Ninth Circuit rejects 'trademark disparagement' claim

In Freecycle Network Inc v Oey (Case 06-16219, September 26 2007), the Ninth Circuit Court of Appeals has vacated a preliminary injunction that prevented the defendant from making public comments to the effect that the plaintiff's claimed mark was generic and unenforceable.

The Freecycle Network is a non-profit corporation that coordinates the efforts of over 3,700 groups worldwide to recycle goods that are no longer needed. The Freecycle Network initially used the term 'freecycle' - and variations such as 'freecycling' and 'freecycler' - to refer generally to the act of recycling goods for free via the Internet. Based in part on the advice of Tim Oey, who was one of its members at the time, the Freecycle Network decided to seek registration of a mark including the word 'freecycle'. Notwithstanding his earlier advice, Oey later urged the Freecycle Network to abandon its efforts to secure the mark. Oey subsequently made statements on the Internet that the Freecycle Network lacked trademark rights in the term 'freecycle' because it was a generic term, and encouraged others to use the term in its generic sense.

The Freecycle Network eventually asked Oey to sever ties with the company and later sued him. The Freecycle Network alleged that Oey's statements constituted contributory trademark infringement and trademark disparagement under Section 43(a) of the Lanham Act (15 USC §1125(a)), as well as injurious falsehood, defamation and intentional interference with a business relationship under state law. The district court granted a preliminary injunction based solely on the Lanham Act claims.

On appeal, the Ninth Circuit first held that there could be no claim for trademark infringement, as Oey's actions likely did not constitute a 'use in commerce'. The court held as follows:

"[Oey] simply expressed an opinion that [the Freecycle Network] lacked trademark rights in the term 'freecycle' and encouraged like-minded individuals to continue to use the term in its generic sense and to inform the [US Patent and Trademark Office] of their opinions."

Even if Oey's statements could be construed to be a use in commerce, the Ninth Circuit further held that such use was unlikely to cause confusion. The court also held that the statements did not satisfy the requirements for false advertising, misrepresentation or unfair competition under Section 43(a).

Turning to the claim for trademark disparagement, the Ninth Circuit held that "no such claim exists under the Lanham Act". Even if such a claim could be gleaned from the text of the act, the court held that Oey's statements were not false. At worst, he "offered an erroneous legal opinion (by a layperson) that [the Freecycle Network] lacked trademark rights in the term 'freecycle'". The court also observed that the act contains no provision "preventing the use of a trademarked term in its generic sense".

The Ninth Circuit thus vacated the preliminary injunction order and remanded the case for further proceedings. The court noted that it expressed no opinion on whether an injunction was appropriate based on any of the state law claims, because the preliminary injunction was grounded entirely on the federal Lanham Act claims.

David S Fleming, Brinks Hofer Gilson & Lione, Chicago