- Posted on: Apr 15 2020
Butterman is Senior Counsel with Dunlap Bennett & Ludwig in Leesburg VA
[04.14.2020 Leesburg] The worst of times can bring out the best and the worst of human nature. False and fraudulent purchase orders are being sent to arguably heroic manufacturers of healthcare products by unknown companies who are misappropriating these manufacturers’ trademarks and offering to sell their COVID-19 test kits and N95 facemasks to an American public desperately needing these products to combat the modern world’s worst pandemic in over a century.
Coronacide, LLC v. Wellness Matrix Group, Inc. and George Todt
In Florida federal court, a Tampa, Florida based healthcare company named Coronacide, LLC (“Coronacide”) filed suit against Wellness Matrix Group, Inc. (“WM”) and its purported representative, a California individual named George Todt, alleging federal Unfair Competition under Lanham Act Section 43(a) and violations of Florida’s Deceptive and Unfair Trade Practices Act. The lawsuit seeks preliminary and permanent injunctive relief, damages, confiscation of the fraudulent marketing materials and “other and further relief as the Court deems just and necessary.”
Coronacide developed a serology blood test to detect the presence of COVID-19 antibodies in a person’s blood which boasts a 97.8% to a 99.6% accuracy rate and provides test results in ten minutes. These Coronacide test kits were approved by the Food and Drug Administration for distribution to only licensed healthcare providers on an emergency use basis. In February 2020, Mr. Todt contacted Coronacide on behalf of WM requesting to purchase Coronacide test kits for distribution to the public and submitted an unsolicited purchase order to Coronacide. Upon investigating WM (formerly known as Fuhuiyuan International Holdings, Ltd.) and determining that Todt had been sued repeatedly for fraud, including by the Securities and Exchange Commission (“SEC”), Coronacide promptly declined the purchase order and Todt’s offer to buy the Coronacide test kits. Coronacide subsequently discovered that WM had set up multiple websites and social media posts offering Coronacide test kits to the public for use at home despite not being able to order Coronacide test kits. The WM websites copied several images and text from Coronacide’s website, including its unregistered CORONACIDE trademark which was marked on the Coronacide website with a superscripted “TM” symbol. Coronacide does not appear to have registered any patents and has not filed or registered any U.S. trademark applications. The day before Coronacide filed its lawsuit against WM and Todt, the SEC temporarily suspended WM from trading because an over-the-counter penny stock that it was trading managed to double in value on March 23, 2020.
3M Company v. Performance Supply, LLC
The St. Paul, Minnesota based 3M company (formerly “Minnesota Mining and Manufacturing”) has been a household brand name for Scotch® tape and Post-It® notepads but is now becoming a household brand name for its N95 respirator facemasks being relied upon by healthcare workers and the public to protect against exposure of the deadly novel coronavirus causing COVID-19. Worldwide and U.S. shortages of these masks have been well documented in the media, as have controversies surrounding 3M’s exporting of these masks to foreign countries, insufficient production of these masks and alleged price-gouging of these masks to exploit desperate public suffering through this pandemic. Now comes defendant, a New Jersey company named Performance Supply, LLC, on March 30, 2020, to offer New York City’s Office of Citywide Procurement a formal quote to sell 2 million 3M brand, N95 Model 8210 respirators for $6.05 each and 5 million 3M brand, N95 Model 1860 respirators for $6.35 each when 3M suggests a list price of $1.02 – $1.31 per respirator. Moreover, the defendant repeatedly used the 3M registered design mark and slogan on technical specification sheets submitted with its quote and set forth specific offer and delivery terms that were never 3M’s offer and delivery terms when selling its products. In fact, the defendant was never an agent of 3M nor was it authorized to distribute and sell 3M branded products, yet the New York City Procurement Office was misled to believe that defendant was an agent of 3M and was preparing to follow through with the purchase.
Consequently, on April 10, 2020, 3M sued Performance Supply in New York federal court alleging federal Trademark Infringement of its registered 3M marks and slogan under Lanham Act Section 32; federal Trademark Dilution under Section 43(c); Unfair Competition, False Endorsement, False Association, False Advertising and False Designation of Origin under Lanham Act Section 43(a); and several equivalent New York state statutes seeking injunctive relief, a full accounting of 3M labeled products distributed by the defendant and monetary damages payable by the defendant to a charity.
In many ways, these plaintiffs are complete opposites while similarly situated in similar roles. The 3M company is a 100-year-old multi-national public corporation with 32 billion dollars in net sales and over 2,100 applications and registrations on file in the USPTO alone (excluding foreign trademark offices). It has 534 registered or applied-for 3M marks and asserted three of these registrations against Performance Supply as well as dilution from the fame of the 3M mark and various Lanham Act unfair competition causes of action. Information about Coronacide cannot be found so we don’t know how old or new or large or profitable Coronacide may be or if its COVID-19 test kits are its first product on the market. However, we know that Coronacide has not yet applied to register that or any mark in the USPTO and it is claiming common law trademark rights against WM as well as a violation of the same federal unfair competition laws as 3M. Both of these companies are initiating litigation to stop a random, unknown and unaffiliated company from fraudulently and exploitatively marketing their successful healthcare products without authorization to a desperate and vulnerable American public in fear of the COVID pandemic by using their trademarks also without permission. These two cases illustrate how U.S. law is equipped to protect businesses against evil market actors by protecting the goodwill of the companies’ names regardless of how protected their marks are and whether or not they are registered. It remains to be seen how these newly filed cases will play out, but while 3M may have more trademark rights in its arsenal, Coronacide could have enough trademark usage rights to obtain the same immediate injunctive relief that 3M seeks. Such is the value of the use-based trademark legal system of the United States.
We hope your business will never experience anything like these cases but if it does, please know that Dunlap Bennett & Ludwig has teams of experienced intellectual property attorneys and seasoned litigators ready to counsel you through all sorts of situations and to equip your company to go to court, if necessary, to achieve the goals of your business.