Freecycle Network v. Oey

Citation: Freecycle Network, Inc. v. Oey, 505 F. 3d 898, 84 U.S.P.Q.2d (BNA) 1530 (9th Cir. 2007).

Factual Background
Plaintiff, The Freecycle Network ("Freecycle"), was a nonprofit organization that operated an online market at the website at "freecycle.com" whereby its members could exchange unwanted goods. Early on, Freecycle used the terms "freecycle," "freecycling," and "freecycler" to refer to the act of recycling products for free via the Internet. In 2004, Freecycle sought registration for the mark FREECYCLE, but it was opposed by a third party, and at the time of trial, remained unregistered.

Defendant Oey was an active member of Freecycle who initially counseled Freecycle to police the FREECYCLE trademark and to register it. But Oey later had a change of heart and decided that the term should be in the public domain. He then posted statements on the Internet claiming that FREECYCLE was a generic term and Freecycle had no rights to the term, and he encouraged others to use it in a generic sense and to petition the PTO to oppose its registration.

Trial Court Proceedings
After severing ties with Oey, Freecycle sued him for contributory trademark infringement and trademark disparagement under Section 43(a) of the Lanham Act and for various state-law claims. The district court granted a preliminary injunction based on Freecycle's 43(a) claims and enjoined him "from making any comments that could be construed as to disparage upon [The Freecycle Network]'s possible trademark and logo" and requiring that he "remove all postings from the [I]nternet and any other public forums that he has previously made that disparage [The Freecycle network]'s possible trademark and logo."

Appellate Court Proceedings
Oey appealed, arguing that the district court erroneously analyzed the elements of trademark infringement and conflated the infringement claim with a disparagement claim that does not exist under the Lanham Act. The court of appeals agreed, and vacated the holding and remanded the case back to the district court for further proceedings.

First, as to Freecycle's trademark infringement claim, the court found that Oey's actions did not constitute a "use in commerce" under the Lanham Act because he did not "promote any competing service or reap any commercial benefit whatsoever." Rather, "Oey simply expressed an opinion that [Freecycle] lacked trademark rights in the term "freecycle" and encouraged like-minded individuals to continue to use the term in its generic sense and to inform the PTO of their opinions."

Moreover, even if Oey's statements constituted a "use in commerce," they were not likely to cause confusion based on the Ninth Circuit's review of the relevant likelihood-of-confusion factors, which the district court did not review. Oey's statements neither mentioned any competing service nor claimed affiliation with Freecycle. The court further found no basis for Freecycle's Lanham Act claim for disparagement because such a claim does not exist under the Lanham Act. Even if such a claim existed, Oey made no false statements of fact, because at the time Freecycle had not been granted trademark protection in the mark FREECYCLE. Oey "at worst" offered an erroneous legal opinion.

Moreover, Oey's prior support of Freecycle's efforts to protect FREECYCLE as a trademark did not render his later statements false. Lastly, the court found that the Lanham Act contains no provision for "genericide," i.e., preventing the use of a trademarked term in a generic sense. Nor did it prohibit individuals from expressing an opinion that a mark should be considered generic or from encouraging others to use a mark in a generic sense. Thus, because Freecycle could not demonstrate any likelihood of success on these claims, the court vacated the injunction.

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