The maker of the popular Elfbar vape will get another shot at upending a court-imposed order banning it from selling under the "Elf" mark, the Federal Circuit ruled Wednesday, saying the district judge who ordered the injunction "misread" precedent and relied on a "deficient" legal analysis.
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U.S. District Judge Aileen M. Cannon needs to totally scrap her decision to impose a preliminary injunction on Shenzhen Weiboli Technology Co. Ltd., a three-judge panel ruled, finding she totally missed the mark in her legal reasoning.
"We find the district court's legal determinations conclusory and its factual analysis deficient," according to the opinion, written by U.S. Circuit Judge Jimmie V. Reyna. "We conclude that the district court committed legal error by misinterpreting the Eleventh Circuit's guidance and unreasonably rejecting Weiboli's [arguments] without adequate legal or factual analysis."
The ruling means Judge Cannon must reconsider Shenzhen Weiboli's so-called "unlawful-use defense" it deployed against the trademark infringement suit lodged by rival electronic-cigarette maker VPR Brands LP. Specifically, the Chinese company argued that VPR can't possibly hold the Elf trademark for vape products because it never secured premarket authorization to sell its nicotine-containing e-cigarettes from the U.S. Food and Drug Administration. Without this approval, the products "are per se illegal" and cannot be trademarked, Shenzhen Weiboli argued.
Litigation between the Florida-based and Chinese companies over the use of the word "Elf" on vaping products began in October 2022. VPR's suit claimed Shenzhen Weiboli and others were violating its trademark on Elf, which is its brand of reusable e-cigarettes, by selling Elfbar, the Chinese firm's brand of disposable e-cigarettes. VPR's suit against another manufacturer, Imiracle (HK) Ltd., was consolidated with the Shenzhen Weiboli case.
The preliminary injunction came down against the Chinese companies in February 2023.
The Federal Circuit panel said that Judge Cannon's initial mistake began with a "misreading" of the Eleventh Circuit's 2016 decision in FN Herstal v. Clyde Armory. Specifically, she said the court didn't give "definitive guidance" on if a party should be allowed to deploy the unlawful-use defense in a trademark infringement action, but she ultimately cautioned against allowing it.
But in reality, the Eleventh Circuit declined to allow the unlawful-usage defense to be used in FN Herstal because the defendant failed to show sufficient evidence that the mark was being used on an illicit product, the Federal Circuit said.
In contrast, Judge Cannon's order "acknowledged" that Shenzhen Weiboli provided evidence to show VPR's use of the Elf mark on e-cigarette products is unlawful under the Federal Food, Drug, and Cosmetic Act.
"The Eleventh Circuit's refusal to adopt the doctrine based on evidentiary deficiencies does not support the conclusion that the Eleventh Circuit would reject the doctrine regardless of the circumstances," the panel said. "The Eleventh Circuit's discussion in FN Herstal does not support such a blanket rejection regardless of the circumstances. Rather, the Eleventh Circuit left open the question of whether to adopt the doctrine under circumstances that warrant further analysis than what the facts in FN Herstal called for."
The Federal Circuit stopped short of saying if the unlawful-use defense should be allowed in this instance, but it did order Judge Cannon to "reevaluate" all pertinent issues related to VPR's motion seeking a preliminary injunction.
How Judge Cannon rules after a second look could determine which side gets the upper hand in out-of-court settlement talks. A year ago, the parties told her that they were working towards a deal, but were at an impasse partly because they wanted to see if the injunction would stand.
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