Secondary Trademark Infringement

Although the majority of contributory liability cases have proceeded under the second prong of the Inwood standard – supplying a product – a few courts have addressed circumstances in which inducement formed the basis for liability. See Transdermal Products, Inc. v.Performance Contract Packaging, Inc. 943 F.Supp. 551 (E.D. Pa. 1996), discussed infra. See also Bauer Lamp Co.,  Inc. v. Shaffer, 941 F.2d 1165, 1171 (11^th Cir. 1991)(defendant sales representatives who asked lamp manufacturer to produce infringing lamps held liable for contributory trade dress infringement; fact that defendants did not themselves manufacture the infringing lamps did not matter for purposes of contributory liability). And see Monotype Imaging, Inc. v. Bitstream Inc., 376 F.Supp.2d 877, 2005 WL 1653604, *8 (N.D. Ill. 2005)(rejecting contributory liability claim where plaintiff failed to show any relationship between the defendant and the direct infringer and therefore could not prove intentional inducement of that infringement); Information Exchange Systems, Inc., v. First Bank Nat’l. Ass’n., 994 F.2d 478 (8^th Cir. 1993)(dismissing claims of inducement to infringe where plaintiff failed to cite to any evidence in the record). See further, Google Inc. v. American Blind & Wallpaper Factory Inc., 2005 WL 832398 (N.D. Cal 2005)(defendant alleged search engine company had induced its competitors to purchase its marks as “keywords”), discussed in detail infra.

Indeed, Transdermal Products presented an unusual factual paradigm, in that the direct infringer defendant sought to join another distributor as a contributory infringer, alleging it had induced infringement in its capacity as the defendant’s customer. The plaintiff, Transdermal Products, was the manufacturer of transdermal patches, a skin patch containing a drug that delivers the drug into a patient when placed onto the skin. It began marketing the patch with the mark, LEPATCH, and contracted with the defendant, Performance Contract Packaging, Inc. (“PCP”), to package and ship LEPATCH to its customers. Among these customers was Laboratorio Maver, S.A. (“Maver”), a Chilean distributor. Transdermal alleged that PCP had begun manufacturing and distributing its own version of LEPATCH to Maver. It sued PCP, but not Maver, alleging, inter alia, trademark infringement under both the Lanham Act and state law. Transdermal Products, 943 F.Supp. 551, 554. Thereafter PCP sought to join Maver as a third-party defendant. At issue therefore was whether Maver could he held contributorily liable for the infringement and thereby be joined as a party under Rule 14 of the Federal Rules of Civil Procedure. See id.

The Transdermal Products court held that it could, applying Inwood to the somewhat atypical facts of this case. It noted at the outset that this case differed from the “vast majority of contributory infringement cases” insofar as the defendants in this case had alleged that Maver, the distributor, encouraged PCP, in its capacity as manufacturer, to violate Transdermal’s trademark. Transdermal Products, supra at 553. Nevertheless, the court discerned that the express language of Inwood subjects “manufacturers or distributors” to liability. Id. at 553.  It noted that Maver distributed the allegedly infringing patches in Central and South America. Id. Furthermore, the defendants had claimed that Maver had “selected the mark in question and represented that it owned and had the authority to use the mark.” Id. at 552, 553.

Citing the first prong of Inwood, the court found that Maver could trigger contributory liability if it had “intentionally induce[d] … another to infringe a trademark.” Transdermal Products, supra at 553. The court further found that if “Maver selected the “LePatch” mark and encouraged PCP to copy the mark, knowing, as a Transdermal customer that it was Transdermal’s mark, a fair reading of [Inwood] would seem to impose liability on Maver.” Id. at 553-554.