Suntree Technologies, Inc. v. Ecosense International, Inc., et al., decided on September 5, 2012, is not the typical trademark infringement case because the Plaintiff’s allegations of trademark infringement stemmed from a contractor bid with a governmental entity, namely, the City of West Melbourne, Florida (“City”). That is, the case did not start out as a “head-to-head” direct confrontation between two separate trademark owners. The case is, however, instructive on a number of fronts. First, the opinion reiterates the requirements for proving infringement of a federal trademark and violation of Florida’s Deceptive and Unfair Trademark Practices Act (FDUTPA) in the Eleventh Circuit. Second, the case involves issues that do not often come up in a typical trademark case, namely contributory infringement and reverse passing off.
Third, the case involves the little known issue of Initial Interest Confusion, a judicially created doctrine which has found favor with the 9th Circuit Court of Appeals in particular. See e.g., Brookfield Communications, Inc. v. West Coast Entertainment Corp. (9th Cir. 1999); Dr. Seurr Entrs. v. Penguin Books (9th Cir. 1997). This issue was a case of first impression for the Suntree Court.
The Suntree Court ultimately held that the Plaintiff’s trademarks had not been infringed by any of the defendants. Nor had any of the defendants violated the FDUTPA.
All page references to the Suntree case are for the slip opinion.
The case originated as the result of the City’s new sewer project in 2008. As is usually the case with such bids, the City provided Bidding and Construction Contract Documents and Technical Specifications to bidding contractors. The project involved the installation of nine baffle boxes for removing pollutants from stormwater before the stormwater reached lakes, rivers, and streams. Suntree at 2. Suntree and Ecosense are “baffle box manufacturing” competitors. Suntree’s baffle boxes were highly regarded and had received certification by the New Jersey’s Corporation for Advanced Technologies, and Suntree was the most well-known storm filtration product supplier in Florida. Ecosense was a relatively new player in the field and actually only installed its first baffle boxes in 2008. Suntree at 3
Bidding documents generally include specifications with regards to key materials. The bidding documents in the Suntree case stated that the nutrient separating baffle boxes were to be provided by Suntree or an approved equal which met or exceeded Suntree Technologies, Inc. specifications. The City presumably used Suntree baffle boxes as the required standard, but also provided for the opportunity of using another manufacturer’s baffle boxes if they met Suntree’s own specifications. Suntree at 3-4.
The bidding documents set forth the process that the bidding contractor must go through to gain approval for an “or equal” item of material equipment. Yet, any approval for any substitute was not going to be even considered prior to an award of any contract. Suntree at 5.
The contract was awarded to Derrico Construction Corporation (“Derrico”). Derrico had listed Suntree as the baffle box supplier in its bid because it did not know if an “approved equal” would be approved if the contract were to be awarded. Suntree at 17. In such a case, Derrico would have been required to install Suntree’s baffle boxes. Derrico subsequently sought and received approval of Ecosense’s baffle boxes as a substitute for Suntree’s product by the City engineer in charge of the project. Suntree at 17-18.
After the project was completed, the County requested that “Ecosense prepare a power point presentation to train the City’s personnel on the proper cleaning and maintenance procedures for baffle boxes.” Ecosense prepared a “real life” photograph presentation posted at its website showing baffle boxes being cleaned and maintained by the City of Rockledge. The City of Rockledge had installed baffle boxes from both Suntree and Ecosense and the photographs included baffle boxes from both manufacturers. The presentation did not mention or otherwise refer to Suntree. Suntree at 7.
Suntree filed a complaint against Ecosense, its president, and Derrico in November 2009 alleging trademark infringement under federal law and unfair competition, misleading and deceptive representations, and unfair practices under the FDUPTA. The lawsuit basically stemmed from Suntree’s believe that “Derrico used Suntree’s reputation to win a bid and then used a “bait-and-switch” tactic to substitute Ecosense’s baffle boxes for those of Suntree.” Suntree at 16.
Sunbiz and Derrico subsequently settled, and as part of the settlement agreement, Derrico agreed to always use baffle boxes manufactured by Sunbiz in the future. Suntree at 8. Although the Sunbiz court did not address the settlement agreement, it must be stated that such an agreement to restrict competition may have antitrust implications since there is apparently at least one other manufacturer (Ecosense) with an equivalent product. In bidding matters, however, the awarding party has the final say so, and will often provide the contract to the cheapest bidder. Therefore, any bid by Derrico which involves Suntree products will need to be competitive if Derrico (and Suntree) hope to “win” the contract.
Ecosense and Suntree both filed motions for final summary judgment, and the district court ruled in favor of Ecosense. Suntree appealed. Suntree at 10.
At first blush, Suntree certainly appears to have had some grounds for disgruntlement. After all, the bidding “players” certainly recognized the quality of its baffle boxes, and yet Suntree was upstaged by a relative new player in the field. By claiming Initial Interest Confusion, Suntree was asserting that Derrico’s actions were being done in a manner calculated to capture [the City’s] attention even though no actual usage of Suntree’s baffle boxes occurred when all was said and done.
Although Derrick and Suntree had settled, the Eleventh Circuit evaluated the bidding process involving Derrick in its analysis to determine whether direct trademark infringement had occurred. Under trademark law, contributory trademark infringement depends upon an initial establishment of direct trademark infringement using a multi-factor analysis. In this case, Derrick was allegedly the “direct trademark” infringer. Suntree at 14.
Such an analysis has also traditionally been a prerequisite to an Initial Interest Confusion inquiry as per the two cases cited above. The majority of courts have followed a multi-factor analysis under the traditional trademark infringement analysis to determine if Initial Interest Confusion had occurred. If the multi-factor analysis fails (e.g., on the basis of non-evidence of actual confusion), a finding of Initial Interest Confusion is highly unlikely.
Regarding defendant Derrick (the contractor), the Suntree Court opined that Derrick had not used Suntree’s mark to identify Ecosense’s product (i.e. pass off an Ecosense baffle box as a Suntree baffle box) and therefore had not intended to confuse the City as to whose baffle boxes would be installed. The Court very deliberately pointed out that the contractor-defendant had merely been following the Instructions to Bidders, “which provided that the contract would be awarded ‘ “without consideration of possible substitute or equal items and that application for such acceptance [would] not be considered by the [City] Engineer until after the Effective Date of Agreement.” ’ Suntree at 17. Such actions on the part of Derrick, as a bidding contractor, was not evidence of an intent to mislead, or confuse or of actual confusion. As such, the Court did not have to reach the issue as to whether “initial interest confusion is actionable in the Eleventh Circuit.” Suntree at 18.
In dicta, the opinion also noted that the City’s project engineer stated in his deposition “that the City was not permitted under Florida law to designate Suntree as the sole manufacturer of baffle boxes absent a showing of special circumstances.” Suntree at 4. Indeed, the bidding documents did provide for “an approved equal.” Although not stated within the opinion, obviously this requirement is intended to promote competitive bidding on state government and municipality contracts.
The Eleventh Circuit Court’s opinion also emphasizes that alleged violations of federal trademark law (i.e., the Lanham Act) and Florida’s Florida Deceptive and Unfair Trade Practices Act (FDUPTA) require the plaintiff to proffer sufficient evidence to prove any such allegations. Furthermore, the Eleventh Circuit’s case law establishes that the legal analysis for counts involving the Lanham Act and the FDUPTA is the same. That is, failure of the plaintiff to establish a violation of the Lanham Act will most likely result in a finding that the plaintiff did not violate the FDUPTA. Suntree at 13 citing Custom Mfg. and Eng.’g Inc. v. Midway Servs. Inc., 508 F.3d 641, 652 (11th Circ. 2007). See also Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193, n.4 (11th Cir. 2011) where the Eleventh Circuit stated that “[c]ourts may use an analysis of federal infringement claims as a measuring stick in evaluating the merits of state law claims of unfair competition.”
The Suntree Court held that Suntree had “failed to present evidence of [Derrick’s] intent to mislead or confuse, or of actual confusion.” As such, the Court did not have to reach the question as to “whether Initial Interest Confusion [was] actionable in the Eleventh Circuit.” Suntree at 18.
Regarding defendant Ecosense, Suntree alleged that the Ecosense’s use of photographs of Suntree’s baffle box product in the power point presentation was an “attempt to pass off Suntree’s baffle boxes as their own.” This type of “passing off” is known as reverse passing off. The factors involved in establishing reverse passing off are the defendant’s intent and actual confusion under Ambrit, Inc. v. Kraft, Inc. 812 F.2d 1531, (11th Cir. 1986). See Suntree at 20.
The Suntree Court found that Ecosense had no intention of confusing potential customers with photos of Suntree’s product as evidenced by its swift and effective remedial action of removing the offending photographs from its website upon notification by Suntree of its error. Furthermore, the usage of the photographs did cause any confusion on the part of any of the City’s engineers. Suntree at 20. Nor did the presentation involve commercial advertising or promotion because the presentation had not been made for commercial purposes, but simply for training customers who had already purchased the product.
What are the take home points from the Suntree decision? First, any future finding of Initial Interest Confusion by the Eleventh Circuit will most likely require that the alleging party prove that trademark infringement under a typical multi-factor analysis has occurred. The Eleventh Circuit has yet to fully consider the issue of Initial Interest Confusion, but the Suntree decision suggests that it will follow the lead of the circuits which have been quite conservative in the application of this judicially created doctrine by first determining if the evidence establishes that infringement did indeed occur. Second, a showing of contributory trademark infringement always requires a showing of direct trademark infringement via supporting evidence. Finally, if the underlying situation which led to the Suntree lawsuit had not involved governmental entity’s (the City’s) bidding process, perhaps a different result may have been reached providing direct infringement could have been proven. Indeed in Suntree, the contractor had complied with the City’s bidding process and “baffle box” substitution procedure, and the Ecosense’s presentation had not been disseminated for advertising or promotional purposes as in a typical commercial setting, but for the training of a limited number of city maintenance personnel. See Suntree at 23.
THE FOREGOING IS FOR INFORMATIONAL PURPOSES AND DOES NOT CONSTITUTE LEGAL ADVICE. IF YOU ARE CONTEMPLATING AN ACTION WHICH MAY HAVE LEGAL CONSEQUENCES, YOU SHOULD CONSULT WITH AN ATTORNEY OF YOUR CHOOSING.
© Troy and Schwartz, LLC
