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LLC v. ETS Express, Inc.

United States District Court, S.D. New York

January 15, 2018

ETS EXPRESS, INC., Defendant.


          JED S. RAKOFF, U.S.D.J.

         Plaintiff Can't Live Without It, LLC ("S'well") has brought six claims against defendant ETS Express, Inc. ("ETS"). ETS manufactures the Force and Swig Bottles, which have the exact same shape as plaintiff's S'well and S'1p Bottles, respectively. ETS has moved for summary judgment dismissing all six of S'well's claims: (1) trade dress infringement in violation of the Lanham Act; (2) false designation of origin and unfair competition in violation of the Lanham Act; (3) trade dress infringement under New York common law; (4) unfair competition under New York common law; (5) deceptive acts and practices m violation of New York General Business law § 349, and (6) false advertising in violation of New York General Business Law § 350. ETS has also moved for summary judgment on its counterclaim seeking cancellation of the trade dress registrations for the S'well and S'1p Bottles. S'well, in turn, has moved for summary judgment as to liability on its second and fourth claims, but only with regard to ETS's alleged use of S'well's trademarked name, not S'well's trade dress rights.

         For the reasons set forth below, the Court grants defendant's motion for summary judgment dismissing plaintiff's second claim (false designation of origin and unfair competition in violation of the Lanham Act), fifth claim (deceptive acts and practices in violation of New York General Business law § 349), and sixth claim (false advertising in violation of New York General Business Law § 350). The Court otherwise denies defendant's motions, and also denies plaintiff's motion.

         The relevant facts, undisputed except where noted, are as follows:

         S'well was founded in 2010 by Sarah Kauss, who remains its CEO. Defendant ETS Express, Tnc.'s Response to Plaintiff's Rule 56.1 Statement of Purported Undisputed Facts ("ETS 56.1 Resp.") ¶ 1, ECV No. 65. S'well manufactures water bottles and holds various trademarks registered with the United States Patent and Trademark Office ("PTO"), including for the words "S'well" and "Swell, " as well as the stylized mark S'well. Id. ¶ 5.

         S'well's signature product is the S'well Bottle, id. ¶ 2, which came to market m 2010, id. ¶ 9. All S'well Bottles have the "S'well" mark printed on their sides. Plaintiff's Response and Counter statement to ETS Express, Inc.'s Statement of Material Facts Not in Dispute ("S'well 56.1 Resp."), ¶ 44, ECF No. 69. S'well registered the S'well Bottle's trade dress (its three-dimensional shape and cap, in combination) with the PTO Supplemental Register in July 2013 and the PTO Principal Register in January 2017. ETS 56.1 Resp. ¶ 6. S'well has since litigated against several companies it viewed as having infringed these trade dress rights. See Can't Live Without It, LLC d/b/a S'well Bottle v. RTIC Coolers, LLC, RTTC Drinkware, LLC, RTIC Web Services, LLC, and John Doe LLCs 1-5, 1: 17-cv-03530 (S.D.N.Y. May 11, 2017); Can't Live Without It, Inc. d/b/a S'well Bottle v. Shanghai2008 (HK) Trading Ltd., 1:16-cv-09520 (S.D.N.Y. Dec. 12, 2016).

         The S'well Bottle has been very successful, obtaining substantial amounts of free, unsolicited media coverage, selling millions of bottles and an increasing number each year, and generating millions of dollars in income. ETS 56.1 Resp. ¶¶ 13-18. S'well sells its bottles (a) directly to consumers on its website, (b) to retailers who then sell the bottles in their stores, and (c) through S'well's custom program, in which an imprint of a company's name or logo is added to the bottle and the company then resells or gives away the bottles. Id. ¶ 22. S'well has spent a great deal of money on advertising and marketing its bottles and has collaborated with various philanthropic organizations, trade shows, festivals, and other events and tastemakers to further develop its brand. Id. ¶ 26. As a result, S'well is well known compared to other water bottle brands. id. ¶ 27.

         ETS is a drinkware company that was founded in 1985. S'well 56.1 Resp. ¶ 1. ETS has had success selling various kinds of its own water bottles that are "patterned after" retail brands. Declaration of Robert Penchina in Support of Plaintiff's Motion for Summary Judgment dated November 20, 2017 ("Penchina Decl."), ECF No. 49, Ex. 6, Deposition of Adam Stone ("Stone Dep.") 101:23-02:2. The Force Bottle is one of ETS's most popular products and is shaped identically to the S'well Bottle. ETS 56.1 Resp. ¶¶ 32-34. ETS first placed a factory order for a Force Bottle in May 2014. Id. ¶ 57. ETS characterizes itself as operating in the "promotion products market" rather than the retail market, meaning it fulfills orders placed by intermediaries for custom-printed products and the intermediaries then sell those products to businesses that give them away as promotions. Id. ¶¶ 42-43. These intermediaries sell a wide variety of products and do not specialize m drinkware. Id. ¶ 44. ETS does sell Force Bottles directly to some retailers - including, at least, college bookstores and a coffee shop chain with locations throughout California. Id. ¶ 47. Additionally, some distributors sell to retailers who sell Force Bottles to end-users either online or in retail stores. Id.; Penchina Decl., Ex. 23.

         Summary judgment is appropriate if the "movant shows that there is no genuine dispute as to any material fact." Fed.R.Civ.P. 56(a). There is no genuine dispute if, "drawing all reasonable inferences in favor of a non-movant, no reasonable trier of fact could find in favor of that party." Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993). A fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "The movant bears the burden of showing that there is no genuine dispute of material fact." Id. at 256.

         I. Trade Dress Violation under the Lanham Act (First Cause of Action) and under New York Common Law (Third Cause of Action) . Defendant's Counterclaim for Cancelation.

         Section 32 of the Lanham Act, in relevant part, holds liable any person who "use[s] in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods" when "such use is likely to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. § 1114(1) (a).[1] "[T]o succeed in a Lanham Act suit for trademark infringement, a plaintiff has two obstacles to overcome: the plaintiff must prove that its mark is entitled to protection and, even more important, that the defendant's use of its own mark will likely cause confusion with plaintiff's mark." Gruner Jahr USA Pub., a Div. of Gruner Jahr Printing & Pub. Co. v. Meredith Corp., 991 F.2d 1072, 1074 (2d Cir. 1993). "The analysis for trade dress infringement is the same under both the Lanham Act and New York State common law." Sports Traveler, Inc. v. Advance Magazine Publishers, Inc., 25 F.Supp.2d 154, 166 (S.D.N.Y. 1998).

         A. Validity of the Trademark and Defendant's Counterclaim for Cancelation

         The Lanham Act only protects nonfunctional, distinctive trade dress. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 775 (1992). If the trade dress is either functional or not distinctive, then cancelation of the mark is appropriate. See 15 USC § 1064(3) (authorizing cancelation "if the registered mark becomes the generic name for the goods or services, or a portion thereof, for which it is registered, or is functional"). S'well's mark is presumptively distinctive and nonfunctional because it is registered with the PTO. See 15 U.S.C. § 1057(b) ("A certificate of registration of a mark upon the principal register provided by this chapter shall be prima facie evidence of the validity of the registered mark"). "As a result, when a plaintiff sues for infringement of its registered mark, the defendant bears the burden to rebut the presumption of [the] mark's protectibillty by a preponderance of the evidence." Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337, 345 (2d Cir. 1999).

         "[P]roduct-design trade dress can never be inherently distinctive, " as product design, such as the shape of a bottle, always serves a function beyond identifying the source of the product. Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 214-15 (2000). To become distinctive, a product design trade dress must acquire a secondary meaning. Id. Trade dress has a secondary meaning if, "in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself." Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 851 n.ll (1982). In evaluating this issue, courts look to such factors, inter alia, as advertising expenditures, consumer studies, sales success, unsolicited media coverage, attempts to plagiarize the mark, and length and exclusivity of the mark's use. Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1041 (2d Cir. 1992).

         Here, defendant's sole argument against distinctiveness is that consumers cannot possibly associate the bottle shape here at issue with any single source because so many different businesses manufacture similarly shaped bottles. ETS provides declarations from various employees who state that they purchased S'well-like bottles from various stores and websites, providing pictures, descriptions, and receipts. See Defendant ETS Express, Inc.'s Local Rule 56.1 Statement of Material Facts Not in Dispute ("ETS 56.1 Stmt."), ¶¶ 23-25, 42, ECF No. 47. ETS identifies 130 different sources of water bottles that have the same shape as the S'well Bottle.

         Defendant posits that, as a matter of law, if "the total number of such different sources exceeds 20, the alleged mark is generic because it cannot indicate that it emanates from a single source." ETS Express, Inc.'s Memorandum of Law in Support of Its Motion for Summary Judgment ("ETS Mem.") at 5, ECF No. 57. But no such numeric rule exists. If, for example, one source has such a large market share and strong brand awareness that the public strongly associates its mark with that brand, consumers will likely assume that products bearing that mark are associated with that brand, regardless of the number of "knockoff" manufacturers. The number of manufacturers is therefore a relevant, but not determinative factor.[2]

         While ETS, in its motion seeking summary judgment dismissing S'well's first and third claims largely relies on a non-existent statistical rule, S'well, by contrast, submits substantial evidence suggesting that the public in fact does associate this particular shape with S'well, including undisputed, significant levels of advertising expenditures, sales success, and unsolicited media coverage. ETS 56.1 Resp. ¶¶ 13-20. Moreover, ETS salespeople in emails with distributors themselves referred to the Force Bottle as a "S'well knockoff, " Penchina Decl. Exs. 11, 12; a "swell like option, " Declaration of Paul J. Safier in Support of Plaintiff's Opposition to Defendant's Motion for Summary Judgment dated December 4, 2017 ("Safier Decl."), ECF No. 62, Ex. 14; "S'well-like, " id., Ex. 15; and "the ones that look like Swell, " id., Ex. 16. Online retailers have similarly advertised Force Bottles to the public as being similar to S'well Bottles. See id., Exs. 20, 21. These comparisons would be meaningless if the audience did not associate the shape with the brand. See Cartier, Inc. v. Four Star Jewelry Creations, Inc., 348 F.Supp.2d 217, 231 (S.D.N.Y. 2004) (use of "such terms as 'Cartier style, ' 'Tank style' or 'Panthere style'" to advertise watches supported finding of secondary meaning). Thus, at a minimum, a genuine dispute exists as to whether S'well's trade dress has acguired a secondary meaning, thereby precluding summary judgment in ETS's favor on this issue.

         Product design with a secondary meaning is nonetheless insufficient to sustain plaintiff's first and third claims if the protected design is functional, i.e., if it serves some useful purpose beyond identification of source and there are no marketable, alternative designs that would achieve the same end. See Brandir Int'l, Inc. v. Cascade Pac. Lumber Co., 834 F.2d 1142, 1148 (2d Cir. 1987). The Latham Act is meant to protect consumers from confusion, not to permit monopoly pricing for functional items. See Qualitex Co. v. Jacobson Prods. Co., Inc., 514 U.S. 159, 164-65 (1995).

         ETS argues that the registered configurations of both the S'well and S'1p Bottles are functional because they are "the most efficient container shape[s] from which to drink." ETS Mem. at 10. ETS cites material S'well itself submitted to the PTO in support of its registrations to argue that both bottles contain "mouths" that are big enough for ice cubes but small enough for "drip-free sipping" and are located in the center of the bottle, so users never need to rotate the bottle to begin drinking. Id. at 10-11. ETS also asserts that the circular shape is the "strongest and the easiest to make, " and that the bottles' smooth tapering at a relatively shallow angle from the base to the mouth permits the bottles to be emptied completely with relatively minor tilts. Id. at 11-12. The alternative design - straight sides with a sharp angle just before the mouth - creates a "catch basin, " so that the liquid in the bottle, rather than smoothly flowing out, is trapped in the depression where the angle changes until the bottle is tilted further, at which point it comes rushing out all at once, leading to spills and other dangers. Id. at 12-13.

         ETS, however, cites no evidence in the section of its brief making these assertions, and that by itself is enough to defeat these assertions for purposes of a summary judgment motion. Several propositions on which they rely, moreover, are far from self-evident. ETS states that manufacturing a circular shape is the easiest and cheapest option, but a rectangular shape might likely be easier to stack and ship. Cf. Abbott Labs, v. Mead Johnson & Co., 971 F.2d 6, 20 (7th Cir. 1992) (nail polish manufacturer arguing that square container was functional for these reasons). The founder of S'well also said in her declaration that she made several aesthetic choices when she designed the bottles that she knew would be more expensive. Declaration of Sarah Kauss dated December 4, 2017 ¶ 5, ECF No. 63.

         Furthermore, ETS offers no evidence suggesting that no other designs could have these same functional benefits. S'well has not trademarked all water bottles with gently sloping sides. Indeed, ETS's argument that both the S'1p and S'Well Bottles have ideal shapes, despite the two being shaped differently, suggests that these benefits may be available in other shapes as well. And ETS says nothing about the distinctive bottle cap, which is part of S'well's trade dress. Nor is it clear that S'well and S'1p Bottles have achieved the perfect mouth size. (How many ice cubes will not fit a smaller bottle mouth? How much more spilling does a bigger bottle mouth risk?)

         To be sure, container shapes are often functional, and "society is better served if functional containers . . . remain available for use among competitors. To the extent this causes a modicum of confusion of the public, it will be tolerated." In re Water Gremlin Co., 635 F.2d 841, 844 (C.C.P.A. 1980). But ETS has not offered sufficient evidence to show that the function the instant combination of design elements serves is otherwise unavailable.

         Although the genuine dispute that therefore exists as to whether S'well's trade dress rights are distinctive and nonfunctional is insufficient in itself to end the inquiry regarding defendant's motion for summary judgment on plaintiff's first and third causes of action (see the next section), it is sufficient to deny defendant's motion for summary judgment on its counterclaim seeking cancelation of plaintiff's marks. That motion is therefore denied.

         B. Likelihood of Confusion

         Even if its mark is valid, a plaintiff cannot succeed on claims of infringement under the Lanham Act or parallel New York State law unless the defendant's use of the mark tends to cause confusion. The Court therefore considers whether customers or potential customers who see the allegedly infringing product (the Force Bottle) are likely to either confuse it with the protected product (the S'well Bottle) or believe that S'well is somehow associated with Force Bottle. In deciding whether a product is likely to confuse consumers about its origins, courts in this circuit examine the eight factors famously enumerated by Judge Friendly in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961):

(1) strength of the plaintiff's mark; (2) the degree of similarity between the two marks;
(3) the proximity of the products; (4) the likelihood that the prior owner will "bridge the gap" . . .; (5) actual confusion; (6) the defendant's good faith in adopting its mark;
(7) the quality of defendant's product; and
(8) the sophistication of the buyers.

Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 478 (2d Cir. 1996). "If a factual inference must be drawn to arrive at a particular finding on a Polaroid factor, and if a reasonable trier of fact could reach a different conclusion, the district court may not properly resolve that issue on summary judgment." Id.

         As discussed above, S'well has adduced significant evidence that its mark is distinctive and strong, despite the fact that many other manufacturers make similar bottles. And defendant concedes that the two products are very similar. ETS Mem. at 6. These first two critical factors therefore weigh against granting defendant's motion.

         ETS's principal argument is that S'well's claim fails on the third and eighth Polaroid factors. According to ETS, Force Bottles and S'well Bottles are sold in separate markets to sophisticated consumers who would not confuse them. ETS submits a declaration from an expert who opines that distributors that purchase Force Bottles from ETS and the businesses that order those bottles from the distributors are unlikely to be confused about the bottles they purchase. Declaration of Michael W. Carwin in Support of Defendant ETS Express, Inc.'s Motion for ...

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