Analysis

Facing COVID-19 Scams, Companies Turn To Trademark Law

By Bill Donahue
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Law360 (October 21, 2020, 8:07 PM EDT) -- Seven months into the COVID-19 pandemic, business owners like Abbott Laboratories have found that federal trademark law is a pretty handy tool to go after alleged coronavirus grifters.

The health care company, one of the leading suppliers of COVID-19 tests, sued a former employee named Justin Brown this week on accusations he was claiming to still be a representative in order to sell diagnostic tests to company customers.

The case included a slew of claims — breach of contract, theft of trade secrets, common law fraud — but focused most heavily on alleged violations of the Lanham Act.

"Brown wrongfully benefited from his unauthorized use of Abbott's name and the Abbott marks, which added significant credibility to his offer and Brown's overall sales reputation," the company wrote. "Abbott customers' mistaken belief that Brown was still employed by or affiliated with Abbott gave rise to unearned positive inferences about Brown and the products he was trying to sell."

Abbott's case is the latest trademark lawsuit aimed at combating alleged scams that have cropped up during the pandemic, a time when panicked buyers and strained resources have combined to create fertile ground for shady behavior.

"Swindlers are imaginative, and the pandemic seems to fuel their imagination," said Richard Z. Lehv, a partner at the trademark-focused firm Fross Zelnick Lehrman & Zissu PC. "Fortunately, brand owners have tools to combat swindlers."

One of the very first Lanham Act cases spurred by the pandemic came on April 8, when a company called CoronaCide LLC accused an entity named Wellness Matrix Group Inc. of selling fake versions of its COVID-19 test to consumers.

"Defendants' actions [have] caused and will continue to damage CoronaCide's efforts to provide efficacious test kits to combat the COVID-19 pandemic and help restart the economy," the complaint said.

Two days later, 3M launched a far larger campaign of Lanham Act cases — using the statute in a novel effort to target bad actors that were allegedly charging exorbitant prices for much-needed protective equipment.

In a campaign that now spans 18 federal lawsuits, 3M accused various vendors of using deceptive tactics in an effort to mislead buyers into thinking their sky-high prices were somehow authorized by the company.

3M's price-gouging cases — a creative way for a private party to tackle something more often policed by state authorities — have led to quick injunctions in a number of cases.

"Federal trademark law provides a powerful weapon to combat COVID-19-related scams," said Scott W. Pink, a partner at O'Melveny & Myers LLP. "It enables a trademark owner to seek temporary restraining orders and injunctive relief to stop the wrongdoing, [and] courts have been willing to grant such relief."

Trademark law has also proved useful in the digital realm, where brand owners have used it to combat both phishing and misinformation.

In June, Microsoft filed a lawsuit in Virginia federal court aimed at shutting down a global phishing scheme, saying the operators had been "exploiting the COVID-19 pandemic" to steal personal information from thousands of customers in dozens of countries.

The tech giant said the scammers had used fake domain names containing the company's trademarks — such as "officeinventorys.com," "officesuitesoft.com" and "officesuited.com" — and COVID-themed emails to dupe recipients into handing over their info.

Microsoft quickly won a temporary restraining order, which the company said would allow it to "proactively disable key domains that are part of the criminals' malicious infrastructure" and prevent the phishing scam from continuing.

"In the COVID era, we have seen a rise in scams that involve the registration of domain names containing companies' trademarks," said Evan D. Brown, a principal at Much Shelist PC. "The aim is to nefariously gather personal information about the company's consumers."

In August, Arizona State University went to court over a different information problem: an "ASU" Instagram account that was using school trademarks to disseminate false claims about the pandemic.

The school said the account — "asu_covid.parties" — was "spreading dangerous misinformation about COVID-19 just as students are returning to ASU's campuses to begin classes." Among other things, the account encouraged students not to wear masks and said the pandemic was a "fat hoax."

"This unauthorized use of ASU's trademarks and trade dress not only harms ASU, but if not enjoined is also likely to endanger the health of the university community," the school wrote at the time.

In its new lawsuit filed this week, Abbott echoed some of the earlier pandemic-related trademark suits. Like in the 3M cases, Abbott says the former worker used misleading language to present himself as a company representative; and like in the Microsoft case, Abbott says the worker used a phony domain name to do so.

A motion for a preliminary injunction is pending. The defendant could not be reached for comment.

As the pandemic surges back into high gear, Abbott's case is unlikely to be the last to fight an alleged COVID-19 scam with the Lanham Act — a statute that is squarely equipped for a unique moment of widespread confusion.

"Trademark law gets at the root of the problem: consumer confusion," said Brown, the Much Shelist attorney. "The victim of a scam thinks that he or she is dealing with a legitimate company. The main way to know whether a company is legitimate is through its trademark."

--Editing by Philip Shea.

For a reprint of this article, please contact reprints@law360.com.

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