This posting was written by Jody Coultas, Editor of State Unfair Trade Practices Law and contributor to Antitrust Law Daily.
The federal district court in Albuquerque has denied in part fashion retailer Urban Outfitters, Inc.’s motion to dismiss trademark infringement and dilution claims brought by the Navajo Nation (The Navajo Nation v. Urban Outfitters, Inc., March 26, 2013, Hansen, C.). The court declined to dismiss the Navaho Nation’s claim under the Indian Arts and Crafts Act and stayed ruling on whether the Navajo Nation has standing to sue under the New Mexico Unfair Practices Act.
The Navajo Nation alleged that Urban Outfitters and its subsidiaries started a product line of items containing the NAVAJO trademark, which they sold on their website and retail stores, that evoked the Navajo Nation’s tribal patterns and resembled Navajo Indian-made patterned clothing, jewelry, and accessories.
Specifically, the Navajo Nation alleged that the product lines were likely to cause confusion and had created actual confusion in the market place, and constituted trademark infringement, trademark dilution by blurring, and willful trademark dilution by tarnishment in violation of the Lanham Act. Urban Outfitters also allegedly engaged in unfair competition and false advertising under the Lanham Act.
Trademark infringement. To state a trademark infringement claim under the Lanham Act, a plaintiff must allege that its mark is protectable, and the defendant’s use of an identical or similar mark in commerce is likely to cause confusion among consumers.
The fair use doctrine did not apply to the claims and did not warrant a dismissal because The Navajo Nation sufficiently stated trademark infringement claims, according to the court. A word that has acquired a secondary meaning still belongs to the public in its primary descriptive sense and any person may use it in such a way that does not convey the secondary meaning or deceive the public.
Urban Outfitters used the term "Navajo" in a trademark sense and did not accompany the term with marks such that a buyer exercising ordinary care would not be deceived into believing the product was produced by the Navajo Nation. There were no clarifying words that would clarify that a "Navajo" product was made by a member of the Navajo Nation. The inclusion of the manufacturer’s brand name did not eliminate confusion as to the source of the product.
Urban Outfitters’ argument that the term "Navajo" was a generic, descriptive term for a particular style of prints, clothing, and clothing accessories was better suited for a motion for summary judgment or trial, according to the court.
Trademark dilution. The court limited the Navajo Nation’s trademark dilution claims to those based on the relative qualities of the products at issue. An owner of a famous mark is entitled to an injunction against another person who uses a mark in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark. Dilution by blurring arises from the similarity between a mark and a famous mark that impairs the distinctiveness of the famous mark. Dilution by tarnishment is association arising from the similarity between a mark and a famous mark that harms the reputation of the famous mark.
The Navajo Nation argued that Urban Outfitters’ use of "Navaho" was scandalous because the Navajo Nation Code provides that the term be spelled "Navajo," and argued that products like Urban Outfitters’ "Navajo Flask" was derogatory, scandalous, and contrary to the Navajo Nation’s principles because it banned the sale and consumption of alcohol within its borders and does not use its mark in conjunction with alcohol. There was sufficient evidence that the mark was famous. However, there was evidence that the Navajo Nation had used the mark on shot glasses, and the alleged misspelling was not sufficiently scandalous to state a dilution claim.
Indian Arts and Crafts Act. Urban Outfitter’s request to dismiss the Navajo Nation’s Indian Arts and Crafts Act (IACA) claim was denied by the court. The IACA is a truth-in-advertising law that creates a cause of action "against a person who, directly or indirectly, offers or displays for sale or sells a good, with or without a Government trademark, in a manner that falsely suggests it is Indian produced, an Indian product, or the product of a particular Indian or Indian tribe or Indian arts and crafts organization." Urban Outfitters argued that the allegations did not show that it falsely suggested that their products were made by Indians, Indian products, or the products of a particular Indian or Indian tribe, and that neither clothing nor clothing accessories constitute "arts" or "crafts" within the meaning of the IACA. The Navajo Nation sufficiently alleged that the products were in a traditional Indian style, and composed of Indian motifs and Indian designs. Also, modern apparel may fall within the definition of an "art" or "craft." The court declined to rule on Urban Outfitters’ judicial estoppel argument and declined to rely on any extra-pleading evidence to make a judicial estoppel finding at this stage of the case.
New Mexico Unfair Practices Act. The court stayed ruling on whether the Navajo Nation had standing to pursue a claim under the New Mexico Unfair Practices Act (UPA). New Mexico courts would hold that a business competitor has standing to assert UPA claims where the business competitor can show that the challenged practice significantly affects the public as actual or potential consumers of the defendant’s goods or services. The briefing on whether business competitors have standing to assert UPA claims did not directly addressed whether there is a public interest component to business competitor standing and/or whether the Navajo Nation sufficiently alleged a public interest component.