Energy drink maker Monster Energy recently prevailed in its trademark and trade dress infringement lawsuit against Integrated Supply Networks (ISN), a maker of automotive tools and related goods. Although the jury verdict awarded zero actual damages for infringement, it did award $5 million in punitive damages against ISN after Monster Energy proved that Integrated Supply acted with malice, oppression or fraud.
Monster Energy first filed suit on its trademark and trade dress infringement claims in March 2017 in which it alleged that ISN was offering goods for sale using trademarks and trade dress that was confusing similar to Monster’s trade dress and federally registered trademarks. Monster Energy eventually identified 399 stock keeping units (SKUs) for products ISN was selling with a black and green-colored trade dress and using word marks similar to Monster’s marks.
Although an entity filing an application for federal registration of their trademarks must make a declaration of the goods and services on which the marks will be used, proving trademark infringement in court doesn’t require that the infringing party sell an infringing good within the claimed classes of goods or services. The trademark owner can enforce the registration against goods that are “related,” meaning that prospective purchasers of the goods associate the infringer’s goods with the registered mark. Monster presented evidence that it had developed strong recognition of its brand in the motorsports area, where its mark was promoted with many tool brands. “The major takeaway from this case is that Monster Energy is able to assert its trademark and trade dress rights against what might appear at first blush to be unrelated goods,” said Joseph Re, partner at Knobbe Martens and counsel representing Monster Energy in this case.
Re noted that the law regarding likelihood of confusion requires a court to determine whether or not an ordinary purchaser might believe that a product sold by one party was either endorsed or sponsored by the party asserting trademark rights. So while most consumers might associate Monster Energy with energy drink products, the enforcement of its trademark rights isn’t limited to the goods and services claimed in Monster’s federal trademark applications. Re said that one example of an infringing use of a mark due to likelihood of confusion that he provided to the jury was the use of a Starbucks logo on a wrench. “I told the jury that Starbucks wouldn’t have allowed that,” Re said. “Starbucks doesn’t sell wrenches, but you can’t sell a wrench with a Starbucks logo on it.” On closing argument, counsel for ISN argued that Re’s Starbucks example wouldn’t have caused consumer confusion because “no one drinks a wrench,” but the jury still found the trademark infringement claim in favor of Monster Energy. Prior to delivering the verdict, the jury was given instructions on how to determine likelihood of confusion based on factors determined by the Court of Appeals for the Ninth Circuit in its 1979 decision in AMF, Inc. v. Sleekcraft Boats.
One recent article on this verdict and published by The Recorder said that the verdict was “flawed” in that the trademark infringement findings didn’t lead to a monetary award for actual damages; according to the article, California state law requires that actual damages be awarded in order to support a punitive damages award. Re mentioned that the true value of a trademark was the right to exclude others from using the mark and, in briefs submitted during the case, Monster Energy argued that monetary harm and irreparable harm were completely disconnected. “There’s nothing which suggests that the jury didn’t think that the mark had value,” Re said. “The real value of the mark is the right to exclude, to prevent consumer confusion and to signify source.” He added that Monster Energy had already moved for a permanent injunction in the case.
Re said that both sides of the case would be presenting any perceived shortcomings in the jury’s verdict in post-trial motions. The briefing schedule for the case requires parties to file briefs on laches and judgment as a matter of law (JMOL) on a new trial on December 4th, briefs on permanent injunction on December 5th, briefs in opposition to JMOL on December 11th and reply briefs on December 18th. “This is a case that’s still playing out,” Re said. “We’ll know a lot more after we see what the judge does with the verdict.”