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about Andrews Arts & Sciences Law & Mark Edw. Andrews
email Mark Andrews Be careful what you write in an unsecure email.
about Andrews Arts & Sciences Law & Mark Edw. Andrews
Snowball Patent & Trademark Litigation in New Orleans
Snowballs or snoballs or sno-balls are shaved ice with colorful flavored syrup. One type of ice-shaving machine is the horizontal-block ice-shaving machine, which uses 12-pound blocks of ice— the kind of ice that was used in old-fashioned iceboxes before electric refrigerators. This type of ice-shaving machine has the benefits of speed and volume.
Back in the 1980s, the company then known as Sno-Wizard sued the Eisenmann Products Company, in New Orleans, for trade-dress infringement because the Eisenmann horizontal-block ice-shaving machine looked like a horizontal-block ice-shaving machine, and therefore looked like the Sno-Wizard machine. Sno-Wizard lost that lawsuit, but forced the Eisenmann family to spend $75,000 defending it. One of the issues in that 1980s litigation was—even though a patent application by Sno-Wizard had been rejected in 1942—the words "PATENT PENDING" had been prominently molded into the metal door—had been a false marking—for 40 years. In the trial, the first owner of Sno-Wizard testified that if he had not kept the false marking on the machine, everybody would have copied it. This was back in the days before patent rights could be verified on the internet. Before building their own ice-shaving machine, the Eisenmanns and Craig Collier had commissioned an old-fashioned patent search to find that the "patent pending" assertion had been false since 1942. This was all prelude. The false patent marking stayed on the door of the machine for another 20 years. The second owner of the renamed SnoWizard company continued to keep the false marking on the door, and even promoted it to the false marking "PATENTED". Instead of learning the lesson that legitimate competition was legal, and that public-domain, functional features could be adopted and adapted by anyone, SnoWizard instead tried to amass as many patents and trademark registrations as it could get, on just about anything and everything. Through trial— as it were— and error, SnoWizard found that the United States Patent & Trademark Office (USPTO) and the state trademark authorities could be fooled into granting undeserved patents and trademark registrations by a simple technique called "misrepresentation". SnoWizard already seemed to know that the customers—as opposed to the competitors—did not really know or care about the difference between patents and trademarks, and some percentage of customers would give some credence to whatever patents and trademarks SnoWizard might claim to have. In the 1990s, SnoWizard's focus was more on imaginary patent rights, with the flavor names only being promoted as "SnoWizard originals"—until SnoWizard discovered imaginary trademark rights in about 2000.
Imaginary trademark rights have worked very well for SnoWizard, because the USPTO has approved a handful of howlers for registration, like HURRICANE, GEORGIA PEACH, and MOUNTAIN MAPLE for flavor names, which most people can recognize as being either descriptive or generic, and also some flavor names that might only be recognized as generic in New Orleans, like KING CAKE and CAJUN RED HOT. But even if the USPTO denies registration, as it did for BUTTERED POPCORN, COOKIE DOUGH, MUDSLIDE, and PRALINE, SnoWizard still continues to claim unregistered and state-registered trademarks in all of those flavors. State trademark registrations are very easy to get, and with SnoWizard's 2 main competitors located in the same state of Louisiana, the state registrations are a very useful threat. These flavor names being descriptive or generic is only one of the reasons they can't be trademarks. Another reason is that, for a flavor concentrate, they are functional to show what the resulting syrup flavor will be. And SnoWizard did not use these flavors first, and did not use them exclusively, so they could not possibly be trademarks even if they weren't functional and generic.
Another reason that imaginary trademark rights suit SnoWizard so well is that the law—both statute and caselaw—provides almost no tools for beating back deliberate large-scale trademark abuse. Oppositions and cancellations before the USPTO have to be brought separately, with a separate fee for each trademark, each class of goods, and each complaining party. There is no fee shifting at all available in the USPTO. Resolution takes a long time. The USPTO has nothing at all to say about unregistered or state-registered trademarks, so even a knock-out win cancelling a registration in the USPTO only forces the trademark abuser into the fall-back position of continuing to assert an unregistered or state-registered trademark. Also, even though the USPTO has—on paper—very strong rules about being lied to, including warnings about lies being punishable by fine and imprisonment under 18 USC §1001, in reality, the USPTO does not care very much—and certainly does not do very much—about being lied to. But as unsatisfactory as oppositions and cancellations are in resisting large-scale trademark abuse, when someone uses the other option and files a lawsuit in district court to try to eliminate junk trademarks in the name of free enterprise, the nagging question "why didn't you just file an opposition" tends to make the district-court litigation seem aggressive and bad-tempered. But at least in district court you only pay one filing fee no matter how many plaintiffs are challenging how many junk trademarks, and fee shifting is at least theoretically available. But the trademark statutes and caselaw are still not very helpful.
The federal trademark statutes—in the Lanham Act—are written in terms of registration of trademarks. There is caselaw saying that the provisions for registered trademarks also apply to unregistered trademarks. But although the Lanham Act's provision for collecting damages for the fraudulent assertion of a trademark is written in terms of registration, just like the rest of the Lanham Act, the caselaw contradicts the general principal that the law also applies to unregistered trademarks, and instead severely restricts the availability of damages only to cases where the trademark application for registration has been completely successful and fully registered. So if an opposer looks after its interests and files a successful opposition against a fully approved but not yet technically registered trademark application, no damages can ever be collected no matter how egregious and provable the underlying fraud is. And if a lawsuit is filed in district court against a trademark that is being fraudulently asserted as an unregistered trademark while the application for registration is pending, and if the claims for damages are included along with the other claims, as they must be under the pleading rules, then the claim for damages is liable to be dismissed as an unripe or inchoate claim— because the actual registration has not issued because a timely opposition was made.
The frustrating mushiness of the trademark laws stands in contrast with the strength of the patent laws. There are reasons for this. In 1879, the U.S. Supreme Court substantially eliminated federal trademark law. As a consequence, federal trademark law lagged behind the development of a national economy in the United States. State-law trademarks were allowed to flourish where other balkanization of the national economy was eliminated. Even when a reasonable federal trademark statute was passed in 1946 through the efforts of Congressman Fritz Lanham, the federal law did not displace state-law and common-law trademarks in the way that other comprehensive federal legislation and regulation has preempted other fields. Also, the ever-thinning legal fiction that trademarks are more about consumer protection and less about property rights has skewed the development of trademark law. Although, historically, all trademark law developed from unfair-competition law, it was not until the Lanham Act was amended in 1988 that the U.S. even had a comprehensive unfair-competition law defined as such, and not everyone has gotten the news, even 2 decades later. An example of the weakness of trademark law is this: Both patent and copyright law, and even cyber-squatting law cobbled onto the Lanham Act, provide for statutory damages— because actual, specific damages are almost impossible to prove in a free society and free economy where people are allowed to buy what they want from whomever they want, and are not required to submit reports and records of their purchases to anyone. But trademark law does not provide the statutory damages available in patent and copyright law. Proving trademark damages is a litigation nightmare. Finally, most trademark statute and caselaw is stated in terms of legitimate trademarks being infringed, with so little attention paid to false assertion of illegitimate trademarks that it takes 3 pages of argument to establish that there is anything wrong with it. In contrast, there is no such thing as a state-law patent or a common-law patent. Patents are strictly federal-law— they have to be sued on in federal courts, and all appeals go to the Federal Circuit. A patent either exists or it does not— it takes less than a minute on the internet to find out. Patents are openly recognized as property rights to practice monopolies, not some kind of weird consumer-protection measure that theoretically does not create any rights, but only recognizes rights that have already come into being. And lying to obtain a patent, or lying about having a patent that does not exist, are clearly treated as economically damaging actionable violations of the patent law. So, with the confusion inherent in parallel federal, state, and common-law trademark regimes, the disconnect between law being interpreted as consumer protection, but enforced as a property right, and the basic weakness and mushiness of the law, trademark abuse is a much safer choice for the abuser than the other intellectual property rights.
SnoWizard always kicks off new harassment of competitors in March or April, because the snowball business is highly seasonal, and this arrangement allows trouble to be concocted over the winter and then sprung on competitors when their hands are full with the start of a new busy season.
The current litigation about bogus patents and trademarks on snowball shaved-ice machines, flavor names, and supplies started in March 2005 when SnoWizard sent a "cease and desist" letter to Southern Snow, asserting a federally registered trademark in the flavor name ORCHID CREAM VANILLA, which had been the signature flavor of the Plum Street Snoballs stand in New Orleans for over 50 years. In other words, SnoWizard had copied a flavor that had already been around, and had become a trademark for somebody else, and SnoWizard lied to the USPTO and registered the trademark in SnoWizard's name. In a move that seems extremely tame— looking back, now knowing of the 2-dozen bogus trademarks and 2 bogus patents to come— Southern Snow filed an administrative action with the Trademark Trial & Appeal Board (TTAB) of the USPTO, to cancel the registration for ORCHID CREAM VANILLA. The only thing that can be achieved in a cancellation action before the TTAB is to get a registration cancelled. The TTAB cannot award damages or attorney fees, so there is no economic gain or loss involved except for the value of the trademark itself. After 4 years, the TTAB did order the cancellation of ORCHID CREAM VANILLA.
In the course of the TTAB cancellation proceeding for ORCHID CREAM VANILLA, Southern Snow discovered that SnoWizard's own newsletters and other documents showed that SnoWizard knew all along that it could not possibly have trademark rights in ORCHID CREAM VANILLA. Also, SnoWizard sent another "cease and desist" letter in April 2005, asserting trademark rights in WHITE CHOCOLATE & CHIPS flavor. And SnoWizard had been falsely claiming a trademark in the word SNOBALL itself, in spite of the TTAB's rejection of SnoWizard's application for SNOBALL in 2004. Southern Snow filed an unfair-competition lawsuit in Louisiana state court in 2006. SnoWizard removed that lawsuit to federal court in New Orleans, as Case No. LAED-06-9170. One week before that case was supposed to go to trial, in January 2008, SnoWizard asked for the case to be stayed—to wait and see how the USPTO TTAB would decide on ORCHID CREAM VANILLA. The case was stayed, and the ORCHID CREAM VANILLA decision by the TTAB was not rendered until December 2009, so the 06-9170 case was stayed for 2 years.
In the spring and summer of 2008, just after the 06-9170 case was stayed, SnoWizard filed a dozen applications for federal trademark registrations of flavor names, and more than a dozen Louisiana trademark applications for registrations of flavor names. The Louisiana registrations were all granted. The USPTO, however, granted some, argued about some, and then approved them, and rejected some of the applications, ultimately.
In April 2009, after some of the trademark applications from 2008 had been granted regsitration, SnoWizard sent a "cease and desist" letter to competitor Parasol Flavors, demanding that Parasol stop selling the SNOW SWEET sugar-free mix that Parasol developed, and the flavors HURRICANE, KING CAKE, GEORGIA PEACH, and BUTTERED POPCORN. In response to the "cease and desist" letter, Parasol sued SnoWizard in Case No. LAED-09-3394. Later, Southern Snow joined with Parasol in this lawsuit, and added the bogus trademarks PRALINE, MUDSLIDE, CAKE BATTER, DILL PICKLE, and BUTTERCREAM to the complaint.
In March 2010, after Southern Snow discovered that SnoWizard was using Southern Snow trademarks as metatag keywords and hidden text on its website, Southern Snow filed Case No. LAED-10-0791 against that infringement, and against the bogus trademarks CAJUN RED HOT, CHAI LATTEA, COOKIE DOUGH, MOUNTAIN MAPLE, SNOFREE, SNOSOUR, SNOBALLS(trailer design), SWISS ALMOND COCO, TIRAMISU, & ZEPHYR, that had come to Southern Snow's attention during 2009 and 2010.
After the TTAB decided in December 2009 to cancel the registration of ORCHID CREAM VANILLA, the 06-9170 case was reinstated, and the 2 later-filed trademark cases were consolidated with it—into 1 big case with 23 bogus trademarks.
Meanwhile, in secret, SnoWizard was attempting to get some actual real patents to justify 60 years of claiming that its machine was patented. SnoWizard specifically designated its patent applications to be kept secret and not published. SnoWizard also omitted and misrepresented information that would have prevented the patents issuing, and two U.S. patents were issued in 2009. Southern Snow filed a lawsuit, Case No. LAED-10-4275, against SnoWizard's false patent marking and against 1 of the issued patents, in November 2010. This case has since been dismissed in favor of a new case brought by a group of plaintiffs.
Also in the meanwhile, SnoWizard tried unsuccessfully in 2010 to bully its distributor in Tarrant County, Texas, Raggs Sno-Cone Supplies, into accepting an expensive change to the distributorship agreement that had been in place for 19 years since 1991. In response to the bullying, Raggs told SnoWizard goodbye, and SnoWizard turned around and sued Raggs for trademark infringement, dilution, and defamation, in Case No. LAED-11-0515. SnoWizard claims that it was trademark infringement for Raggs to re-sell SnoWizard flavor concentrate that Raggs bought from SnoWizard, at wholesale, specifically to re-sell, as Raggs had been doing with SnoWizard's full knowledge for 19 years.
During the 6 years that this litigation has been pending and expanding, several other people in the snowball business have been willing to be witnesses on behalf of Southern Snow and Parasol, and have been following the litigation with interest because SnoWizard's bogus patents and trademarks threaten them, too. Also, some of the other people have their own claims against SnoWizard because SnoWizard stole their trademarked signature flavors. In the late spring and early summer of 2011, these other participants in the snowball business, Plum Street Snoballs, Ted Eisenmann, Special T Ice, Raggs, Parasol, Southern Snow, and now Van's Snowballs, joined together as co-plaintiffs in Case No. LAED-11-1499, filed 24 June 2011.
Where the earlier litigation was somewhat piecemeal because it was filed in response to separate, escalating provocations, the new litigation at least attempts to fit all of the individual bogus patents and trademarks—which can seem trivial and silly in isolation—into the big picture of SnoWizard attempting, with some initial success, to claim monopolies in both the ice-shaving machine market and the related flavor-concentrate market with government-sanctioned exclusive rights which either do not really exist, or were obtained by fraudulent means.