when weak TM claims do better than seemingly strong false advertising claims

Sanho Corp. v. Kaijet Technol. Int’l, 2024 WL 4553279, ---F.Supp.3d ----, No. 1:18-cv-05385-SDG (N.D. Ga. May 20, 2024)

Note: A jury found Kaijet liable for design patent andcopyright infringement after this opinion, but rejected the TM claims, which Iguess says something about a jury’s ability to distinguish claims. It didn’tget a chance to decide the false advertising claims, which I think reflectscourts’ relatively lax approach to TM compared to the rigors to which falseadvertising claims are subjected before reaching a jury; personally, I likelywould have gone the other way.

Sanho sells accessories under the HyperDrive name, includingMacBook dongles. Kaijet sells competing UltraDrive MacBook dongles. 

Kaijet product Sanho product

(My spouse uses a third competitor that looks basically indistinguishable; FWIW, he says that he would not buy the same product again because it's easy to whack it in a way that detaches it from the laptop and that a cable connection would have been a better choice.)

Sanho has aregistration for HYPERDRIVE.

HyperDrive logo UltraDrive logo

The court first found that there was a factual issue aboutwhether the hubs were “power adapters” as specified in the trademarkregistration. The hubs can be used “to transmit[ ] power from a ‘source’(MacBook Pro) to a ‘sink’ (a cell phone being charged).”

The court also found a factual issue on likely confusionbetween UltraDrive and HyperDrive, reasoning that because a power hub is not adrive (and also that there’s a Star Wars reference), the mark was suggestive.Third-party use of the weak components “hyper” and “drive” didn’t reduce thestrength of the mark (but somehow that didn’t make confusion less likely justbecause the overlap was in “drive”). Although the marks weren’t similar inappearance, they were “similar in sound, meaning, and usage,” since they bothhad a two-syllable prefix followed by the word “drive,” and “hyper” and “ultra”were roughly synonymous. They were directly competing. Although there’s adistinction between bad “[i]ntent to benefit from a competitor’s goodwill” andgood “intent to copy,” they’re often related and bad can be inferred from good,as it could be here. Email communications repeatedly referenced Sanho’s design,and expressed a desire to use similar elements in its own product. Kaijet USchanged its existing product name from “ultrastation” to “UltraDrive” afterSanho began selling its hubs, and as Kaijet US was preparing to introduce acompeting product into the same market.

Whether there was evidence of actual confusion was acontested issue about interpreting consumer complaints.

Sanho’s false advertising claim  alleged that the defendants falsely advertiseda hub as an “8-in-1” product, when it contains only seven ports. But the courtagreed that this wasn’t literally false, and Sanho offered no evidence oflikely confusion. It seems like a jury should at least have addressed theliteral falsity issue, because it’s hard to say that no reasonable jury couldhave found literal falsity, when there are eight numbers for ports and thenumbers don’t correspond to, or even add up to as far as I can tell, eightdistinct functions. But the court reasoned that “labels do, in fact, count outeight functions. Several of those functions do seem duplicative—(5) and (6) areboth labeled ‘USB 3.0.,’ (7) and (8) are both labeled ‘Memory Card’—but thatsuggests the labels are misleading, not literally false.” I would instead havesaid that means that both possible meanings—number of functions or number ofports—are literally false.  

neither eight functions nor eight ports shownThere were also factual disputes on the copyrightinfringement claim based on the parties’ packages.  Sanho’s packaging contained both protectableand non-protectable elements: 

Sanho packaging

Non-protectable are Sanho’s product name and description,the packaging’s selection of typographies and colors, and familiar images suchas MacBooks and laptop ports.

Also non-protectible are functionalelements like the listing of product information and specifications. The way inwhich the product-shaped cutout or window on the front of the packaging allowsconsumers to view the product without opening the packaging is likewisefunctional and therefore non-protectable.

However, there was “a spark of creativity here in Sanho’sarrangement and coordination of the packaging’s otherwise unprotectibleconstituent elements—most notably in the alignment of the right side of theproduct-shaped cutout with the left edge of a depiction of a MacBook to suggestthe physical docking of the hub to the laptop.” Packaging for similar productscontained “more or less the same elements—product name and description,specifications and features, cutouts or windows—but in a variety ofarrangements, none of them resembling Sanho’s in overall layout, and none ofthem suggesting its product’s physical compatibility with another device in theway that Sanho’s does.”

packaging front comparison packaging side comparison

The court found that defendants

appropriated the most originalelement of Sanho’s design: the cutout in the center showing the product hubphysically interfacing with a depiction of a MacBook to the right. In addition,the front of [defendants’] packaging presents mostly the same information asSanho’s, and in the same layout: product name at top, product description atbottom, “4K” and “50 Gbps” callouts at bottom right. The back of j5create’spackaging, like Sanho’s, depicts a MacBook, open at a similar angle and viewedfrom a similar perspective, with the product hub attached and its portslabeled, followed by a bulleted list detailing the ports’ capabilities. Theleft side panel of [defendants] packaging, like Sanho’s, depicts and labels thehub’s ports. These are significant similarities in the packagings’ arrangementand coordination of dominant design features.

But they were also “far from identical,” includingdifferences in color and font, as well as defendants’ product carrying productspecifications in four languages and depicting the product’s side profile onthe side of the package. Because substantial similarity is qualitative, thiswas for the jury.

Finally, the court rejected Kaijet’s false advertisingcounterclaim based on Sanho’s allegedly false “fake review campaign” ofpositive product reviews on Amazon, based on failure to show materiality. Itwas insufficient to provide:

1. A study showing that 74% ofrespondents “read online reviews” from online stores like Amazon and BestBuy;

2. A study showing that 32.7% ofrespondents cited “[p]roduct reviews and recommendations as a “[m]ain reasonfor shopping at Amazon”; and

3. Sanho CEO Daniel Chin’sdeclaration testimony that “The UltraDrive is an inferior and lower qualityversion of the HyperDrive. It receives less favourable customer rating reviewson Best Buy’s website and has many complaints.”

“Evidence about where consumers read online reviews is notprobative of what they do with the information in those reviews. Likewise,evidence about why consumers choose to shop at Amazon is not probative of whythey would choose the HyperDrive over the UltraDrive, when the latter was soldexclusively through Best Buy.” There was no evidence tending to prove thatSanho’s alleged fake reviews caused consumers to buy Sanho’s products insteadof defendants’, and self-interested testimony on superiority was insufficient.(This is a bit of conflating materiality with harm causation, but ok. Imagine acourt finding evidence that consumers generally care about brand names, orother general testimony about branding, insufficient in a TM case!)

Also, defendants failed to rebut Sanho’s evidence ofimmateriality, which was deposition testimony that No such evidence has beenproduced. Furthermore, the Kaijet Defendants have failed to meaningfully rebutSanho’s evidence of immateriality: deposition testimony that the Sanho product hada better aggregate rating on Best Buy (where it is actually sold) than it didon Amazon, and Sanho’s expert’s testimony that the sales metrics of itsproducts, both of themselves and relative to the sales metrics of Kaijet, wereuncorrelated with the timing of Sanho’s alleged fake review campaign. Noreasonable jury could find, on this record, that Sanho’s fake review campaignwas material.