Court Opinion

ID: 213620
Source: CourtListenerOpinion
Date Created: 2011-03-30 15:09:40+00
Date Added: 2024-06-11T17:28:16.430969
License: Public Domain

NOTE: This disposition is nonprecedential

  United States Court of Appeals
      for the Federal Circuit
               __________________________

                   SEAT SACK, INC.,
                   Plaintiff-Appellant,
                             v.
 CHILDCRAFT EDUCATION CORP. AND SCHOOL
             SPECIALTY, INC.,
            Defendants-Appellees.
               __________________________

                       2010-1455
               __________________________

   Appeal from the United States District Court for the
Southern District of New York in case no. 07-CV-3344,
Magistrate Judge Douglas F. Eaton.
             ___________________________

                 Decided: March 30, 2011
              ___________________________

     EDWARD J. CARROLL, III, Law Office of Edward J. Car-
roll, of Kingston, New York, argued for plaintiff-appellant.

    ANTHONY S. BAISH, Godfrey & Kahn, S.C., of Milwau-
kee, Wisconsin, argued for defendants-appellees. With
him on the brief was NICHOLAS A. KEES. Of counsel on
the brief was JENNIFER L. GREGOR, of Madison, Wisconsin.
               __________________________
SEAT SACK   v. CHILDCRAFT                                 2

    Before LOURIE, PLAGER, and DYK, Circuit Judges.
DYK, Circuit Judge.
    Seat Sack, Inc. (“appellant”) appeals from the district
court’s grant of summary judgment to Childcraft Educa-
tion Corp. and School Specialty, Inc. (collectively, “Child-
craft”) on the claims of, inter alia, breach of contract,
breach of fiduciary duty, conversion, design patent in-
fringement, trademark infringement, false advertising,
and unfair competition. We affirm.
                        BACKGROUND
    In 1993, Ann McLear (“McLear”) developed a product
called the Seat Sack, and in 1999, she formed the appel-
lant corporation to manufacture and sell Seat Sacks. The
Seat Sack is a pouch that attaches to the back of a stu-
dent’s chair and contains compartments to store school
supplies. In 2000, appellant signed a vendor agreement
with Childcraft, which gave Childcraft the exclusive right
to sell Seat Sacks if those Seat Sacks had a Childcraft
label affixed to them. From 2000 to 2005, appellant sold
Seat Sacks with a Childcraft label to Childcraft, and
Childcraft sold those Seat Sacks to customers through its
website and catalog. In 2003, Childcraft began developing
a new product, called a “Seat Pocket.” Although not
identical to the Seat Sack, the Seat Pocket is similar. It
also attaches to the back of a student’s chair and has
compartments to store school supplies. During 2004 and
2005, Childcraft continued to purchase Seat Sacks from
appellant and simultaneously marketed its own Seat
Pocket product. Childcraft also claimed it still had Seat
Sacks remaining in inventory after 2005, when it stopped
purchasing new Seat Sacks.
  In 2007, appellant filed suit against Childcraft.
Among numerous other claims, appellant alleged viola-
3                                   SEAT SACK   v. CHILDCRAFT

tions of the Lanham Act, specifically 15 U.S.C. § 1125(a),
which covers unregistered trademark infringement and
false advertising claims. The district court granted
summary judgment to Childcraft on all of appellant’s
claims. In addressing appellant’s trademark infringe-
ment Lanham Act claim, the district court primarily
found that the plaintiff had failed to produce evidence
showing that the term “Seat Sack” was “inherently dis-
tinctive” or had acquired “secondary meaning.” Although
the district court was unsure whether appellant had
raised a false advertising claim under the Lanham Act, it
stated that, “in any event, [appellant’s] evidence does not
show that the defendants misrepresented the ‘nature,
characteristics, qualities or geographic origin’ of the Seat
Sack or of the Seat Pocket.” Seat Sack, Inc. v. Childcraft
Educ. Corp., No. 07-CV-3344, slip op. at 26 (Jan. 22, 2010)
(quoting § 1125(a)(1)(B)). Appellant timely appealed the
district court’s decision to the United States Court of
Appeals for the Second Circuit, which transferred the case
to this court because of our exclusive jurisdiction under 28
U.S.C. § 1295(a)(1) flowing from the design patent in-
fringement claim.
                       DISCUSSION
    “We apply the law of the regional circuit on non-
patent issues.” Baden Sports, Inc. v. Molten USA, Inc.,
556 F.3d 1300, 1304 (Fed. Cir. 2009). Therefore, we apply
Second Circuit precedent to appellant’s non-patent claims.
Summary judgment is appropriate only “if the movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a).
    We find no error in the district court’s treatment of
appellant’s claims and, with respect to the majority of
those claims, we have nothing to add to the district court’s
SEAT SACK   v. CHILDCRAFT                                    4

thorough analysis. In particular, the district court prop-
erly rejected appellant’s claim under 15 U.S.C. § 1114 for
trademark infringement because it does not have a regis-
tered federal trademark and its claim under 15 U.S.C.
§ 1125(a)(1)(A) for unregistered trademark infringement.
In one respect we conclude that further discussion is
required. Appellant provided evidence that Childcraft’s
website was programmed so that, at least during some
period of time, a visitor entering the term “Seat Sack” into
the website’s search engine was directed to a webpage
showing only the Seat Pocket. After commencement of
this lawsuit, Childcraft revised its website so that this
could not occur. Appellant claims that Childcraft origi-
nally programmed the website to improperly divert cus-
tomers from appellant’s product––which Childcraft
disputes––and that Childcraft violated § 1125(a)(1), a
codified provision of the Lanham Act, during the period
that this search protocol was in effect.
    The relevant Lanham Act provision––§ 1125(a)(1)––
forbids false advertising as well as infringement of unreg-
istered trademarks. See Empressa Cubana Del Tabaco v.
Culbro Corp., 399 F.3d 462, 478 (2d Cir. 2005). The false
advertising prong provides:
   Any person who, on or in connection with any
   goods or services, or any container for goods, uses
   in commerce any word, term, name, symbol, or
   device, or any combination thereof, or any false
   designation of origin, false or misleading descrip-
   tion of fact, or false or misleading representation
   of fact, which . . . in commercial advertising or
   promotion, misrepresents the nature, characteris-
   tics, qualities, or geographic origin of his or her or
   another person's goods, services, or commercial ac-
   tivities, shall be liable in a civil action by any per-
5                                   SEAT SACK   v. CHILDCRAFT

    son who believes that he or she is or is likely to be
    damaged by such act.
§ 1125(a)(1) and (a)(1)(B) (emphasis added). Unlike a
claim for unregistered trademark infringement, a plaintiff
claiming false advertising under the Lanham Act need not
demonstrate that it has protectable trademark rights.
See Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 112–113
(2d Cir. 2010) (setting out elements for Lanham Act false
advertising claim, which do not include a requirement
that a party possess trademark rights); see also J. Thomas
McCarthy, 5 McCarthy on Trademarks and Unfair Com-
petition § 27:9 (4th ed. 2010) (discussing the separate “two
prongs” of § 1125(a) for trademark infringement and false
advertising and their separate substantive rules and
elements). The district court’s conclusion that the Seat
Sack mark was not inherently distinctive and had not
acquired secondary meaning is not dispositive of this
Lanham Act claim.
     Nevertheless, the district court properly granted
summary judgment on appellant’s false advertising claim.
To succeed on a false advertising claim for damages, a
plaintiff must “introduce evidence of actual consumer
confusion” unless it can prove intentional deception. See
Res. Developers, Inc. v. Statue of Liberty-Ellis Island
Found., Inc., 926 F.2d 134, 139 (2d Cir. 1991). Appellant
did not prove intentional deception, as it provided no
evidence to contradict two declarations by Childcraft
employees which stated that Childcraft did not purpose-
fully change the automated search protocols to yield
results for Seat Pockets in a search for Seat Sacks.
Therefore, appellant has to prove actual consumer confu-
sion to receive damages. Where, as here, the statement is
not literally false or false by necessary implication, to
obtain an injunction on a false advertising claim, a plain-
tiff must also prove “by extrinsic evidence, that the chal-
SEAT SACK   v. CHILDCRAFT                                6

lenged [advertisements] tend to mislead or confuse con-
sumers” and must “demonstrate that a statistically sig-
nificant part of the commercial audience holds the false
belief allegedly communicated by the challenged adver-
tisement.” Merck Consumer Pharm. Co. v. Smithkline
Beecham Corp., 960 F.2d 294, 297–98 (2d Cir. 1992).
     In opposing summary judgment, appellant did not
point to any specific evidence of customer confusion. It
merely stated that “[p]ublic confusion is clearly set forth
in the facts of this case.” Appellant’s Memorandum of
Law in Opposition to Defendants’ Motion to Dismiss and
in Support of Plaintiff’s Cross Motion for a Preliminary
Injunction at 9, Seat Sack, Inc. v. Childcraft Educ. Corp.,
No. 07-CV-3344 (July 24, 2007), ECF No. 26. Appellant
failed to raise a genuine issue of material fact on the
Lanham Act false advertising claim concerning the exis-
tence of customer confusion. The district court did not err
in granting Childcraft’s motion for summary judgment.
                        AFFIRMED
                            COSTS
   No costs.