Zippo wins German preliminary injunction vs Lorillard over blu e-cig

Mon Aug 18, 2014 3:13pm EDT

An advertisement for the e-cigarette brand blu is seen on the window of a store in New York May 27, 2014.  REUTERS/Shannon Stapleton

An advertisement for the e-cigarette brand blu is seen on the window of a store in New York May 27, 2014.

Credit: Reuters/Shannon Stapleton

(Reuters) - A German court has ordered a subsidiary of U.S. tobacco giant Lorillard Inc to stop selling the popular blu e-cigarettes in that country, citing trademark confusion with lighter and fuel products sold by Zippo Manufacturing Co.

Pennsylvania-based Zippo, which announced the preliminary injunction against Cygnet UK Trading on Monday, is also engaged in a high-stakes trademark fight over the blu name in the United States and several other countries.

"I am very pleased that the German court affirmed our legal rights to our intellectual property," Zippo Chief Executive Officer Gregory Booth said in a statement, adding that the company was working "vigorously" to protect its trademarks worldwide.

Robert Bannon, director of investor relations at Lorillard, said the injunction will only impact online sales since the blu e-cigs are not currently sold at retail stores in Germany.

In a statement, Lorillard said the company would defend against "these types of opportunistic trolling tactics. Zippo has shown it is willing to try to unfairly capitalize on the commercial success of others when it has failed to prevail in the marketplace."

The Regional Court of Frankfurt am Main said in its Aug. 6 injunction that the blu e-cig brand created a "likelihood of confusion" with Zippo's European Union "BLU" trademark on butane lighters and fuel, according to Zippo.

Zippo has also filed to kill blu e-cigarette trademark applications or cancel registrations in Canada and Mexico. Sweden has already rejected a blu application by Lorillard, Zippo said.

The German decision comes as the two companies are going head-to-head in federal court in California.

Lorillard U.S. subsidiary LOEC Inc, which makes the blu e-cigarettes, sued Zippo last April seeking a court declaration that its products do not infringe on Zippo's trademarks.

It took the action after Zippo filed its opposition to several of Lorillard's applications for the blu name and design with the U.S. Patent and Trademark Office, and threatened litigation, according to court documents.

LOEC argued that there was "no likelihood of confusion, mistake or deception" with Zippo's BLU lighters because the products did not compete with each other and consumers were sophisticated enough to know the difference.

Meanwhile, Zippo has filed counterclaims against LOEC, seeking to prevent the sale of blu-brand e-cigarettes. A jury trial is scheduled for April 2015.

Since Lorillard acquired blu in 2012, the brand has gained 47 percent of U.S. market share of e-cigarettes. Annual sales have quadrupled to more than $200 million.

The blu e-cig business is being sold to Imperial Tobacco Group as part of Lorillard's $27.4 billion merger with Reynolds American Inc, which was announced last month.

(Reporting by Andrew Chung, editing by G Crosse and Ted Botha)

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