Fourth Circuit Reverses Dismissal of Georgia Pacific Trademark Infringement Claims
We’ve all become familiar with the “touchless” paper towel dispensers that churn out a paper towel when you wave your hands in front of the dispenser. In an August 10 decision, the Fourth Circuit held that Georgia Pacific may assert its trademark rights to bar competitors from selling paper towels to fit in its “hands-free” towel dispensers based on post-purchase confusion of the general public who used the towel dispensers in public restrooms.
In its decision, the Fourth Circuit reversed the District Court’s dismissal of all of Georgia Pacific’s trademark infringement and unfair competition claims against Von Drehle Corporation, which made lower quality paper towels specifically designed to fit in Georgia Pacific’s “enMotion®” touchless towel dispensers.
With its touchless dispensers, Georgia Pacific sought to introduce a “branded” paper towel dispenser tied to its trademarks, akin to a branded soda fountain dispenser which the user expects to dispense only branded products. Georgia Pacific placed four registered trademarks on the face of the dispensers, the dispensers operated only with non-standard ten-inch toweling, and the toweling was made with a special process to give it a soft-fabric feel.
Georgia Pacific sells the toweling, but it only leases the dispensers to its distributors, which then are permitted to sublease the dispensers to end user customers who install the dispensers in their restrooms. Although the toweling does not have any identifying marks, each dispenser stated that it was the property of Georgia Pacific and that it may be used only to dispense trademarked Georgia Pacific products.
When they were introduced in 2002, the “enMotion®” dispensers were the only electronic, hands-free dispensers on the market, and – as we all know – they have quickly become very successful, if not ubiquitous in commercial restrooms. The success of the “enMotion®” dispensers prompted the defendant, Von Drehle, to develop a ten-inch toweling called “VD 810-B” specifically for use in the Georgia Pacific dispensers, and Von Drehle embarked on a sales campaign to sell its toweling to end-users for use to re-fill “enMotion®” dispensers.
Georgia Pacific sued Von Drehle for contributory trademark infringement, alleging that Von Drehle’s toweling harmed its reputation and goodwill by creating post-purchase confusion as to the source of the toweling among restroom visitors. The District Court granted summary judgment to Von Drehle on the grounds that there was no evidence of confusion among the restroom owners who purchased the towels, because the restroom owners knew that the source of the Von Drehle toweling was not Georgia Pacific.
The Fourth Circuit reversed, rejecting the District Court’s limitation of its analysis of the relevant audience to restroom owners, rather than restroom users, i.e. you and me. The Court held that its precedent allowed the jury to consider confusion among the non-purchasing public. The Court focused on whether the end-user customer’s stuffing of “enMotion®” dispensers with VD 810-B constituted direct trademark infringement, which is a necessary predicate to Von Drehle’s liability for contributory infringement. Applying the well-known five-factor test for trademark infringement, the Court quickly determined that Georgia Pacific had offered sufficient evidence of the first four of the five elements.
As to the fifth element – likelihood of confusion – the Court held that it was appropriate to consider confusion of the non-purchasing public “if it can ‘be shown that public confusion will adversely affect the plaintiff’s ability to control his reputation among its laborers, lenders, investors, or other group with whom plaintiff interacts.’” The Court found sufficient evidence of a likelihood of confusion among restroom visitors as to the source of the paper toweling in “enMotion®” dispensers and sufficient evidence that such likelihood of confusion could adversely affect Georgia Pacific’s reputation. Without the ability to control the quality of toweling, the Court held, Georgia Pacific was subject to the risk of injury to its reputation, given the evidence of the inferior nature of Von Drehle’s toweling and Von Drehle’s concession that poor quality toweling would affect how a restroom visitor would view the product.
The Court thus reversed the grant of summary judgment in favor of Von Drehle and also affirmed the grant of summary judgment in favor of Georgia Pacific on Von Drehle’s state-law claim of tortious interference with contract.