Opinion ID: 162918
Heading Depth: 3
Heading Rank: 2

Heading: Contributory Infringement under the Lanham Act

Text: 23 P & G next challenges the district court's refusal to entertain its § 43(a) Lanham Act contributory infringement claim, purportedly asserted in its complaint. Although the district court stated that P & G has waived th[is] claim, id. at 1293, the court also rejected the claim on the merits. Amway urges us to find such waiver. Alternatively, Amway argues that P & G has failed to establish the elements of the claim. 24 The law of contributory infringement evolved from the recognition that parties other than the direct infringer often play roles in the infringement. Cross, Contributory Infringement, supra, 80 Iowa L.Rev. at 104. Because the infringement test initially adopted under the Lanham Act is not well suited for targeting such secondary liability, an additional theory of liability was warranted. See id. 25 The Supreme Court outlined the contours of a contributory infringement claim in Inwood Laboratories Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982): 26 [L]iability for trademark infringement can extend beyond those who actually mislabel goods with the mark of another. Even if a manufacturer does not directly control others in the chain of distribution, it can be held responsible for their infringing activities under certain circumstances. Thus, if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorally responsible for any harm done as a result of the deceit. 27 Id. at 853-54, 102 S.Ct. 2182; see also Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 983 (9th Cir.1999) (Contributory infringement occurs when the defendant either intentionally induces a third party to infringe the plaintiff's mark or supplies a product to a third party with actual or constructive knowledge that the product is being used to infringe the service mark.); AT & T, 42 F.3d at 1432 (applying Inwood to a section 43(a) claim). 28 The elements of a contributory liability claim are thus (1) supply of a product and (2) knowledge of direct infringement. See Fonovisa, Inc. v. Cherry Auction, Inc. 76 F.3d 259, 264-65 (9th Cir.1996) (citing Inwood, 456 U.S. at 854, 102 S.Ct. 2182). An action for contributory liability is not limited to a manufacturer, but may also extend to licensors, franchisers, or to similarly situated third parties. See AT & T, 42 F.3d at 1432 (Of course, there is no reason why the doctrine should be confined in application to manufacturers, and indeed, other courts have expanded it beyond that particular origin.) (collecting cases). 29 P & G does not dispute that it never used the term contributory infringement in its previous pleadings. Nevertheless, P & G maintains that its allegations were sufficient to state the elements of a Lanham Act contributory liability claim under the notice pleading requirements of Fed. R.Civ.P. 8. Aplt's Br. at 24-25. P & G points to language in its Second Amended Complaint 4 alleging that Amway (1) was informed about the Satanic rumors, (2) allowed the Distributor Defendants to make these statements, and (3) knew or should have known of Distributor Defendants's conduct. See id.; Aplt's App. vol. III, at 1041-2 (Second Amended Complaint). 30 We are reluctant to adopt P & G's broad definition of notice pleading so as to include a claim for contributory infringement. Count Four of the Second Amended Complaint indicated the Distributor Defendants had the [i]mplied approval of Amway when they disseminated the statements. Id. at 1045. We do not believe these pleadings adequately alleged a short and plain statement of the claim showing that the pleader is entitled to relief on a claim of contributory infringement. Fed.R.Civ.P. 8(a). 31 Nevertheless, we do acknowledge that when P & G I resuscitated P & G's § 43(a) Lanham Act claim, that part of the mandate might plausibly be read to have restored a contributory infringement claim under § 43(a). In the interest of a comprehensive resolution of the § 43(a) claim, we, like the district court, shall also examine the contributory infringement claim on the merits. 32 On the merits, however, P & G fares no better than it did below. There is no dispute as to Amway's supplying the product to the Distributor Defendants, thus satisfying the first element. See Fonovisa, 76 F.3d at 264-65. As to the second element, Amway's knowledge of direct infringement, 5 we agree with the district court that Amway cannot be held liable for contributory infringement. 33 In Inwood, the Supreme Court considered an action against a manufacturer of generic pharmaceuticals. 456 U.S. at 847, 102 S.Ct. 2182. Non-party pharmacists packaged the defendant's less-expensive generic pills, but labeled them with the plaintiff's brand name. Id. at 850, 102 S.Ct. 2182. This constituted undisputed trademark infringement. See id. To maintain a successful action for contributory infringement, the plaintiff had to show that the generic pharmaceutical maker in fact, continued to supply [the pills] to pharmacists whom the [generic manufacturer] knew were mislabeling generic drugs. Id. at 855, 102 S.Ct. 2182. In Inwood, the Court agreed with the findings of the district court and concluded that the plaintiff could not make this showing. See id. at 858-59, 102 S.Ct. 2182. 34 Similarly here, P & G cannot establish that Amway continued to supply any products to the Distributor upon discovery of the Satanic message. Id. at 855, 102 S.Ct. 2182. In fact, as the district court noted, Amway did not instruct the Distributor Defendants to spread the rumor, and, in fact, upon learning of the subject message, Amway suggested that [one of the Distributor Defendants] issue a retraction, which he did. See Dist. Ct. Order, 158 F.Supp.2d at 1294; see also AT & T, 42 F.3d at 1433 and n. 14 (noting that the plaintiff could not proceed under the doctrine of contributory infringement because where the objectionable acts of the sales representatives were made known to the principal, the principal in turn took appropriate steps to reprimand and discipline the sales representative). The district court correctly rejected P & G's contributory infringement claim.