Smoke and Mirrors: Lorillard Tobacco. v. California Imports

by Maximilian Meese

In a time when tobacco companies operate in a haze of public scrutiny and health concerns, it is difficult for cigarette producers to keep a favorable trademark. For Lorillard, the oldest continuously operated tobacco company in the U.S., the struggle is no less real. Though Lorillard may not be a household name, they would like to think otherwise of their flagship brand: Newport cigarettes. With simple packaging and a well-developed trademark, Newport cigarettes have crawled to the top of the menthol cigarette market; over the entire cigarette industry, they sell second only to Marlboro.

It comes as no surprise that other producers might be tempted to profit from emulating such a recognizable brand. What Lorillard may not have expected is for the emulation to come from Global Market Direct (“Global”), a marketer of “aromatic potpourri herbal blends.” Translated from those over-flattering terms, Global advertised a synthetic marijuana substitute, or “spice” as peddlers often call it. The DEA has banned five separate ingredients of synthetic marijuana, but producers have found ways around restrictions by changing their recipes. At the time this particular conflict of interests began, head shops frequently, and legally, stocked their shelves with varieties of synthetic marijuana.

For Lorillard, imitation was far from flattery. Global’s line of “Newprot” herbs struck a little too close to home. Examine the difference for yourself:

newport

Subsequently, on November 5, 2010, Lorillard brought an action for infringement and counterfeiting of registered marks, trade dress infringement, unfair competition, and trademark dilution. Defendant brothers Majdi and Mohd Abujamous (acting as the spearheads behind the fictitious Global entity) eventually admitted to intentionally mimicking the Newport brand. On August 7, 2012, the court delivered an extremely easy decision: Majdi and Mohd are very, very liable.

Infringement: Check

Four counts of Lorillard’s claim pertained to infringement, and Lorillard easily hurdled the necessary elements: (1) Lorillard has a valid trademark; (2) defendants used the likeness of the mark; (3) defendants used the mark in commerce; (4) the mark was deployed in the sale, distribution, or advertising of goods or services; and (5) the use was likely to confuse consumers. A cursory glance at the facts would satisfy these first four elements, and the court agreed.

Determining if this imitation was likely to confuse consumers was albeit more nuanced, but no less in Lorillard’s favor. Following Pizzeria Uno Corporation v. Temple, the Fourth Circuit (our court of interest) relied on a list of seven factors to help determine consumer confusion: “(a) the strength or distinctiveness of the mark; (b) the similarity of the two marks; (c) the similarity of the goods/services the marks identify; (d) the similarity of the facilities the two parties use in their businesses; (e) the similarity of the advertising used by the two parties; (f) the defendant’s intent; and (g) actual confusion.”

The Newport mark is extremely strong, and the imitation is stunningly similar. Both goods are smoking products, sold out of similar stores with comparable point-of-sale advertising schemes. Finally, the Abujamous brothers testified to attempting a recognizable connection between the products. Despite not having actual confusion to point to, Lorillard clearly won.

Dilution: Check

The other count of Lorillard’s action related to dilution, which entails tests largely the same as infringement. Unsurprisingly, when a controversial product dresses up in the clothes of a nationally renowned brand, the result is quite predictable: the famous brand prevails. When the controversial product is known for injuries, illnesses, and toeing the blurry line of legality, the court spends more time signing the verdict against the defendants than it does applying these tests.

Bad Faith: Double Check

Lorillard won on every claim, and then some. By admission, the Abujamous brothers deliberately and willfully copied Newport, which worsened their position. Furthermore, their pre-trial conduct was so reprehensible that Lorillard collected on attorney’s fees and special costs. After avoiding summons and depositions, destroying physical evidence, and giving false testimony at every stage of the process, the Abujamous brothers were practically enemies of the court. In addition to the ruling for damages, Lorillard’s victory amounted to $290,000 in attorney’s fees, plus $18,000 in personal expenses.

The results of Lorillard are hardly novel. A two-bit operation of synthetic marijuana vendors pretended to be something they weren’t, and got punished for it. Despite this being an open-and-shut case, the lesson remains: keep your hands off other people’s trademarks. And when it comes to imitation, certainly don’t pick a brand as big as Newport cigarettes… you’ll only get burnt.

For more information on the case’s proceedings, see Lorillard Tobacco Co. v. Cal. Imports, LLC, 886 F. Supp. 2d 529, 2012 U.S. Dist. LEXIS 110871, 105 U.S.P.Q.2D (BNA) 1230, 2012 WL 4335290 (E.D. Va. 2012).

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