3M Trademark Claims Stemming from the COVID-19 Crisis
A recent lawsuit, stemming out of the COVID-19 crisis, demonstrates an egregious case of a company improperly using the brand name of another company to profit from the association with the brand and demonstrates the need for trademark owners to closely monitor how other companies are using their name.
According to the lawsuit, in the midst of the pandemic, a New Jersey medical supply company, Performance Supply, LLC (“Performance”), has been reselling millions of 3M’s N95 masks, at more than five times the regular price, and has been misusing the 3M name to mislead customers that Performance was an authorized distributor of the 3M masks.
Performance is not a 3M distributor and therefore not authorized to use 3M’s brands, the suit alleges, and thus, Performance’s actions infringe upon the intellectual property rights of 3M. The complaint alleges that Performance used 3M’s brands in support of its fraudulent scheme to convince third parties that it was a distributor of 3M while offering to sell some 7 million 3M brand N95 masks for more than 5 times their actual price. In doing so, Performance used 3M trademarks and slogan in its quote and specification sheets. The complaint alleges that “the mere association of 3M’s valuable brand with such shameless price gouging harms the brand, not to mention its more serious threat to public health agencies that are under strain in the midst of a worldwide pandemic.”
3M alleges that such behavior combined with the unauthorized use of 3M brands violates federal and trademark law. In the complaint, 3M accuses Performance of using 3M’s famous trademarks to “perpetuate a false and deceptive price-gouging scheme” against consumers and government agencies, including the New York City’s Office of Procurement. 3M is not claiming that the goods were counterfeit products, but that Performance used the registered marks to confuse and mislead third parties into believing that 3M authorized the price and the sales of the goods.
The applicable statute, 15 U.S.C. § 1117, makes certain damages available to 3M, including monetary relief for up to three times the amount of the actual damages arising from the unauthorized use of the 3M trademarks, Performance’s profits, and the costs of the action and attorneys’ fees. 3M is also seeking an injunction for Performance to immediately cease its alleged illegal actions. The court will likely award damages to 3M if it concludes that Performance’s actions constituted trademark infringement. The complaint alleges that Performance used 3M brands to validate egregious false statements to third parties while posing as an authorized 3M distributor to willfully create an advantageous position of the demand involving N95 masks due to the crisis. 3M promised to donate all monetary relief awarded in this action to a COVID-19 charitable organization.
In a statement last week, 3M said it would "aggressively pursue third-parties that seek to take advantage of this crisis.” During its announcement of the lawsuit against Performance, 3M confirmed it is taking a series of actions to address price gouging and counterfeiting related to its products. With regards to potential counterfeiting claims against third parties, 3M could seek up to $2,000,000 in statutory damages per mark and type of goods under 15 U.S.C. 1117(c) if it can show that anyone used 3M’s trademarks in connection to N95 masks or products that are not authentic or genuine 3M products.
Statutory damages are a powerful remedy available in counterfeit claims involving trademarks that are federally registered. Early trademark registration and trademark monitoring are extremely valuable for better protection of the marks especially when it comes to knock-offs.
Finally, trademark owners should always consider sending “take down” notices to the operators of any websites with fraudulent or counterfeit product offerings, removing false or deceptive social media pages, and sending cease and desist letters as a first step prior to taking further legal action.
Readers are encouraged to contact our firm if you have any further questions.