mark to claim that plaintiff was a satisfied customer of defendants' services. As to unfair competition, the Second Circuit held that plaintiff need not necessarily be in competition with defendants to have standing, instead applying a more flexible "reasonable interest" test.
CASE SUMMARY
FACTS
Plaintiff Famous Horse Inc. d/b/a V.I.M. ("V.I.M.") operated a chain of clothing stores in New York selling brand-name jeans and sneakers at discount prices. Defendants offered to supply several clothing stores, including V.I.M., with Rocawear brand jeans at a discounted price. After purchasing jeans from defendants, V.I.M. discovered that the jeans were counterfeit and stopped selling them. Defendants, however, continued selling allegedly counterfeit Rocawear products to other stores and told potential purchasers that V.I.M. was a satisfied customer of defendants. V.I.M. sued for trademark infringement, false endorsement, and unfair competition under Sections 32 and 43(a) of the Lanham Act. The district court subsequently dismissed the complaint on defendants' motion under Rule 12(b)(6) and concluded that V.I.M. failed to allege any facts establishing consumer confusion as to the source of its products.
ANALYSIS
On appeal, the Second Circuit held that "consumer confusion, triggering the Lanham Act . . . need not be solely as to the origin of the product." Analyzing V.I.M.'s false-endorsement claim under Section 43(a), the court emphasized that the statute prohibits the use in commerce of any designation that is likely to cause confusion or to...
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