Trademark Infringement in Reverse?
Could a seemingly innocent practice be putting you at risk for accusations of trademark infringement? If you source components from other companies to manufacture your product, you should know about an unusual type of trademark infringement called reverse passing off. In conventional trademark infringement, also known as direct passing off, a first party sells its goods under a second party’s trademark and infringes on the good will associated with the trademark. In contrast, reverse passing off (also known as reverse palming off) occurs when a first party sells its goods under a trademark to a second party and the second party resells the good after removing the first party’s trademark.
What Scenarios Constitute Reverse Passing Off?
The 8th Circuit held that reverse passing off is actionable under the Lanham Act § 43(a), 35 U.S.C. § 1125(a) (2012) because, as with direct passing off, the consuming public is harmed by a lack of knowledge of the true source of a good caused by deception on the part of the defendant. See Pioneer Hi-Bred Int’l v. Holden Found. Seeds, 35 F.3d 1226, 1241-42 (8th Cir. 1994). In Pioneer, the defendant sold a breed of seed corn without acknowledging in its advertising that the defendant’s seed corn was developed from the plaintiff’s seed corn. The 9th Circuit held similarly that “reverse passing off occurs when the wrongdoer simply removes or otherwise obliterates the name of the manufacturer or source and sells the product in an unbranded state.” Thus, under the Pioneer Hi-Bred court’s test, it is unadvisable to simply remove the markings from another’s goods and sell them as your own.
What Scenarios Do Not Constitute Reverse Passing Off?
In some circumstances, including a trademarked component in a system does not constitute reverse passing off. For example, when a trademarked component is incorporated into a larger or more complex system, when the trademarked component is not visible within the device, or when the component does not aid the performance of the device, reverse passing off may not have occurred. See Roho, Inc. v. Marquis, 902 F.2d 356 (5th Cir. 1990). In Roho, the plaintiff produced cushions designed to prevent and treat bedsores, each of which was labeled with the plaintiff’s trademark. The plaintiff also produced a mattress by assembling four of the cushions together. The defendant purchased ten of the cushions from the plaintiff, removed the labels, fastened the ten cushions together to form its mattress, and added its own labeling to its resulting mattress. Although the court found that “the [defendant’s] mattress is virtually indistinguishable from [the plaintiff’s] mattress,” the fact that the defendant “modified [the] cushions in more than a superficial manner” to form its mattress was enough for the court to hold that it did not amount to reverse passing off. Accordingly, under the Roho court’s analysis, companies that manufacture devices incorporating trademark-protected features can protect themselves by not removing markings unless the incorporated features are modified in a more than superficial manner.
Whether or not reverse passing off has occurred is dependent on the facts. In some technology areas, such as a computer, finished devices may contain hundreds of components from multiple suppliers, which potentially each have their own intellectual property protection. In other areas, however, where a component and its markings are in plain view, the component’s markings might need to be removed in order to provide space for the device’s markings. Sometimes it can be advantageous to make it known to the consumer that the components in a device came from a certain supplier by maintaining the component markings or other labeling. There is little jurisprudence on reverse passing off, and the relevant rules can vary between states and regions. Therefore, it is a good idea to check with an intellectual property attorney before removing or concealing someone else’s trademark.
Do you have questions about the topic of reverse passing off? Contact Dan