Peaceable Planet v. Ty

Citation
Peaceable Planet, Inc. v. Ty, Inc., 2003 U.S. Dist. LEXIS 14937 (N.D. Ill. Aug. 28, 2003), rev'd in part and remanded, 362 F.3d 986 (7th Cir.), ''cert. denied,'' 543 U.S. 869 (2004).

Factual Background
Plaintiff makes plush toy educational products for children and adults. In 1999, plaintiff began selling a toy camel named "Niles." From May 1999 to February 2000, plaintiff sold 3,217 of these toys while spending almost $200,000 advertising and promoting all of its products. Defendant makes "Beanie Babies" plush toys for children.

At a trade show in February 2000, defendant introduced a camel named "Niles" and that name first appeared on defendant's website on March 1, 2000. Defendant expressly claimed that it owned the NILES trademark by stating so on its website and by using the "TM" symbol next to the NILES name on product labels and hang tags and in its catalogs. Plaintiff filed an application to register the mark NILES, and defendant opposed the application. A few months earlier, plaintiff sent defendant a cease-and-desist letter demanding that it not use the NILES mark.

Trial Court Proceedings
After defendant failed to respond, plaintiff sued defendant for trademark infringement and other claims. The parties filed cross-motions for summary judgment regarding the protectability of the NILES mark. The court held that NILES was not a valid, protectible mark because it was not inherently distinctive and had not acquired secondary meaning.

The court initially found that the NILES mark was not inherently distinctive because it was a first name. In fact, the court found that NILES was "primarily merely . . . a personal name" based largely on a consumer survey submitted by defendant showing that 47% of prospective consumers thought of the term NILES as a person's name.

The court next found that plaintiff had not provided sufficient evidence to establish secondary meaning. Plaintiff did not submit any consumer testimony or surveys indicating that the primary significance of NILES was to identify plaintiff as the source of the product rather than the toy itself. Moreover, plaintiff's advertising and sales evidence was entirely circumstantial and did not show that consumers associated NILES with plaintiff. In any event, the low number of sales in a nine-month period was insufficient to establish secondary meaning. And it was unclear from the evidence submitted by plaintiff what portion of its advertising expenditures was spent on the NILES product.

Appellate Court Proceedings
On appeal, the Seventh Circuit reversed the district court's determination that the NILES mark was merely descriptive and not protectible absent secondary meaning simply because it was a personal name. The Seventh Circuit noted that the reasoning for not protecting personal names in certain situations is entirely distinct from the reasoning for not protecting descriptive terms. According to the court

"the 'rule' that personal names are not protected as trademarks until they acquire secondary meaning is a generalization, and its application is to be guided by the purposes that we have extracted from the case law. When none of the purposes that animate the 'personal name' rule is present, and application of the 'rule' would impede rather than promote competition and consumer welfare, an exception should be recognized."

Here, denying protection to NILES because it is a personal name was not consistent with the purposes of the personal-name rule. First, the rule is designed to allow people to use their names in conjunction with their business. Here, however, Niles was not the defendant's name. Second, the rule accounts for the fact that some names are so common that consumers will not assume that two businesses with the same name are related simply because they share the same name. Here, Niles was a very uncommon and "downright rare" name, as indicated by defendant's survey in which only about half of the respondents considered "Niles" to be a personal name, even though "the questions posed to the respondents were slanted by obsessive repetition of the term 'person's name'" and even though the survey was limited to adults despite children being the primary market for defendant's products. In addition, defendant's own statistics indicated that about only one in 50,000 residents of Illinois was named "Niles."

The final concern with personal names is that preventing someone from using his name to identify his business would deprive consumers of useful information. Here, consumers would not be deprived of information if defendant had to choose another name for its camel. In addition, the court noted that the NILES mark was suggestive, not descriptive, of a camel because the name suggested the Nile River and thus the desert. The Seventh Circuit therefore concluded that plaintiff held a valid trademark in the name NILES.

Because defendant submitted enough admissible evidence to create a triable issue on the issue of reverse confusion &mdash; the similarity of the products, identity of the marks, and disparity in fame and sales between plaintiff and defendant &mdash; the Seventh Circuit remanded the case to the district court where plaintiff to succeed on its infringement claim will have to show that a substantial number of consumers think that plaintiff's camel was actually defendant's.

Source
This page uses content from Finnegan’s Internet Trademark Case Summaries. This entry is available under the Creative Commons Attribution-Share Alike License 3.0 (Unported) (CC-BY-SA).