While patent litigation in the e-cigarette industry has garnered significant attention, the growing number of companies and brands competing in this market raises a host of issues with other types of intellectual property—issues that have already swept across industries that similarly involve a reusable base product and high-margin refill supplies, such as coffee machines and pods, razors and blades, and printers and ink cartridges.
In one recent litigation example in U.S. District Court for the Central District of California, Spark Industries, LLC sued a former distributor, Kretek International Inc., alleging that Kretek’s “EZ Cig” brand products infringed the trade dress associated with Spark’s “Cig2o” brand cartomizer packaging (as opposed to the refill cartomizers themselves). Spark alleges that when it ended its distributor relationship with Kretek, Kretek reintroduced its EZ Cig brand of competing cartomizers and changed the packaging to closely copy Spark’s Cig2o packaging.
Last week, the Court cut short Spark’s effort to preliminarily enjoin Kretek from using the “EZ Cig” packaging. While the Court did not bar from proving trade dress infringement and seeking permanent injunctive relief at a later point in the case, its comments about the substantive merits of the claim suggest Spark may have a challenging road ahead. The decision underscored the difficulty in proving a trade dress claim arising from a product’s packaging in an increasingly crowded market.
One inherent complication of trade dress claims is that the scope of the protected trade dress is typically defined during the litigation, unlike a patented invention, which must be particularly described beforehand in the claims of the issued patent, or a registered trademark whose scope is set forth in the trademark application. Here, Spark argued that various aspects of the color scheme and text placement of its cartomizer packaging constituted its protected trade dress:
- “Use of a blue and white color theme, with a smoky/textured blue area at the top with white text and a textured white area in the middle with blue text”;
- “Use of ‘3 Refill Cartomizers’ on refill packs in blue, sans-serif font across the middle of the package”;
- “Use of different, ‘highlight’ colors to signal the particular flavor of tobacco”;
- “Use of terms such as ‘red tobacco’ for red-colored packets and ‘gold tobacco’ for gold-colored ones”;
- “A corresponding blue area at the bottom of the package with additional lettering in white”;
- “Placement of items on the package, including: the particular number (3) of the refill cartridges in the middle of the package and the brand name at top”;
- “The shape, design, color scheme and graphic layout of the display carton box, including the color scheme, style, coloring and placement of text.”
A side-by side comparison of images of Spark’s Cig2o packaging and Kretek’s allegedly infringing EZ Cig packaging (taken from Spark’s preliminary injunction brief) is provided below:
The Court, however, noted that other aspects of the two rectangular packages appeared to be generic and suggested that the prominent placement of the respective brand names made their packaging readily distinguishable.
The ruling leaves Spark the opportunity to prove that its trade dress is protectable and infringed at trial. But having failed to obtain a preliminary injunction, it will be interesting to see whether Spark can prove that its trade dress is protectable at trial. Packaging rarely rises to the level of “inherent” distinctiveness, so a plaintiff seeking to protect packaging trade dress typically has to present evidence that the packaging has acquired “secondary meaning,” i.e. that consumers associate the packaging with the source of the product, in this case Spark. Direct evidence, such as a consumer survey showing that consumers associate the blue-and-white packaging with Spark or its Cig2o brand, may be harder to come by the longer the similar EZ Cig packaging is on the market.
From a broader perspective, this case emphasizes that companies in the e-cigarette market face threats to intellectual property (both patent and non-patent) and related market advantages not only from competitors, but from (former) partners as well. To maximize the strength of an intellectual property portfolio, these issues should be considered during product design, the negotiation of partnership agreements and the development of marketing and branding pieces, not just after the fact in the context of real or impending litigation.
For questions and/or comments, please contact Bryan Haynes, Troutman Sanders tobacco practice partner, at 804.697.1420 or by email, or Charan Brahma, at 202.274.2816.