649 F. App'x 633
9th Cir.2016Background
- Mercado Latino, Inc. sued Indio Products, Inc., alleging trade dress and trademark infringement based on Indio’s sale of candles with packaging and design allegedly confusingly similar to Mercado’s.
- The district court dismissed Mercado’s complaint for failure to state a claim and struck additional trade dress allegations from a later amended complaint.
- Indio argued Mercado’s trade dress claim was preempted or displaced by the Copyright Act (i.e., a copyright claim disguised as a Lanham Act claim).
- Mercado contended it asserted traditional trade dress and reverse passing-off trademark claims (sale of Mercado candles in Indio boxes), not claims about the origin of a communicative work.
- The Ninth Circuit reviewed the dismissal de novo, considered all interlocutory rulings on appeal, and concluded the district court erred in dismissing several claims and in striking amended allegations without defining the scope of leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trade dress claim is preempted by the Copyright Act | Mercado: trade dress is a traditional Lanham Act claim about confusingly similar product design and not displaced by copyright | Indio: trade dress claim is really a copyright claim in disguise and conflicts with copyright law (rely on Dastar/Shaw) | Trade dress claim not preempted; Lanham Act claim allowed alongside copyright claim |
| Whether dismissal should be limited to First Amended Complaint / striking additional trade dress allegations | Mercado: appellate review should consider all pleadings and the district court abused discretion by striking Second Amended Complaint allegations | Indio: (implicit) appellate review limited and strike appropriate | Court considered all interlocutory rulings and held district court abused discretion in striking amended allegations |
| Whether trademark reverse passing off survives First Sale Doctrine | Mercado: factual allegations (sale of Mercado candles in Indio boxes) plead reverse passing off under the repackaging-notice exception | Indio: First Sale Doctrine bars Lanham Act claim | Alameda: Ninth Circuit held Mercado sufficiently pleaded trademark infringement under the repackaging-notice exception to the First Sale Doctrine |
| Effect on derivative claims (unfair competition; interference with prospective economic advantage) | Mercado: derivative claims depend on Lanham Act claims | Indio: derivative claims fail if Lanham claims dismissed | Court reversed dismissal of derivative claims as Lanham claims reinstated |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205 (2000) (distinguishes protectability of unregistered trade dress and affirms coexistence of copyright and trade dress claims)
- Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007 (9th Cir. 1994) (copyright and Lanham Act damages may both be available for same conduct)
- Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) (refuses to extend Lanham Act to false designation claims about communicative products to avoid conflict with copyright)
- Shaw v. Lindheim, 919 F.2d 1353 (9th Cir. 1990) (declines to expand Lanham Act where Copyright Act provides adequate remedy for copying of television script)
- Enesco Corp. v. Price/Costco Inc., 146 F.3d 1083 (9th Cir. 1998) (articulates repackaging-notice and quality-control exceptions to the First Sale Doctrine)
- Lacey v. Maricopa County, 693 F.3d 896 (9th Cir. 2012) (appellate review of a final dismissal considers intervening interlocutory rulings)