SAN FRANCISCO (CN) - Nonlethal projectile outfitter United Tactical Systems won a bid to temporarily halt its competitor's sale of and use of the word "PepperBall" while it litigates its trademark infringement claim against the rival.
United Tactical renewed a trademark infringement action against Real Action Paintball and its CEO, K.T. Tran, after acquiring Advanced Tactical Ordnance Systems this past summer. Previously, ATO had sued Real Action in federal court in Indiana over its trademarked PepperBall bullets that look like paintballs, but are made of plastic instead of gelatin and contain an irritant powder instead of paint - claiming its rival was selling similar pellets on its own website.
ATO won its bid to halt Real Action's sales of the allegedly nonlethal projectiles in the Indiana court, but the 7th Circuit ruled earlier this year that an interactive website occasionally selling items to Indiana customers did not establish the Indiana court's jurisdiction in the case.
Meanwhile, after United Tactical bought ATO and its proprietary work - including the PepperBall brand - the company filed suit last month in San Francisco federal court to "preserve the injunctive relief ATO already obtained" from the Indiana court, according to the complaint.
But U.S. Magistrate Judge Maria-Elena James declined United Tactical's request for a temporary restraining order in October, finding that "very few' circumstances justify an injunction without first giving Real Action its say in the matter.
James partially reversed course earlier this week - after giving Real Action its say - and ordered Real Action and Tran to stop "advertising, displaying or distributing products, literature or any other materials bearing the words PepperBall or PepperBall Technologies" on its own products for the duration of the trial.
While acknowledging that United Tactical had a long way to go to prove that it even legally acquired the PepperBall mark when it bought ATO, James said that Real Action's prolific use of the word on its website and marketing materials - as well as announcements to customers that the company had taken over ATO predecessor PepperBall Technologies when it was liquidated - caused enough customer confusion to warrant an injunction.
"Real Action argues that the announcements it made were not about its 'own product' and therefore United Tactical's false advertising claim should not survive," James wrote in the 43-page ruling. "Real Action argues that its statements were about what it does and what it acquired. The court disagrees with the argument. Real Action's announcements may have included statements about what it does and what it acquired, but these statements could also be interpreted by consumers to mean that its projectiles are for all intents and purposes PepperBalls as originally sold by PepperBall Technologies. As described by United Tactical, Real Action publicized that it had 'PepperBall projectiles in everything but name.' Consumers could also interpret Real Action's announcements communicating that it had improved the PepperBall formula and quality control. While at some point Real Action may have altered the formula, there is no evidence those alterations occurred by the time it made its announcements or that there were changes in quality control."
She continued: "Real Action sent its announcements by email and posted them on its website and other online forums. Courts have held that such acts are sufficient to establish that a defendant caused its false statement to enter interstate commerce. The court finds that United Tactical is likely to succeed in showing that Real Action made misleading statements concerning its irritant projectiles in interstate commerce."
United Tactical's loss of control over its reputation and goodwill warrants a sales ban, at least for time being, James said. But given that the case is still in its infancy - and Real Action may in fact duck United Tactical's claims entirely - the judge also ordered United Tactical to post a $20,000 bond to cover any damages Real Action may suffer from the temporary ban if it wins.
United Tactical has until Jan. 2 to deposit the money or the injunction will be dissolved, James concluded.
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