Once again, Nautilus and Icon are preparing to cross paths in the courtroom. On July 21, the Nautilus Group (NYSE: NLS), manufacturer of the Bowflex, filed a second trademark infringement lawsuit against Icon Health & Fitness to prevent Icon from using the name CrossBar on exercise equipment.
That was the new name Icon adopted for its Crossbow when a federal appeals court ruled barely a month ago (see SNEWSÂ® story, June 23) that the name was indeed an infringement of Nautilus' trademarked Bowflex name.
That ruling was a result of the trademark infringement allegation that was part of a Nautilus lawsuit filed against Icon in December 2002. In that, Nautilus charged that Icon's Crossbow infringed on the patent and trademark of the Nautilus Bowflex machine. The patent and trademark charges are now being addressed as separate cases.
Although neither the patent nor trademark suits have yet gone to trial, it seems Nautilus has gained the upper hand in the trademark case with the June decision by the U.S. District Court of Appeals for the Federal Circuit Court that forbid Icon from using the Crossbow name pending trial.Â Â
Nautilus claims the subsequent and nearly overnight name change of Crossbow to CrossBar wasn't good enough. The company claims that the CrossBar name will still confuse consumers. Before, Nautilus had claimed that just about any exercise piece with the word "bow" would confuse the consumer and could be a target of a suit.
Nautilus stated in the complaint filed July 21 in the U.S. District Court, Western District of Washington, in Seattle: "While Icon may have made some effort to start to cease use of that mark (Crossbow), it has adopted and is now starting to use a mark that continues and fosters that confusion. The association between Icon and Nautilus and/or their products was established by Icon's use of the confusingly similar Crossbow mark. Icon is attempting to continue and foster that confusion by using a mark that differs only insignificantly."
Gregg Hammann, chairman and CEO of the Nautilus Group, stated in a press release, "We strongly believe the 'CrossBar' name is too similar to the Crossbow trademark already ruled likely to infringe on the Bowflex trademark. We will seek an injunction for Icon's most recent infringement, will attempt to remove infringing 'CrossBar' product from the market and will pursue monetary damages."
Colleen Logan, Icon's vice president of marketing, responded in a statement, "We do not believe this lawsuit has merit, and we intend to vigorously oppose it. We do not believe the names Bowflex and CrossBar are 'confusingly similar,' as Nautilus contends in its suit."
Executives from Nautilus and Icon have not returned calls for elaboration.
Interestingly, Nautilus executives did not directly address the new lawsuit during a quarterly earnings report held July 22, just 24 hours after news of the suit was released. Nautilus executives didn't raise the subject to analysts, although there were several moments when some comment would have been natural and nearly expected. Nautilus executives stopped short, only mentioning the Federal Court of Appeals ruling earlier this month. Also, analysts did not broach any direct questions about the suit, although one did ask about the company's high legal expenses. In response, Hammann said the company's high legal expenses would likely continue for a while.
"When people infringe on trademarks or when they infringe on patents, we'll go after them," he said. "We need to send a message that if you want to do that, you're in for a fight, and that's going to cost us some money. We're going to stay all over it."
In the earnings conference call, Hammann was asked whether Nautilus would prefer that retailers package Icon product and return it to Icon rather than sell it. (Retailers are apparently deeply discounting the Crossbow machines to clear them out.) Hammann replied that Nautilus did not want to harm the retailers.
"We'd love to have them box them up and ship them back to Icon, and that's frankly what we think they should do," Hammann said. "But if they want to choose a different approach, we're trying to be flexible on that."
He also said Nautilus will become less flexible into the busy fourth quarter if the Crossbow-branded product is not off retail floors.
The new trademark-infringement lawsuit asked the court, among other things, to enjoin Icon from use of the name, as well as to award to Nautilus what would be equal to Nautilus' lost profits as well as what would be equal to Icon's gain.
"Icon's unauthorized use of the confusingly similar CrossBar mark on exercise machines constitutes an attempt to palm off its products as those of Nautilus and to compete unfairly with Nautilus," the suit stated. "This conduct constitutes common law unfair competition."Â Â
SNEWSÂ® View: Sigh, how many times can we say, "Well, there they go again." Although trademarks are valuable, there is a point where swapping suits like this can begin to look frivolous. Already, both cases are headed to trial -- the patent case for April 2005 and the first trademark case also in 2005. Certainly, this second case makes a statement, which is likely much of what Nautilus wants to do. But does that really mean that any piece of exercise equipment with the word "bow" or "flex" or "cross" or "bar" or you-name-it-what-else will be subject to a trademark-infringement suit? We doubt that any consumer would confuse CrossBar with Bowflex. But Nautilus is claiming that the only reason the name CrossBar has any cachet is because of the name Crossbow. Could be, but this guilt by distant association seems like quite a stretch.