Brooks Kushman and Innovation Ventures Win 5-hour ENERGY® Trademark Appeal

Tuesday, August 26, 2014

SOUTHFIELD, Mich., - The Sixth Circuit recently affirmed a jury verdict against N2G Distributing Inc. (“N2G”) for violation of Brooks Kushman client Innovation Ventures, LLC`s 5-hour ENERGY® trademark and trade dress and false advertising. The Sixth Circuit also affirmed the District Court`s subsequent contempt ruling against N2G for violation of the permanent injunction entered after the trial.

In November 2011, jurors found that a number of N2G`s energy shot products infringed the trademark and trade dress of the 5-hour ENERGY® shot, and that N2G`s infringement of certain products was intentional. Jurors also found false advertising with respect to two N2G products. Jurors awarded Innovation Ventures $1.75 million in damages. The Court also awarded over $1 million attorneys` fees to Innovation Ventures.

In May 2012, pursuant to the jury verdict, the District Court entered an injunction permanently enjoining N2G from possessing, selling or advertising any energy shot products bearing the trademarks or trade dress deemed by jurors to infringe, or that are confusingly similar to Innovation Ventures` 5-hour ENERGY® trademark and trade dress. A few months after the District Court entered the permanent injunction, Innovation Ventures learned that N2G continued to possess, sell and advertise the enjoined products, as well as a “6 Hour Energy” shot that the District Court enjoined four years earlier. N2G also advertised and sold energy shot products with nominally modified trademarks and packaging that were still confusingly similar to the 5-hour ENERGY® trademark and trade dress. On Innovation Ventures` motion, the District Court found N2G and its owner in contempt.

The Sixth Circuit affirmed the jury verdict and the finding of contempt. In doing so, the Sixth Circuit upheld the District Court`s application of the “Safe Distance Rule” to find that the modified N2G products were confusingly similar to the 5-hour ENERGY® trademark and trade dress and, therefore, violated the permanent injunction. In order to give meaningful effect to injunctions entered against infringers, the “Safe Distance Rule” requires that once a party is deemed to infringe a protected trademark or trade dress, any subsequent trademarks or trade dress adopted by that party must keep a safe distance from ones previously infringed. Under the “Safe Distance Rule,” the trial court is not obliged to undertake the full likelihood-of-confusion analysis required to find infringement in the first instance, but may instead determine whether the modified products are confusingly similar to the protected trademark or trade dress. The Sixth Circuit stated that the “Safe Distance Rule” was “particularly apt in this case—where a serial infringer has tinkered with products to skirt a permanent injunction for commercial gain.” The Sixth Circuit had not directly addressed the “Safe Distance Rule” for over 80 years, but reaffirmed its vitality in this precedential opinion.

Innovation Ventures` efforts throughout the trial, contempt proceedings and appeal were led by Brooks Kushman President Mark Cantor, Shareholder Marc Lorelli, and Shareholder Chanille Carswell.

About Brooks Kushman P.C.

Brooks Kushman P.C. is a leading intellectual property (IP) and technology law firm with offices across the nation and represents clients nationally and internationally with respect to protection, enforcement and monetization of IP, including patents, trademarks, copyrights and trade secrets. The firm has more than 90 intellectual property professionals specializing in various technical disciplines, and has a reputation for providing leading IP counseling with a focus on the business objectives of their clients.

Brooks Kushman counts a number of Fortune 100 companies across a variety of industries among its clients. The firm is also recognized by leading legal publications and rankings, including Corporate Counsel magazine, U.S. News & World Report, Law360, Intellectual Asset Management, Managing Intellectual Property, and Intellectual Property Today. For more information, please visit www.BrooksKushman.com.