Feature Trademark troll Hunting down a trademark troll Everyone has heard of patent trolls. Well, Leo Stoller may just be the US’s most notorious trademark troll. Google has decided to take him on informed purchasing decisions (using By Brian E Banner and Anne M Sterba trademarks to locate services and products they like) free from deception and confusion. Some years ago the general patent counsel That is the purpose of trademark law. for BorgWarner, the engine and power train But sometimes people misuse the manufacturer, received a cease-and-desist trademark registration and enforcement letter from attorney Smith. Smith’s letter systems for their own commercial advantage. claimed that BorgWarner was infringing his This often occurs when a big and client’s valuable trademark XYZ for auto sophisticated entity asserts rights in a mark parts. His letter went on to demand that this beyond its legal scope of protection against unauthorised misuse of the same trademark a smaller, less sophisticated opponent. by BorgWarner immediately cease or legal If the target cannot afford an attorney or steps would be instituted to bring about that litigation, it must capitulate to the stronger result. BorgWarner’s counsel researched his entity and accept or negotiate settlement company’s date of first use of the trademark terms. Aggressive brand enforcement is in question and determined that it had allowed under US law, but legally baseless priority by many years over the date of first and vexatious enforcement beyond one’s use of the allegedly infringed mark. An legal rights is not. appropriate response was sent to Smith, who a few days later called and began the Baseless and vexatious enforcement conversation by saying: “Hello, this is Mr The latter course of conduct appears to be Smith, the attorney for the former user of the modus operandi of the infamous Leo the mark XYZ.” Stoller, well known to many active US This exchange illustrates a common trademark attorneys and their clients. As a problem in US trademark law. Many cease- citizen and not a licensed attorney, Stoller is and-desist letters are sent without beyond rebuke and sanctions from the determining priority beforehand. In the organised bar. On occasion, he employs example above, this what Smith had done. different licensed attorneys to prepare and His charge that BorgWarner's mark was file papers in federal district courts on his likely to cause confusion in fact sparked behalf. As principal, he controls a number of BorgWarner into carrying out its own corporations (eg, Central Mfg Inc) and over investigation, which proved decisive in two dozen proprietorships, some with names persuading Smith that his own client’s use close to that of a corporate entity (eg, of XYZ infringed BorgWarner’s prior rights Central Mfg Co and Central Mfg Co Inc). (see Ultra Electronics Inc v Workman He also uses aliases or assumed names in Electronic Products Inc, 192 USPQ 497 inconsistent ways and ever-changing alleged (TTAB 1976)). Policing one’s valuable relationships with the corporate entities. trademark rights from misuse by third For example, he has claimed personal parties is required to prevent the mark from proprietorship of Rentamark and claimed becoming generic. Our free enterprise it as an assumed name for at least two system relies on rational consumers making corporate entities. www.iam-magazine.com Intellectual Asset Management June/July 2007 55 Trademark troll Threats and extortion in Illinois Google attacks Leo Stoller has brought the following cases • S Industries Inc v Diamond Multimedia On 19th January 2007, Google Inc to the Northern District of Illinois through his Systems Inc, 991 F Supp 1012, 1023 commenced a civil action in the US District holding companies: (ND Ill 1998): the court found that the Court for the Northern District of Illinois • S Industries Inc v Centra 2000 Inc, plaintiff’s “claim of actual infringement of against several of Stoller’s companies, 249 F3d 625 (7th Cir 2001): the court its registered marks … crosses the border requesting the following: affirmed award of attorneys’ fees against of legal frivolousness, as its §1114 claim • Injunctive relief against false advertising, the plaintiff, noting a pattern of abusive utterly lacks merit on its face”. further acts of racketeering activity and and improper litigation, specifically • S Industries Inc v JL Audio Inc, 29 F Supp further acts of unfair competition. with Stoller. 2d 878, 881 (ND Ill 1998): the court • Entry of an order requiring the • S Industries Inc v Ecolab Inc, 96-4140, held that “the plaintiff’s actions in this dissolution and/or reorganisation of the 1999 US Dist LEXIS 3484 at 26-27 (ND case and in the several other cases enterprise and the divestment of any Ill, 12th March 1999): the court held that filed throughout this district raise doubts interest therein. “Stoller presented remarkably little as to the good faith of [the] plaintiff and • Three times plaintiff’s damages and admissible evidence, most of it highly its counsel”. defendants’ profits. suspect … and he did not have a shred • S Industries Inc v Hobbico Inc, 940 F • Plaintiff’s reasonable attorneys’ fees of admissible evidence to prove [the Supp 210, 211 (ND Ill 1996): the court and costs. plaintiff’s] provision of pest extermination noted that the plaintiff “appears to have • Pre-judgment interest. services under the mark”. The court entered into a new industry – that of • Punitive damages in an amount sufficient concluded that “requiring Ecolab to instituting federal litigation … [A]nd this to punish the defendants and deter such spend time and money defending itself court has had occasion to note a future misconduct arising out of the against such baseless claims was proliferation of other actions brought by "fraudulent scheme" of the defendants ‘oppressive’”, and therefore concluded [the plaintiff]”. and "their alleged principal … Stoller". that Ecolab was entitled to recover the • S Industries Inc v Kimberly-Clark Corp, reasonable attorneys' fees and costs 96-3916, 1996 US Dist Lexis 9567 (ND According to the complaint, the incurred in its defence. Ill, 1st July 1996): based on its review of defendants’ scheme has been designed to • S Industries Inc v Stone Age Equipment newly filed complaints, the court noted deceive the public and Google, and involves Inc, 12 F Supp 2d 796, 819 (ND Ill that the plaintiff’s “claim of actual "falsely claiming trademark rights for the 1998): the court awarded attorneys’ fees infringement of its registered marks purpose of harassing and attempting to and costs for oppressive suit where the therefore appears to be nothing short of extort money out of legitimate commercial plaintiff offered “highly questionable (and frivolous, for its marks simply do not actors, both large and small". The complaint perhaps fabricated) documents” and apply to the challenged use … At least at alleges that the various defendants, all testimony from its principal that was held the threshold, this action looks to have controlled by Stoller, have falsely to be “inconsistent, uncorroborated, and the hallmark of a lawyer-inspired lawsuit represented that: in some cases, demonstrably false”. of dubious merit”. • They own a federal registration for the Google mark. • They are owners of common law rights in court as being known for “running an the Google mark. industry that produces often spurious, • They have the right to license the Google vexatious and harassing federal litigation … mark to third parties. [N]o court has ever found infringement of any trademark allegedly held by Stoller or The complaint further alleges that after his related companies in any reported Google refused the defendants’ demands for opinion. In fact, courts in this [Northern money, the defendants not only persisted in District of Illinois] have ordered Stoller or their spurious demands for a pay-off, but his corporate entities to pay defendants’ also threatened to publicise their allegations, attorneys’ fees and costs in at least six which, they claimed, would bring about “the reported cases.” (Central Mfg Co v Brett, total destruction” of Google as a business. 04-3049, 2005 US Dist LEXIS 23379, at 2- One can understand Google’s vexation and 3 (ND Ill, 30th September 2005). need for action. Typically, Stoller – a self-proclaimed trademark licensing expert – threatens to file Serial harassment trademark infringement actions in cease-and- As of 1st January 2007 Stoller had been desist letters when he identifies a third party involved in over 55 other federal district that begins to market a product bearing court trademark litigations involving his some version of the name Stealth, Halley’s, various alleged marks. Although he has Sentra, The Terminator, Emerson or any been rebuked in many of the published other name in which his companies or decisions, he has continued his actions. assumed name entities may claim some While there are others who engage in similar common law right for any goods or services. practices, Stoller has been described by one He sends letters even if the third party 56 Intellectual Asset Management June/July 2007 www.iam-magazine.com Trademark troll merely describes a stealth-like quality in its they own it in every market, including product. If the alleged infringer refuses to markets in which the mark has not been agree to Stoller’s licence demands or to actually used by them or their affiliates. cease using the term stealth, Stoller will Or at least it implies that … Stoller believes often file a trademark infringement action. that repeatedly suing people in unrelated For example, one of the entities of which markets, with relatively little success, is in Stoller is president, Stealth Industries Inc, itself a legitimate mode of doing business … is the owner of a US registration for the To me, this method of doing business is a mark Stealth featuring a bull’s-eye design form of [IP] ambulance chasing, and it has for pool cues, pool tables, darts, billiard the look of an extortion scheme … I note balls, cue cases, cue racks and billiard that the great majority of these cases were gloves.