Case study: when copyright, trademark infringement, counterfeiting, and state-law claims converge
In a complaint filed in Illinois federal court earlier this year, Coach slapped Jo-Ann Fabric and Craft Stores with just about every claim in the intellectual property playbook: trademark infringement, copyright infringement, a variety of state-law claims, and even counterfeiting. At issue is a fabric that Jo calls "Blizzard Fleece Fabric--OO Geo", which Coach claims is too similar to its USPTO-registered "CC & Design." Images of each can be viewed here.
To be sure, it is common practice to bring all potential claims against a defendant in a single lawsuit; for one thing, if a plaintiff leaves something out, s/he may be " collaterally estopped" from litigating the omitted claim in the future. But even so, Coach's complaint seems unusually... thorough, what with its eleven different causes of action. One possible reason, this writer submits, is that Coach sees potential holes in its federal claims, and wants to cover its...elf.
Let's start with the copyright claim. As my blog has discussed in the past, fabric designs are subject to federal copyright protection, even when those designs are used to create "useful articles" that don't enjoy such protection. But you generally can't file suit under the U.S. Copyright Act until you've registered (or at least preregistered) the work at issue. The Copyright Office doesn't turn away all that many who seek its warm embrace, but the simpler the work at issue, the greater the chance the Copyright Office will nix a registration for lack of sufficient "originality." This writer certainly isn't privy to Coach's history with the Copyright Office. And Coach does allege on page 15 of its Complaint that it "has a valid registered copyright in its Op Art design." Strange thing is, in the Complaint's main discussion of "Copyrights," on page 7, the phrase "Op Art" -- indeed, even the word "registration" -- doesn't appear at all. This may indicate that while Coach has a valid copyright registration in something, it is not, in fact, the "CC & Design" at issue in this case. (Then again, it might just be that the Complaint doesn't connect the dots between the relevant design and the copyright registration.)
As you might expect, there's also a federal trademark infringement (i.e., Lanham Act) claim in the mix. But Coach might be a little insecure about its ability to prove a " likelihood of confusion" among consumers concerning the "origin," or even the "sponsorship", of the fabric Jo has been peddling. Why? Most consumers probably assume (correctly, LOF supposes) that Coach doesn't make its signature design available in raw bolts of fabric to whoever might be feeling a little arts-and-craftsy. So if the case lasts long enough for the parties to reach a fight over the " actual confusion" element of the Polaroid "likelihood of confusion" test (or more precisely, the Seventh Circuit's version of the Polaroid test), Coach might be hard-pressed to get the often-important consumer survey results that parties use to support their Lanham Act claims.
One form of insurance for Coach's potentially-fraught trademark infringement claim is its trademark counterfeiting claim. From a plaintiff's perspective, the major doctrinal advantage to the latter is that, if a plaintiff like Coach makes a successful showing that the defendant's product contains "a spurious mark which is identical with, or substantially indistinguishable from [plaintiff's] registered mark," the Polaroid factors need not be considered at all. In other words, that pesky "actual confusion" factor that Coach might be worried about -- it goes out the window. But where the law giveth, it also taketh away: the "identical or substantially indistinguishable" test represents a daunting requirement on its own, especially when even the Complaint refers to the plaintiff's own mark as double-C s and the defendant's mark as double-O s. Yes, the two patterns do look strikingly similar -- but are they similar enough for a court to rule that Coach has stated a potentially viable counterfeiting claim?
Perhaps not, forcing Coach to fall back on its state-law claims. This hypothetical scenario, in which Coach's federal copyright, trademark, and counterfeiting claims all fail, may explain why the case has been filed in Illinois, a state that appears to have no special connection to, well, anything of relevance in the case. (As the Complaint states, Coach is a Maryland corporation with its principal place of business in Florida. Jo-Ann is an Ohio corporation with its principal place of business in the same state. The Feldman Company, another named defendant, is New York-based. Curiously, even the Chicago-based law firm partner who signed the Complaint doesn't seem to focus on soft IP in particular, but rather on "complex commercial litigation," which usually means litigation over very, very long contracts.)
So, why Illinois? As you can imagine, companies like Coach don't tend to file major lawsuits haphazardly. Under the guidance of their attorneys, they consider various factors in deciding where to bring suit, including, of course, the statutes and case law in the jurisdiction under consideration. It is probably not a coincidence, then, that this case was filed in a state with a "Consumer Fraud and Deceptive Business Practices Act" that local courts have construed very broadly:
"Our legislature enacted [the Illinois Consumer Fraud Act] to create 'broad protective coverage of consumers from the many types of deceptive or unfair selling and advertising techniques used by businesses,' and to give consumers broader protection than a common law fraud action."
(Emphasis added.) True, Illinois isn't the only state with such a statute; most states have consumer protection laws on the books. But Illinois has an especially broad array of state-law causes of action, many of which Coach has thrown at Jo.
To be clear, you can't sue somebody just anywhere. There are rules. And because Coach's chosen forum doesn't seem to have any much of a connection with the parties or conduct at issue, Coach should prepare itself for -- at the very least -- a motion to change venue from one federal court to another. Such a motion, if granted, won't revise the language of the Complaint, but it might determine which state-law claims the new court is willing to consider, since federal courts adjudicating state-law claims apply the choice-of-law rules of the state in which they sit. State courts, in turn, are often reluctant to apply the unfamiliar laws of a far-off state to conduct that has only a tenuous connection with the foreign state, opting to apply their domestic law instead. What does all of this mean? Well, for one thing, it means some poor junior associate spent many a late night researching not just Illinois law, but also that of Ohio, New York, Maryland, and Florida. It's all part of the job...