Box Acquisitions, LLC v. Box Packaging Products, LLC
Docket: 12 C 4021
Court: District Court, N.D. Illinois; March 26, 2014; Federal District Court
The Court grants summary judgment in favor of the Defendants, which include Box Packaging Products, LLC, Jamil Packaging Corporation, and David M. Diroll, based on the motion filed under Federal Rule of Civil Procedure 56. The relevant background indicates that Plaintiff BOX Acquisitions, LLC operates as a distributor and wholesaler of shipping products in Illinois, having established a business relationship with Jamil in 1998. Jamil, an Indiana corporation, was a customer until 2012 and produces corrugated packaging.
Plaintiff uses the names BOX Packaging and BOX Partners interchangeably, with a registered trademark for BOX Partners and its domain "boxpartners.com," but lacks federal trademark registration for "Box Packaging" and "boxpackaging.com." Notably, the domain "boxpackaging.com" was owned by Allied Packaging from 1999 to 2009, and although Plaintiff was aware of this, no action was taken due to its inactive status.
In December 2010, Diroll purchased the domain "box-packaging.com" and others, partly to promote Jamil's services. After acquiring these domains, Diroll founded Box Packaging Products LLC and began advertising with references to "boxpackaging.com."
While Plaintiff's branding shifted to BOX Partners, documentation from 2009 to 2012 still identified them as BOX Packaging. The industry includes other entities using similar terms, and no consumer research has been conducted by Plaintiff regarding "Box Packaging." Employee claims of confusion from clients about the domains’ direction to Defendants’ website lack specific details or names.
On April 1, 2011, the parties discussed the use of the domain "boxpackaging.com," after which the Plaintiff proposed to purchase it for $500, a proposal rejected by the Defendants. On October 18, 2011, Defendants filed a trademark application for "boxpackaging.com," intending to use it in the packaging industry, claiming first use in commerce as of December 10, 2010. The trademark was registered on April 3, 2012, under number 4,123,303. In May 2012, around the time of Plaintiff's lawsuit, Plaintiff removed Defendants’ "jamilpackaging.com" website, leading to a cessation of their business relationship.
On November 5, 2013, Plaintiff filed an amended complaint alleging multiple claims under the Lanham Act, including false registration, cancellation of the trademark, direct infringement, unfair competition, and cybersquatting, as well as violations of Illinois trade laws and common law claims of trademark infringement and unfair competition. Defendants moved for summary judgment on January 31, 2014, asserting that there were no genuine issues of material fact. Summary judgment is appropriate when the evidence shows no genuine dispute exists, with the burden shifting to the non-moving party to provide specific evidence of a triable issue. Trademark infringement cases require careful consideration due to their complexity. The Lanham Act aims to protect trademarks in interstate commerce, ensuring owners maintain goodwill and consumers can distinguish between producers.
To establish a federal trademark infringement claim, the Plaintiff must demonstrate: (i) the existence of a protectable mark in "Box Packaging" prior to the Defendants' use of a similar mark, and (ii) that this use is likely to confuse consumers. The Plaintiff carries the burden of proving the protectability of the mark or showing a genuine issue of material fact regarding this issue. Both federal trademark infringement and unfair competition claims require the same elements and proof.
A key issue in this case is the protectability of "Box Packaging," which is contested as either a descriptive phrase lacking protection or as a suggestive mark entitled to full trademark protection. Marks are classified into five categories based on distinctiveness: generic, descriptive, suggestive, arbitrary, and fanciful, with protection increasing from generic to fanciful. The distinction between descriptive and suggestive marks is critical; a suggestive mark is protected without requiring secondary meaning, while a descriptive mark must acquire distinctiveness to gain protection.
The court applies the "degree of imagination test" to differentiate between descriptive and suggestive marks, assessing whether the mark directly describes the product or requires imagination to connect with it. The Defendants assert that "Box Packaging" is a descriptive phrase without secondary meaning, warranting summary judgment. In contrast, the Plaintiff contends that the classification of the mark is ambiguous and presents material factual issues unsuitable for summary judgment. The Plaintiff also argues that, under the Lanham Act, unregistered marks can be enforced, asserting that "Box Packaging" is inherently distinctive and suggestive or, if deemed descriptive, has acquired distinctiveness.
Defendants argue that "Box Packaging" merely describes the Plaintiff's offerings of boxes and packaging, asserting that no reasonable jury could conclude otherwise. They reference industry usage of the term and cite Plaintiff's admission that all its revenue derives from boxes and packaging, despite Plaintiff's general objections to interrogatories. In contrast, Plaintiff claims that "Box Packaging" does not accurately represent the full range of its products and services, which include adhesives, tape, safety products, and marketing services, arguing that the term is not commonly defined. The court states that the burden lies with Defendants to prove that "Box Packaging" is descriptive and that no genuine factual dispute exists. It concludes that "Box Packaging" is a descriptive mark, as it directly connects to the company's core operations and is recognized as such in the industry. Furthermore, since the term is found to be descriptive, it lacks protection unless Plaintiff can demonstrate that it possesses secondary meaning, indicating that the term signifies the source of the products to the public. Establishing secondary meaning requires substantial evidence, and the more descriptive the term, the heavier the burden on the Plaintiff to show that the term identifies the source rather than the product itself. Descriptiveness and the absence of secondary meaning can be resolved in favor of the defendant at the summary judgment stage.
Courts evaluate secondary meaning through both direct and circumstantial evidence. Direct evidence includes consumer testimony and surveys, which are central to establishing secondary meaning. Circumstantial evidence encompasses exclusivity, duration and manner of use, advertising efforts, sales volume, market presence, and evidence of intentional copying. The Plaintiff bears the burden to demonstrate that "Box Packaging" holds secondary meaning.
The Plaintiff claims exclusive use of "Box Packaging" since 1989, arguing that this use has established a secondary meaning. However, the Defendants counter with evidence of other companies using similar phrases, such as "boxpackaging.net" and "box-packaging." They assert that the Plaintiff's claim of exclusivity is undermined by Allied's ownership of "boxpackaging.com" from 1999 to 2009, which the Plaintiff disputes, asserting that Allied did not actively use the domain.
A significant issue is the Plaintiff's inconsistent branding, as it began using "BOX Partners" interchangeably with "Box Packaging" starting in 2004. This shift is documented in various invoices and correspondence, leading the Court to find that such inconsistent use undermines the claim of secondary meaning. Previous rulings state that inconsistent advertising can negate the establishment of secondary meaning, indicating that the Plaintiff’s frequent use of "BOX Partners" disrupts the continuity necessary for "Box Packaging" to attain secondary meaning.
The argument presented refutes the Plaintiff's claim of having an established marketplace presence due to its use of the "Box Packaging" mark. It references case law that emphasizes the necessity for trademark usage to be clear and recognizable without extensive analysis. The Plaintiff has not sufficiently demonstrated that prior to adopting the name "BOX Partners" (1989-2004), the public associated "Box Packaging" with them to the extent of acquiring secondary meaning. Trademark rights require use in commerce, but merely descriptive or generic terms do not automatically confer such rights. Factors like exclusivity, duration, and manner of use do not support the existence of secondary meaning in this case.
Regarding advertising, the Plaintiff acknowledged a lack of specific sales figures and evidence during discovery, despite claiming substantial advertising expenditures. The Defendants counter that only a few advertisements mentioned "Box Packaging," with most focusing on "BOX Partners." Furthermore, the Plaintiff's failure to adequately respond to discovery requests regarding advertising limits evidence supporting secondary meaning. The Court finds insufficient evidence to suggest that the Plaintiff's advertising significantly influenced consumer perception.
On the issue of intentional copying, the Plaintiff alleges that the Defendants intentionally copied their name after acquiring domains and starting a competing business in 2010. The Plaintiff cites deposition testimony indicating that the domains were meant as a "lead generator." However, since "Box Packaging" is deemed a descriptive term, the likelihood of wrongdoing in the Defendants' use is reduced. Notably, the Plaintiff began phasing out "Box Packaging" in 2004 in favor of "BOX Partners," and other companies also use "Box Packaging" online, further complicating the claim of intentional infringement.
The Court determines that Plaintiff's use of a common descriptive phrase for its original company name and its later reference as BOX Partners undermines its claim of intentional copying. The history of business relations and Diroll's deposition do not provide adequate evidence of Defendants' bad faith or intentional copying of the name and mark. Plaintiff has failed to present both direct and significant circumstantial evidence demonstrating that the public associates a secondary meaning with BOX Packaging.
Defendants argue for summary judgment, asserting that Plaintiff has not met its burden to show a likelihood of confusion from Defendants’ use of "Box Packaging." Plaintiff claims there are instances of actual confusion and that the use of "boxpackaging.com" infringes on its federally registered trademark "BOX Partners." The Court references the seven factors from the Seventh Circuit to assess the likelihood of confusion, noting that a clear factual scenario can allow for summary judgment.
While all factors do not need to be proven, the overall weight of the most significant factors will determine the likelihood of confusion. The absence of evidence of actual confusion can lead to a finding of no likelihood of confusion. Plaintiff's assertion of actual confusion lacks substantiation, as specific customer names are not provided.
The Court concludes that a detailed analysis of all seven factors is unnecessary. Although "box-packaging.com" and "boxpartners.com" share "box" and offer similar services, confusion is less likely among the sophisticated business customers of Plaintiff. The Court previously established that "Box Packaging" is a common descriptive phrase, and the strength of Plaintiff's mark is not particularly robust. Lastly, the evidence does not support the claim that Defendants intended to misrepresent their services as those of Plaintiff.
Factors favor Defendants, indicating no likelihood of consumer confusion between "box-packaging.com" and BOX Partners. Plaintiff has not proven a protectable right to the phrase "Box Packaging," making Defendants' defenses of laches and acquiescence by estoppel unnecessary. Consequently, Defendants are granted summary judgment on Counts III and IV.
For the remaining federal claims, Plaintiff must provide clear and convincing evidence of fraud in the registration of "Box Packaging," demonstrating that Defendants intended to mislead the PTO with false information. A cybersquatting claim requires showing that Plaintiff had a distinctive or famous mark at the time of Defendants’ domain registration, that the domain is identical or confusingly similar to Plaintiff's mark, and that Defendants acted in bad faith. Although Defendants were aware of Plaintiff's use of the mark, such knowledge alone does not prove bad faith, especially since other companies in the same industry also used similar phrases. This weakens Plaintiff's claim to a distinctive mark, and the Court previously determined "Box Packaging" is not protectable. Additionally, Defendants purchased the "boxpackaging.com" domain after Allied relinquished it, undermining accusations of fraudulent registration and cybersquatting. Plaintiff's failure to register "Box Packaging" with the PTO during the claimed period also supports Defendants’ position. Thus, summary judgment is granted for Defendants on Counts I and V.
Regarding the cancellation of trademark registration, federal courts can cancel registrations when the asserted rights are invalid. This is appropriate only if the trademark is contestable; marks become "incontestable" after five years of use post-registration, limiting the grounds for cancellation.
The court finds that the trademark "boxpackaging.com" remains contestable due to its recent registration but denies the cancellation of the Defendants’ "Box Packaging" trademark. Summary judgment is granted for Count II. The Defendants have sufficiently demonstrated that the term "Box Packaging" does not qualify for trademark protection as a suggestive mark or a descriptive mark with acquired secondary meaning. Furthermore, there are no genuine issues of material fact regarding other federal claims under the Lanham Act, as the Plaintiff has not provided specific evidence to support a triable issue. Consequently, summary judgment is also granted for the Plaintiff's common law and statutory claims, as these are evaluated under the same criteria as the federal claims. The court references Spex, Inc. to underscore that claims regarding unfair competition and deceptive practices under Illinois law align with the Lanham Act principles. Ultimately, the court grants the Defendants’ motion for summary judgment in full.
