Superior common law rights in South Carolina defeat infringement claims
Sundance Botanicals LLC v The Power of Elderberries LLC (Case 2:20-cv-141-PPS, Northern District of Indiana (19 August 2022)), as noted by the district court on summary judgment, is a tale of two companies duelling one another in the elderberry market. Plaintiff, Sundance Botanicals, produces an elderberry syrup called Elderpower, while defendant, the Power of Elderberries, makes a competing syrup under the identical name, the Power of Elderberries.
Once discovery closed, Power of Elderberries filed a motion for partial summary judgment on three separate issues. First, it argued that it should prevail as a matter of law for all alleged violations in the states of North Carolina and South Carolina because it has superior common law trademark rights in those states. Second, it argued that Sundance is not entitled to an award of damages or an injunction in the nine states where it has not used its trademark. Finally, Power of Elderberries claimed that Sundance has not suffered and cannot prove actual damages.
For a variety of reasons, the court found that questions of material fact existed on most of the issues raised in the motion for partial summary judgment, and therefore denied most of the motion. However, the court was persuaded that the Power of Elderberries had superior common law trademark rights in the State of South Carolina, and granted summary judgment as to all claims in that state.
The court set forth the following undisputed facts relevant to this issue: Kristy Fattore is the owner of Sundance Botanicals. Sundance first started selling elderberry syrup under the name Loving Earth Remedies in 2012; the first use of a printed label with the name ELDERPOWER on it was 9 January 2015. Sundance filed US trademark application 88270652 with the US Trademark Office on 22 January 2019, seeking registration for ELDERPOWER. The ELDERPOWER trademark was registered on 30 July 2019.
The defendant, the Power of Elderberries, has operated from Myrtle Beach, South Carolina, since 2018. It began using its mark THE POWER OF ELDERBERRIES on its elderberry syrup produce on 20 July 2018. Power of Elderberries filed its own trademark application with the trademark office later, on 8 June 2019.
On summary judgment, Power of Elderberries argued that before Sundance’s registration of its trademark, Power of Elderberries had first use of its product in North and South Carolina, and therefore it had superior trademark rights in those two states. Sundance responded that when it registered first, that gave it constructive nationwide use of its mark, and therefore Power of Elderberries failed to establish its right to use its mark in North and South Carolina before Sundance’s application for registration.
In response to the parties’ arguments, the court first looked at the facts applicable to South Carolina. Power of Elderberries argued that Sundance’s actions in South Carolina had been sporadic, casual or transitory and insufficient to establish common law trademark rights there. Sundance eventually conceded that before 22 January 2019 – the date it applied for federal trademark registration – it had made only a single sale into South Carolina. In contrast, Power of Elderberries provided an invoice showing that it generated $63,761 in sales in South Carolina in 2018 and $243,439 in South Carolina in 2019.
The court found that these numbers established a significant difference between the sales in South Carolina before Sundance’s trademark application, that is, Sundance only had one sale, and the Power of Elderberries sold multiple thousands of dollars’ worth of product in South Carolina.
Sundance also argued that it had senior trademark rights based on its website and Facebook account, which advertised and promoted its Elderpower elderberry syrup nationally, and that it had a branded vehicle that travelled across the country displaying the mark. The court rejected these arguments and held that these were insufficient to show continuous and bona fide use of the trademark in South Carolina, especially in light of the sales Power of Elderberries had there before Sundance applied for a trademark. The court concluded that “generalized websites, social media, or Facebook accounts don’t suffice to target and reach the people who live in the state of South Carolina”.
The court concluded that even drawing all reasonable inferences in favour of Sundance, as required on summary judgment, there was not enough evidence for a fact finder to determine that Sundance continuously used its elderberry mark in commerce in South Carolina before filing its service mark application. As such, the court granted summary judgment in favour of Power of Elderberries and held that it had superior common law trademark rights in South Carolina.
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