Alternative defence to false advertising claim carries the day

In Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta v Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem (Case 11-15101, December 18 2012), the US Court of Appeals for the Eleventh Circuit has sua sponte reissued its earlier decision in a trademark and false advertising case, revising certain evidentiary rulings but not the outcome of the case between two charities claiming the same historical heritage.

In its earlier decision, the dissent argued that the district court’s admission of testimony about the history of the organisations by an individual affiliated with one of the parties was error. In vacating its earlier decision, the 11th Circuit, in a unanimous opinion, agreed that the testimony was improperly admitted. Notwithstanding that ruling, the conclusion on false advertising remained unchanged. In the reissued decision, the 11th Circuit looked to the district court’s alternative decisional basis that did not rely on the now-excluded testimony.

The plaintiff is a religious order of the Roman Catholic Church that offers charitable services, while the defendant is also a charitable organisation, having an ecumenical, rather than Roman Catholic, association. The plaintiff filed trademark infringement and false advertising claims under the Lanham Act and state law claims based on the defendant’s use of word marks that were confusingly similar to the plaintiff’s registered marks. The plaintiff also argued that the defendant falsely claimed a connection to the plaintiff dating back to the 11th century. The defendant counterclaimed, asserting that the plaintiff committed fraud on the USPTO for failing to disclose the existence of other organisations that used similar word marks.

The district court ruled in favour of the defendant on all counts, finding that the plaintiff had committed fraud on the USPTO based on the defendant’s use of a similar mark before the plaintiff.

In its original decision, the 11th Circuit reversed the district court on its fraud holding that was based on a declaration in support of registration submitted by the applicant’s representative attesting that there were no similar marks under 15 USC §1051(a)(3). The 11th Circuit concluded that the representative could not have intended to deceive the USPTO in attesting to an oath that he believed was entirely accurate, as he was personally unaware that any other organisation was using the marks for which the plaintiff sought a trademark.

The 11th Circuit found that it was error for the district court to rely on Global-Tech Appliances, a patent case, for the applicable standard for a claim of fraud on the USPTO for a trademark. The 11th Circuit found that standards cannot be imported between different intellectual property, such as patents and trademarks. The appeals court also found that, if a declarant subjectively believes the applicant has a superior right to use the mark, there is no fraud, even if the declarant was mistaken (such as in this case).

In its reissued decision, the 11th Circuit has maintained its reversal of the district court’s fraud finding and vacated the district court’s judgment of no infringement of the design mark, explaining that the district court considered only one of the seven 'likelihood of confusion' factors in Frehling Enterprises v International Select Group. However, with regard to the earlier split on the false advertising charge, the panel members in the reissued decision were now unanimous.

The false advertising claim involved the defendant’s advertising of a connection to the historic Order of Malta. The plaintiff claimed that this was a misrepresentation that had deceived its Catholic customers into contributing money to the interdenominational Florida Priory.

The factual issue rested on competing versions of events dating back prior to 1800. The district court adopted the version put forward by the defendant’s purported expert to establish the historical connection. Reliance on that evidence was basis for the dissent voiced by Judge Pryor in the original 11th Circuit decision.

The expert evidence relied on by the district court was the testimony of the prince grand master of the Ecumenical Order, whose testimony was admitted under Rule 702 of the Federal Rules of Evidence. Judge Pryor argued that the district court considered the testimony without first qualifying the witness as an expert as to the history on which he testified.

In the reissued opinion, the 11th Circuit distinguished what each side believed to be the correct version of pre-1800 history of the Order of Malta. However, with regard to the false advertising claim, the underlying district court decision held that the defendant could not be held liable for false statements for two reasons: because it shared a pre-1800 history with the plaintiff order; and because (in the subject advertising) the defendant did associate itself with the Ecumenical Order, a non-Catholic organisation.

In its revised opinion, the 11th Circuit looked to the district court’s second reason to affirm the judgment, noting that while the district court had erred “when it permitted… a lay witness… to testify about historical matters”, the error was harmless because the defendant’s defence based on the district court’s alternative ground was sufficient.

Expert witnesses must be qualified as experts under Federal Rule of Evidence 701. If they are not so qualified at trial, then their testimony may not be entitled to any weight and may even be excluded. If an expert witness is not qualified under Rule 701, he or she may testify as a lay witness about matters as to which he or she has personal knowledge. However, it is unlikely that the testimony of lay witnesses as to historical "facts", especially testimony of party witnesses who are not independent, will be given weight, since the witness has no personal knowledge as to the "facts" on which he or she is testifying. If such persons do testify, the party offering the testimony should offer as much corroboration testimony or evidence as possible for the historical information. Otherwise the party runs a significant risk that the testimony will be disregarded altogether. Here, the 11th Circuit reissued its decision because the witness testifying as an expert as to historical events was neither qualified as an expert nor was he able to give competent evidence as a lay witness based on personal knowledge (ie, regarding historical events dating back to the pre-1800 history of the Order of Malta).   

Paul Devinsky and Jeremy Elman, McDermott Will & Emery, Washington DC and Miami