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Minnesota to Own “Trademark Bullies”

Posted in Trademark Bullying, Trademarks

Minnesota is positioned once again to take legislative ownership of the ”trademark bullying” debate. Putting aside the serious questions of whether new laws are needed and whether a state as opposed to a federal solution can have any meaningful impact, and despite the federal government’s recent focus on the perceived problem that ended in a whimper, Rep. Peppin appears convinced that Minnesota needs a remedy against those who engage in so-called “trademark bullying.”

The key problem with a legislative solution, of couse, is in clearly articulating what constitutes conduct that crosses the “trademark bullying” line. As I have written before, basing the standard on “reasonableness” is problematic. To warrant the pejorative label and suffer what ever legal consequences might flow from an appropriate attachment of the label, “trademark bullies” must be more culpable than simply unreasonable.

Yet, Minnesota’s brand new H.F. No. 1116 defines “trademark bullying” the very same way it was in the proposed legislation we reported on last year (H.F. 2996), maintaining the beyond a “reasonable” scope of rights approach:

“[T]he practice of a trademark holder using litigation tactics in an attempt to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark holder.”

An additional curiosity of the proposed law is the avoidance of any focus on trademark owners — instead, undefined trademark holders are targeted. To the extent the bill intends to catch more than trademark owners in the “trademark bully” net (perhaps, exclusive licensees), more clarity is required. To the extent the preference for the term “trademark holder” is driven by an academic reluctance to refer to intellectual property ownership, the cow is already out of the barn (see here, here, here, here, and here).

Unlike the last proposed Minnesota legislation, the current version of H.F. No. 1116 has no explicit focus on trademark cease-and-desist letters, but one must wonder whether the undefined “litigation tactics” reference is intended to broadly include them. Hopefully not, as they should be considered desirable pre-litigation or litigation-avoidance tactics. The current bill also omits the cumbersome mandatory settlement conference procedures contained in last year’s H.F. 2996, and thankfully there is no mention of the Minnesota Office of Administrative Hearings.

What the recently proposed legislation offers is the following language to the remedies section of the Minnesota Trademark Statute:

“The court in exceptional cases may also award reasonable attorney fees to the prevailing party. Exceptional cases include cases where a party brings suit for harassment, malicious, fraudulent, or willful purposes, including trademark bullying.”

So, this version of the proposed legislation contemplates an attorneys fee shift to deter so-called “trademark bullying” conduct. The obvious disconnect, however, lies in the fact that while “harassment, malicious, fraudulent, and willful” conduct properly suggest a heightened level of culpability along the lines of a bad faith intent requirement for an “exceptional case” to justify the fee shift, by definining “trademark bullying” under a “reasonableness” standard, the drafters unfortunately appear willing to extend liability for “trademark bullying” to conduct that may only rise to the level of mere negligence.

Our understanding is that the bill has been referred to the Commerce and Consumer Protection Finance and Policy Committee, but there will be no hearings scheduled until next year. Stay tuned for further developments.

In the meantime, what are your thoughts about this proposed legislation?