Common Law Unfair Competition
ABF asserted as a counterclaim that PODS' lawsuit was unfair competition because PODS "has no objective or subjective basis for believing ... that consumers are likely to be confused by ABF's use of the term 'pod' or 'pods.'" ABF relied on Ohio law for the proposition that "lawsuits implemented with the design to gain an unfair advantage over a competing business are a basis for a common law suit for unfair competition." Problem is, as the Court recognized, Florida law requires an unfair competition claim to include two elements:
(1) deceptive or fraudulent conduct of a competitor; and
(2) likelihood of consumer confusion
ABF's reliance on Ohio law didn't cut it, so the Court dismissed this counterclaim (without prejudice, should ABF be able to assert the elements of a Florida common law unfair competition claim).
Sherman Act Violation & Noerr-Pennington Immunity
Next, ABF accused PODS of attempted monopolization in violation of the Sherman Act by registering trademarks for the "generic term" "pods" and asserting those trademarks against competitors. PODS responded by relying on Noerr-Pennington immunity.
Generally, the First Amendment immunizes a party from liability for petitioning the governement for redress from an injury. ThisNoerr-Pennington immunity (named after the two cases from which it derives) extends to litigation: "Engaging in litigation to seek an anticompetitive outcome from a court is First Amendment activity that is immune from antitrust liability." Like most things in the law, there is an exception. Namely, a sham pleading. You are immune from liability if you file a lawsuit, except if that lawsuit is a sham pleading. The test for whether the lawsuit is a sham pleading considers: (1) whether the pleading is objectively baseless; and (2) whether the plaintiff brought the lawsuit did so with a subjective motivation to interfere directly with the business relations of a competitor.
ABF's argument under the sham exception is generally that PODS should know the 'pods' mark is generic, and thus it shouldn't assert its registrations. The law, however, does not see things that way. The 'pods' trademark registrations themselves are evidence that the marks are not generic. ABF may be able to come forward evidence that they have become generic, but until they, they are presumed otherwise. Indeed, ABF is seeking to cancel PODS's registrations. Until then, the lawsuit and cease-and-desist letters are not shams. So Noerr-Pennington immunity applies, and the counterclaim must be dismissed.
Unclean Hands Affirmative Defense
PODS also asked the Court to strike ABF's affirmative defense of unclean hands. The Court's reasoning for doing so:
In trademark infringement suits, the doctrine of unclean hands requires allegations "specifically related to the trademark which is at issue and not collateral to the trademark itself." Immuno Vital, Inc. v. Golden Sun, Inc., 49 F. Supp. 2d 1344, 1361 (S.D. Fla. 1997); see also Coca-Cola Co. v. Howard Johnson Co., 386 F. Supp. 330, 335 (N.D. Ga. 1974) (a court in equity may "deny the enforcement of a trademark to one who has used the trademark, itself, as the vehicle of unlawful antitrust activities"). "Merely because a plaintiff has violated the antitrust laws ... does not result in 'unclean hands' on plaintiff's part." Coca-Cola, 386 F. Supp. at 337Additionally, Noerr-Pennington immunity protected PODS against this affirmative defense.
Taken as a whole, ABF's allegations in support of its affirmative defense of unclean hands are intertwined with the allegations in its counterclaims -- that PODS engaged in trademark misuse and violated unfair competition and antitrust laws by sending cease-and-desist letters and filing suit. Because those activities are not specifically related to the trademark itself, ABF has not properly asserted an unclean hands defense.
Motion to dismiss counterclaims and strike affirmative defense granted.
PODS Enterprises, Inc. v. ABF Freight Systems, Inc., Case No. 8:11-cv-84 (M.D. Fla. Oct. 17, 2011) (J. Covington)