On June 23, 2016, the U.S. International Trade Commission (“ITC”) issued a decision in the closely watched Converse proceeding, invalidating one of Converse’s trademarks for its iconic Chuck Taylor shoes and issuing a broad exclusion order prohibiting the import of any shoes that infringe certain of Converse’s other trademarks. The decision highlights the benefits of bringing infringement complaints to the ITC.
The case began in the fall of 2014, when Converse launched an offensive against more than thirty companies, accusing them of trademark infringement. At the same time that it filed the complaints in federal court, Converse filed a complaint with the ITC, asserting that the companies were infringing the following trademarks in violation of Section 337 of the Tariff Act of 1930:
U.S. Registration No. 4,398,753 for . This registration is for the two stripes on the midsole, the design of the toe cap, and the design of the multilayered toe bumper with the diamond and line patterns (the “‘753 Registration”).
U.S. Registration No. 3,258,103 for . This registration is for the three-dimensional diamond tread design (the “‘103 Registration”).
U.S. Registration No. 1,588,960 for . This registration is also for the three-dimensional diamond tread design (the “‘960 Registration”).
Most of the companies subject to the complaints settled with Converse, leaving only four defendants.
In December 2015, an administrative law judge (“ALJ”) for the ITC sided largely with Converse, finding that the above Converse trademarks were valid and holding that the defendants violated Section 337 when they imported shoes bearing similar trademarks. The decision, however, was not entirely in Converse’s favor, as the judge determined that certain shoe brands offered by the defendants did not infringe the Converse trademarks.
The ALJ’s decision did not stand for long though. On June 23, 2016, upon review, the full ITC overturned a key portion of the decision. Specifically, the ITC invalidated the ‘753 Registration on the grounds that it had not acquired secondary meaning and so consumers encountering products bearing the mark did not associate it with a single source.
Perhaps more important for trademark owners in general was the ITC’s issuance of a broad exclusion order based on its finding that the ‘103 Registration and the ‘960 Registration were valid. Under the order, the ITC banned the unlicensed import of all shoes bearing these or confusingly similar trademarks. The order applies to imports by anyone—not just the defendants—and is based on the ITC’s finding that “a general exclusion from entry for consumption is necessary . . . because there is a pattern of violation of section 337 and it is difficult to identify the source of infringing products.”
Brand owners facing similar problems related to the import of counterfeit or infringing products by difficult-to-identify parties may do well to consider seeking similar relief from the ITC. In order to obtain an exclusion order, a brand must establish the following: (1) unfair competition or an unfair act, such as trademark infringement; (2) importation, sale for importation or sale after importation into the United States of an accused product; and (3) an existing industry in the United States related to the product in question. The brand owner need not have a federal trademark registration, but if there is no registration, then the brand owner must also prove that the alleged unfair act causes or threatens to cause injury. The recent ruling indicates that if a brand owner can establish a pattern of importing infringing products by difficult-to-identify sources, then the brand owner may be able to obtain a similarly broad exclusion order. While the ITC cannot award money damages, a broad order excluding importation of goods bearing the same or similar trademarks may go further to shut down nefarious operations and protect a brand.