Blurred Lines Between Trademark and Trade Dress: Fifth Circuit Rules on “Web-Dress” Infringement

In Test Masters Educational Services, Inc. v. State Farm Lloyds, No. 14-20473, 2015 U.S. App. LEXIS 11148 (5th Cir. June 29, 2015), the Fifth Circuit affirmed a district court’s ruling that the amended counterclaim in the underlying lawsuit did not trigger a duty to defend on the basis of trade dress infringement. The underlying dispute arose from the ongoing legal saga between Test Masters Educational Services, Inc. (TES) and Robin Singh Educational Services, Inc. Both entities provided test preparation services under the name “Testmasters.” Both entities also had similar website addresses. The underlying lawsuit was originally filed by TES against Singh, alleging trademark infringement, among other claims. In response, Singh filed a counterclaim alleging that TES’ website purported to offer live LSAT preparation services under the “Testmasters” name, mimicked a map on Singh’s website, and engaged in misrepresentations to trick consumers into believing that TES’ services were involved with Singh. TES tendered the counterclaim to its insurer, State Farm Lloyds, which agreed to pay for TES’ defense subject to a reservation of rights. Specifically, State Farm offered to pay under a reservation because it admitted that Singh’s counterclaim conceivably alleged trade dress infringement with respect to the mimicry of the map on Singh’s website. However, Singh later filed an amended complaint that did not contain any allegations referring to the mimicry of the map. As a result, State Farm withdrew it defense. TES then filed suit against State Farm seeking a declaration that State Farm had a duty to defend TES.  On cross-motions for summary judgment, and applying Texas law, the district court granted State Farm’s motion. On appeal, TES continued to contend that Singh’s amended counterclaim alleged trade dress infringement. The Fifth Circuit noted that while State Farm’s policy did not cover trademark infringement, it did cover trade dress infringement. The court recognized that trade dress is distinct from trademarks and broadly refers to the total image and overall appearance of a product, which may even include sales techniques. Also, in order to allege a trade dress claim, the plaintiff must identify discrete elements of trade dress that it wishes to protect. Upon reviewing the amended counterclaim, the Fifth Circuit acknowledged Singh’s citation to Section 43(a) of the Lanham Act, which encompasses trade dress and trademark infringement. However, the Court was not convinced the mere citation of the Lanham Act was sufficient since courts are required to look at the actual origin of the damages (as opposed to the legal theories or conclusions). The Fifth Circuit also disagreed with TES’ contention that Singh’s allegation reference to TES’ “confusingly similar” website triggers a duty to defend. The court reasoned that the allegation, taken in context, indicated that it was fundamentally based on the factual misrepresentations of the website, not its “look and feel.” Consequently, since there were no aesthetic claims with respect to the website, there could be no trade dress infringement. Takeaway: This case illustrates the careful attention that needs to be paid to allegations that conceivably allege “personal and advertising injury” in the form of trade dress infringement. While trademark infringement (normally not a covered personal and advertising injury offense) and trade dress infringement do have conceptual and actual overlaps, there are important distinctions. Notably, as referenced in Test Masters, when reviewing allegations for trade dress infringement, it is important to focus on the actual aesthetic description of the product.

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