Commercial Law Reporter
A Publication Devoted to Commercial Law and Intellectual Property Issues
September 2009

Managing Editor: Karen Libertiny Ludden
Co-Editors: Robert D. Goldstein and Mark Shreve

This edition of Commercial Law Reporter contains the following:

  • “Likelihood of confusion” is key to a trademark infringement case.
  • What you need to know about premises liability and the reasonable person standard
  • Commercial Law Update
  • Breaking news: Jury denies recovery on trademark infringement case; Federal unemployment agency audits and fines trucking companies when independent owner/operators found to be employees of trucking companies

“Likelihood of confusion” is key to a trademark infringement case.
by: Timothy J. Jordan

Last month, a jury in the Eastern District of Michigan declined to find that there was any trademark infringement or unfair competition on the part of EZMoving/Moving and Storage (a moving company), despite claimed similarities between its name and that of the Plaintiff, EZ Mini Storage (a self-storage company). The case took nearly four and a half years to litigate and resulted in a two week trial before Judge Denise Page Hood, with hundreds of exhibits and numerous witnesses. The matter is likely to be appealed. Nolan, LLC v. TDC International Corp.

The test applied by the jury hinged on the central issue of “likelihood of confusion.” In the Eastern District of Michigan, there are eight factors that must be considered to determine the likelihood of confusion: (1) the strength of the plaintiff’s mark; (2) the relatedness of the goods; (3) the similarity of the marks; (4) the evidence of actual confusion; (5) the marketing channels used; (6) the likely degree of purchaser care; (7) the defendant’s intent in selecting the mark; and (8) the likelihood of expansion of the product lines. See Frisch’s Rest., Inc. v. Elby’s Big Boy of Steubenville, Inc., 670 F.2d 642 (6th Cir. 1982).

In this particular case, there also existed the question of whether defendant’s use of its allegedly infringing mark predated plaintiff seeking (and eventually obtaining) federal registration of its trademark; a fact that, if found true, would preclude at least a claim for federal trademark infringement if not also possibly serve as a defense to a claim of common law infringement as well. The theory of “modernization” was also raised during the course of the litigation by both parties because of changes made to their respective marks over the years.

Ultimately, after hearing all of the evidence, the jury concluded that there was no “likelihood of confusion” between the companies.

Mr. Jordan is an attorney in the Detroit office of Garan Lucow Miller who handles intellectual property matters and successfully litigated and tried this case on behalf of the Defendant. You can reach him at (313) 446-1530/(800) 875-1530 or tjordan@garanlucow.com

What you need to know about… the reasonable person standard
by: Fareed S. Saba

When someone injures themselves on commercial premises, one of the primary legal defenses used by the property owners is the argument that the condition of the premises – whether it be an icy parking lot, a concrete step, or an uneven patch of pavement – was “open and obvious.” The question, however, is “open and obvious” to whom? The answer in Michigan is the “reasonable person.”

The “reasonable person” standard is an objective and not a subjective standard. Saying it is an objective instead of a subjective standard is a bit deceiving, though. What you need to know and consider is that even under an objective standard, a “reasonable person” may be charged with knowledge that varies depending on his or her experience in the activity in question.

For example, a “reasonable person” who has experience with Michigan winters would be a person who would expect that, on any given morning, there could be ice on the ground. In fact, we attorneys are fond of pointing this fact out during court hearings involving ice and snow cases.

The same can be said for other situations, however, including recreational activities. For example, if the premises involved is a golf course, where the players are usually wearing soft spike cleats, and your plaintiff is an experienced golfer, a “reasonable person” in that situation may mean someone who knows that walking in cleats on concrete is more difficult than wearing regular shoes. Surfaces that may not otherwise be slippery or may not usually be considered a risk may become a risk when one is wearing spikes. The same is true in other types of recreational venues such as a roller skating rink, or a softball field. A “reasonable person” in these situations may include a roller skater or softball player with knowledge that their recreational gear may make them more susceptible to fall.

While the standard remains objective, what is considered reasonable to expect an average user of ordinary intelligence to discover may differ based on the situation. Putting it another way, a “reasonable person” is not always a 35-year old engineer with 2.5 kids and a white picket fence. While the standard is objective in theory, it does not always play out this way when applied to the facts of your particular case.

Mr. Saba is an attorney in the Ann Arbor office of Garan Lucow Miller who handles slip and fall cases involving commercial premises. You can reach him at (734) 663­7642/(800) 878-5600 or fsaba@garanlucow.com

MICHIGAN COURT OF APPEALS FINDS THAT PERFORMANCE OF A CONTRACT CONSTITUTES ACCEPTANCE OF SAME AND FORMS A BINDING CONTRACT
by Karen Libertiny Ludden

In an August 6, 2009 decision, the Michigan Court of Appeals held that a party’s performance of the terms of a contract constituted the “acceptance” of the offer of contract necessary to form a binding contract. Lansing Pavillion LLC v Eastwood LLC, 2009 WL 2424677 (Mich App).

This case involved a complex series of written communications and contracts between a land developer, a realtor, a bank and a contractor. The Court of Appeals ruled on a number of legal issues on this case, but the most significant dealt with the situation where a contract offer has been made, but instead of a written acceptance of the contract – what is usually used to create a binding contract – the actual commencement of performance of the terms of the contract also created a binding contract.

The Court held, “[B]ecause Lansing Pavilion attached Eastwood’s signature of the [Site Development Agreement] and proceeded to closing, the trial court correctly found that Lansing Pavillion’s acceptance by performance formed a unilateral contract. “ Id at 4.

INTENDED THIRD PARTY BENEFICIARY TO A CONTRACT CAN BRING SUIT FOR BREACH OF CONTRACT
by Karen Libertiny Ludden

In an August 4, 2009 decision, the Michigan Court of Appeals held that an intended third-party beneficiary to a contract has standing to bring suit for breach of contract. Petfreedom.com LLC v Net Generation, Inc., 2009 WL 2382430 (Mich App)

Petfreedom.com hired Net Generation to create a website. Contrary to the terms of its contract with Petfreedom, and without Petfreedom’s knowledge or approval, Net Generation subcontracted the work out to another company, Virtual Systems Solutions, Inc., d/b/a Softura, to create the computer code for Petfreedom’s website.

The trial court initially ruled against Petfreedom, holding that it was an incidental beneficiary to the contract between Net Generation and Softura and thus lacked standing to bring a lawsuit. The Court of Appeals reversed, holding that Petfreedom was an intended third-party beneficiary of the secondary contarct and had standing to bring suit. Id at 2.

Ms. Ludden is an attorney in the Troy office who handles commercial litigation involving contracts. You can contact her at (248) 641­7600/ (800) 875-7600, or kludden@garanlucow.com

JURY DENIES RECOVERY ON TRADEMARK INFRINGEMENT CASE
by: Timothy J. Jordan and Robert D. Goldstein

A Federal Court jury in the Eastern District of Michigan denied recovery to a plaintiff moving company, despite similarities between its name and that of a self-storage company, following a two-week trial and over four years of litigation.

Mr. Jordan is a trial attorney in the Detroit office of Garan Lucow Miller who litigates intellectual property matters. You can reach him at (313) 446-1530/(800) 875­1530 or at tjordan@garanlucow.com

Mr. Goldstein is an attorney in the Grand Blanc office of Garan Lucow Miller who handles intellectual property matters at both the trial level and in the Court of Appeals. You can reach him at (810) 695­3700/(800) 875-3700 or at rgoldstein@garanlucow.com

UNEMPLOYMENT AGENCY PERFORMING AUDITS TO DETERMINE IF TRUCKING COMPANY OWNER/OPERATORS ARE EMPLOYEES RATHER THAN INDEPENDENT CONTRACTORS FOR PURPOSES OF UNEMPLOYMENT BENEFITS AND FINES
by: Mark Shreve

The Federal unemployment agency has recently been performing audits of trucking company records to determine if owner/operators of rigs can ben considered employees of the companies for purposes of obtaining unemployment benefits. In several instances, despite the terms of the contracts intended to create independent contractor status, the agency has found a direct employer -employee relationship and fined the company.

Mr. Shreve is an attorney in the Troy office of Garan Lucow Miller who handles trucking cases in the United States and Canada. You can contact him at (248) 641-7600/(800) 875-7600, or mshreve@garanlucow.com