David Lilenfeld Blog The intellectual property blog of David Lilenfeld

30Jan/160

“Clearly Canadian” – Likelihood of Confusion – Similarity of Marketing Channels

2.  Marketing channels

Here, there is evidence that both companies market and sell their beverages over the Internet through their own websites, third party retail sites, and Facebook. (See Zarrow Dep. at 51:24-52:5; Cargle Dep. at 83:21-25; Khan Dep. at 46:12-19; 91:15-92: 95:8-15.) Yet, “[g]iven the broad use of the Internet today, the same could be said for countless companies.” Playboy Enterprises, Inc. v. Netscape Commc'ns Corp., 354 F.3d 1020, 1028 (9th Cir. 2004). “Some use of the Internet for marketing . . . does not alone and as a matter of law constitute overlapping marketing channels.” Entrepreneur Media, Inc., 279 F.3d at 1151.

The parties hotly contest whether the two products would typically be stored in the same shelves, aisles, or general areas of a retail store. (See Mot. at 22 (contending that Clearly Kombucha must be located in the refrigerated section); Supp. Resp. (Dkt. # 94) at 10-11 (contending that Clearly Kombucha appears on warm shelves).) Because the court  must weigh the facts in the light most favorable to Clearly Food, the court assumes for the purposes of this motion that retail stores would choose to display Clearly Kombucha products near Clearly Canadian products more often than not, which weighs in favor of finding of likelihood of confusion. (See Billick Decl. Ex. I (restocking notes from 2013 showing that retail stores stocked Clearly Kombucha on warm shelves and next to bottled  water products such as Perrier, Smart Water, Vitamin Water, Evian, and Fiji, as well as next to flavored beverages such as Snapple and Sobe), Ex. J.) The significance of the potential adjacent storage, however, is blunted by the fact that Clearly Canadian is not currently sold in any brick and mortar retail stores. Clearly Food has recently engaged a sales and marketing company to market Clearly Canadian “to the top twenty-five grocery store chains across the United States,” and expects that Clearly Canadian will be sold in unspecified grocery stores in 2015. (2d Khan Decl. ¶¶ 3, 5.) However, it remains unclear     whether Clearly Canadian will be sold in similar retail stores as Clearly Kombucha, or in the same geographic region as Clearly Kombucha, in the near or intermediate future.  (See Zarrow Dep. at 27:21-28 (explaining that Clearly Kombucha was sold in limited

In sum, a reasonable jury could not find that the parties’ current marketing  channels “overlap to any significant degree.” See Entrepreneur Media, Inc., 279 F.3d at 1151. Future overlap, although possible, is speculative, and the minor existing overlap in Internet use is insignificant because the “shared use of a ubiquitous marketing channel does not shed much light on the likelihood of consumer confusion,” Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1151 (9th Cir. 2011). Therefore, the court finds that this factor merits little weight in the likelihood of confusion analysis, and what weight it does merit benefits Top Shelf. Id.

3.  Relatedness of the goods

“Related goods are generally more likely than unrelated goods to confuse the public as to the producers of the goods.” GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000). “Related goods are those products which would be reasonably thought by the buying public to come from the same source if sold under the same mark.” Entrepreneur Media, Inc., 279 F.3d at 1147. The Ninth Circuit applies “a sliding scale approach as to the weight that relatedness will carry dependent upon the strength of the trademark holder’s mark.” Entrepreneur Media, Inc., 279 F.3d at 1147.

Clearly Food identifies the following undisputed similarities between the two products. To begin with the obvious, Clearly Canadian and Clearly Kombucha are single-serve, bottled beverages. (See Ledden Decl. Ex. 21.) Moreover, both products are  “sparkling” (carbonated) beverages, and are marketed as such. (See Dkt. # 47-4 (2014 presentation to Clearly Canadian investors); Billick Decl. (Dkt. # 95) Ex. A (a December,  2010 “Gourment California Foods Product Brief” identifying Clearly Kombucha’s “core position” as a “lightly sparkling” beverage), Ex. B (2009 business plan to market Top Shelf Kombucha as “the world’s first luxury sparkling elixir”), Ex. C (October 2013 email from Ms. Zarrow to a potential distributor describing Clearly Kombucha as a “sparkling, fermented, nonalcoholic tea”), Ex. D (2013 business plan describing Clearly Kombucha as a “sparkling fermented tea”), Ex. E, Ex. F at 3, Ex. G (“Brand Ambassador” handbook instructing marketers demonstrating Clearly Kombucha in retail stores to “[a]sk EVERY person that walks by if they would like a sample of  ‘sparkling tea’” unless the person already had kombucha in his or her cart).) Additionally, both products are “clear” beverages, and are marketed as such. (See Cargle Dep. (Dkt. # 57-3)

Finally, both products are perceived as healthy alternatives to other carbonated beverages, such as soda, and marketed as such. (See Ledden Decl. Ex. 8 (“2007 Survey”); Dkt. # 47-4 (2014 presentation to Clearly Canadian investors); 2012 Bus. Plan; Billick Decl. Ex. D (Clearly Kombucha 2013 business plan) at 9), Ex. E (notes from a Clearly Kombucha marketing demonstration).

Top Shelf points out that Clearly Kombucha differs from Clearly Canadian in that it is a flavored fermented tea rather than flavored water. (See Mot. at 22.) Top Shelf attempts to further distinguish the products by emphasizing the affirmative health benefits allegedly associated with kombucha, as well as the fact that Top Shelf targets a “niche” health-conscious demographic. (See Mot. at 21-23.) However, “the relatedness of each company’s prime directive isn’t relevant.” Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1056 (9th Cir. 1999). Rather, “the focus is on whether the consuming public is likely somehow to associate [the alleged infringer’s]  products with [the mark owner].” Id.see also Am. Int’l Group, Inc. v. Am. Int’l Bank, 926 F.2d 829, 832 (9th Cir. 1991).

Viewing the evidence in the light most favorable to Clearly Food, the court concludes that a jury could reasonably find that the consuming public is likely to associate the Clearly Kombucha product with the Clearly Canadian brand. The thrust of  Top Shelf’s argument is that the two brands do not directly compete for customers. But  even if a jury concluded that the two brands do not directly compete, a jury could still  reasonably find that the similarity of their products—namely, clear, sparkling, single-serve beverages—would likely result in consumer confusion between the brands and products. See American Int’l Group, Inc., 926 F.2d at 832 (concluding that although the parties were not direct competitors, customer confusion could result in light of the similarities between the financial services offered by the parties). Therefore, for summary judgment purposes, this factor weighs in Clearly Food’s favor.

30Jan/160

“Clearly Canadian” Likelihood of Confusion – Similarity of Trademarks

David Lilenfeld breaks down the likelihood of confusion section of the court's ruling in this trademark infringement case. The case pits CLEARLY CANADIAN against CLEARLY KUCHABU. In this post, the similarity of the trademarks are assessed.

E.        Infringement

Top Shelf also moves for summary judgment on Clearly Food’s trademark infringement claims. (See Mot. at 19-22.) To assess whether a defendant has infringed a plaintiff’s trademark, courts apply a “likelihood of confusion” test that asks whether use of the plaintiff’s trademark by the defendant is likely to cause confusion or to cause mistake, or to deceive as to the affiliation, connection, or association of the two products.”5  Mattel, Inc. v. Walking Mountain Productions, 353 F.3d 792, 806-07 (9th Cir. 2003); see also New W. Corp. v. NYM Co. of Calif., Inc., 595 F.2d 1194, 1201 (9th Cir. 1997). (David Lilenfeld: although the factors can vary from circuit-to-circuit, all eleven circuits require a likelihood of confusion analysis in trademark infringement cases).

(David Lilenfeld: Clearly Food brought claims under Sections 32 of the Lanham Act, 15 U.S.C. § 1114(1), and 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1)).  (See generally Compl.) Although Section 32 provides protection only to registered marks and Section 43 provides protection to unregistered marks, with respect to proving infringement, the same “likelihood of confusion” standard applies to both    provisions.  See GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000); Brookfield Commc’ns, Inc., v. West Coast Entm’t Corp., 174 F.3d 1036, 1046-47 n.8 (9th Cir.1999).  As such, the court’s analysis of the “likelihood of confusion” standard is independent of the prospective outcome of Top Shelf’s cancellation-of-registration claim.  See Grupo Gigante SA De CV v. Dallo & Co., 391 F.3d 1088, 1108 (9th Cir. 2004) (“Ultimately, very little turns on the cancellation-of-registration claim because registration is not necessary to establish trademark protection under federal . . . law.”).

The Ninth Circuit has developed an eight-factor (David Lilenfeld: the number of factors can vary from circuit-to-circuit, but are non-exhaustive) test to guide courts in assessing likelihood of confusion. Id. (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348–49    (9th Cir.1979), abrogated on other grounds by Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792, 810 n.19 (9th Cir. 2003)). The non-exclusive factors include (1) strength of the protected mark, (2) proximity and relatedness of the goods, (3) type of goods and degree of consumer care, (4) similarity of the protected mark and the allegedly infringing mark, (5) marketing channel convergence, (6) evidence of actual consumer confusion, (7) the defendant’s intent in selecting the allegedly infringing mark, and (8) likelihood of product expansion. Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1125 (9th Cir.  2014).

(David M. Lilenfeld: as the court will point out, all likelihood of confusion analyses are facts intensive). The “ultimate question of likelihood of confusion is predominantly factual in nature, as is each factor.” Entrepreneur Media, 279 F.3d at 1141. Rather than mechanically identifying the number of factors that favor of each party, a court must  “consider what each factor, and—more importantly—what the analysis as a whole, reveals about the ultimate question . . . : the likelihood of consumer confusion as to the origin of the product or service bearing the allegedly infringing mark.” Id. At the end of the day, “it is the totality of facts in a given case that is dispositive.” Pom Wonderful LLC, 775 F.3d at 1125.

1.  Similarity of the marks (David Lilenfeld: Factor #1 - how similar are the trademarks)

“The greater the similarity between the two marks at issue, the greater the likelihood of confusion.” GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1206 (9th Cir. 2000). The Ninth Circuit has “developed three axioms that apply to the ‘similarity’ analysis: 1) Marks should be considered in their entirety and as they appear in the marketplace; 2) Similarity is best adjudged by appearance, sound, and meaning; and, 3) Similarities weigh more heavily than differences.” Entrepreneur Media, Inc., 279 F.3d at 1144.

(David Lilenfeld: instead of focusing on the trademarks here, it delves into how the trademarks are presented (i.e., screen-printing v. paper label)). First and foremost, the court notes that both marks appear in the marketplace primarily as labels on the bottles of single-serve beverages. (See Mot. at 21 (showing pictures of the trademarks alone and as used on bottles).) The salient differences are that the Clearly Canadian logo is screen printed, whereas the Clearly Kombucha logo is a paper label, and the Clearly Canadian bottle has a “teardrop” shape, whereas the Clearly Kombucha label has a traditional “beer bottle” shape. (See Ledden Decl. Ex. 21 (side-by-side comparison of the bottled beverages).) Second, the court notes that the appearance of the trademarks as used on the bottle labels is not overly similar: the Clearly Canadian label has horizontal text and a picture of the fruit that represent’s the beverage’s flavor; the Clearly Kombucha label has vertical text and an apparently whimsical drawing; the fonts are also different.6  (See id.) Moreover, the logos as used separately from the bottles are not overly similar: Clearly Canadian’s logo consists of blue, horizontal text, (David Lilenfeld: the court seems to be heading toward no likelihood of confusion conclusion) and a red bottle with a maple leaf; Clearly Kombucha’s label is a black, oversized letter “C” with the work “Clearly” written vertically inside the “C” and the word “kombucha” written in a different font outside of the “C.” (Compare Ledden Decl. Ex. 19 with

(David Lilenfeld: Obviously, the first word in each mark is identical sounding, but we don't normally see courts break down the wounds of words -- instead opting  to assess the sound of the word in its entirety) On the other hand, the sound of the trademarks is quite similar: both begin with the word “clearly” and end with a word that begins with a phonetic hard “c” sound. See Palm Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 1372 (Fed. Cir. 2005) (finding that the first word in the trademark constituted the “dominant feature in the commercial impression” created by the mark). In addition, as Clearly Food points out, the common word “clearly” is the operative word (David Lilenfeld: determining the "operative" word is tough and which it is in this case is debatable) in both trademarks: the Trademark Office required both registrants to disclaim rights to the use  of the words “Canadian” and “kombucha” without the preceding word “clearly.” (Req. for Not. Ex. C; Ledden Decl. Ex. 2 (Appendix A).) Last, the meaning of the trademarks is also similar, insofar as they both rely on the word “clearly” to describe an aspect of their product. (See Zarrow Dep. at 16:22-17:2.)

Overall, the court finds that the third axiom—that similarities weigh more heavily than differences—controls the result here. Although Top Shelf has identified certain differences between the marks, a reasonable jury could find that the similarities in how the marks are used in the marketplace and the sound and meaning of the marks outweigh those differences. See Entrepreneur Media, Inc., 279 F.3d at 1144. Therefore, the court concludes that a reasonable jury could find that the marks are similar. As such, for summary judgment purposes, this factor weighs in Clearly Food’s favor. (David Lilenfeld: I am surprised at this result.  I think the trademarks are quite different in appearance and sound).

 

30Jan/160

“Clearly Canadian” Trademark Opinion (part 2.) – trademark abandonment

In this post, David Lilenfeld continues to break down the court's opinion in trademark infringement case pitting CLEARLY CANADIAN v. CLEARLY KOMBUCHA.  This posts relates to the Court's opinion with respect to defendant's argument that plaintiff abandoned its CLEARLY CANADIAN trademark.

C.        Abandonment

(David Lilenfeld: a rare discussion on trademark abandonment). “To prove abandonment of a mark as a defense to a claim of trademark infringement, a defendant must show that there was: ‘(1) discontinuance of trademark use and (2) intent not to resume such use.’”Wells Fargo & Co. v. ABD Ins. & Fin. Servs., Inc., 758 F.3d 1069, 1072 (9th Cir. 2014), as amended (Mar. 11, 2014) (quoting  Electro Source, LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 935 (9th Cir. 2006)); see also 15 U.S.C. § 1127(1). Non-use for three consecutive years constitutes prima facie evidence of abandonment. Herb Reed Enterprises, LLC v. Fla. Entm’t Mgmt., Inc., 736 F.3d 1239, 1247-48 (9th Cir. 2013); 15 U.S.C. § 1127(1). (David Lilenfeld: critical point here, since the term of non-use by plaintiff appears to be three years (2012-2015)). In the Ninth Circuit, non-use for three consecutive years creates only a rebuttal presumption of abandonment—it does not shift the burden of proof to the trademark owner. Abdul-Jabbar v. Gen. Motors Corp., 85 F.3d 407, 411 (9th Cir. 1996). A trademark owner can rebut the presumption of abandonment by showing valid reasons (David Lilenfeld: showing valid reason won't be hard here (bankruptcy)) for non-use or lack of intent to abandon the mark. Id.

“The standard for non-use is high.” Herb Reed Enterprises, LLC, 736 F.3d at 1247-48. “Non-use requires ‘complete cessation or discontinuance of trademark use.’” (quoting Electro Source, LLC, 458 F.3d at 936). The phrase “trademark use” means use that “includes placement on goods sold or transported in commerce; is bona fide; is made in the ordinary course of trade; and is not made merely to reserve a right in a mark.”1  Electro Source, LLC, 458 F.3d at 936 (quoting 15 U.S.C. § 1127). Even a “single instance of use is sufficient against a claim of abandonment of a mark if such use is made in good faith.” Wells Fargo & Co., 758 F.3d at 1072 (quoting Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir. 1970)).  (David Lilenfeld: the bar to prove trademark abandonment is set high, but Top Shelf might still prevail on lack of likelihood of confusion).

Evaluating whether a use is in “the ordinary course of trade” is “often an intensely factual undertaking.” Electro Source, LLC, 458 F.3d at 940. Courts must consider the “totality of the circumstances” to determine if genuine, albeit limited usage of the mark occurred “in the ordinary course of trade.” Id.Wells Fargo & Co., 758 F.3d at 1072.

(David Lilenfeld: Relevant factors include the “genuineness and commercial character of the activity, the determination of whether the mark was sufficiently public to identify or distinguish the marked [products] in an appropriate segment of the public mind as those of the holder of the mark, the scope of the [trademark] activity relative to what would be a commercially reasonable attempt to market the service [or product], the degree of ongoing activity of the holder to conduct the business using the mark, [and] the amount of business transacted.”)

Although “bona fide” is not defined in Section 1127, the Ninth Circuit has noted that “Black’s Law Dictionary provides two similar definitions for ‘bona fide’: ‘1. Made in good faith; without fraud or deceit. 2. Sincere; genuine.’” Electro Source, LLC, 458 F.3d at 936 (quoting Black’s Law Dictionary at 186 (8th ed. 2004)). The Ninth Circuit has also noted that “the term ‘bona fide’ in common parlance means ‘made or carried out in good faith; sincere.’”  Id. (quoting The American Heritage College Dictionary 158 (3d. ed. 2000)).

Because abandonment of a trademark is “in the nature of forfeiture, [it] must be strictly proved.” FreecycleSunnyvale v. Freecycle Network, 626 F.3d 509, 515 (9th Cir. 2010).  (David Lilenfeld: again, setting the bar highly for Top Shelf). The Ninth Circuit has not determined whether this high standard of proof requires“clear and convincing” evidence or a “preponderance of the evidence.” Id.see Grocery Outlet Inc. v. Albertson’s Inc., 497 F.3d 949, 954 (9th Cir. 2007) (separate concurrences disagreeing as to the applicable standard of proof). The court need not decide which standard of proof applies here because, viewing the evidence in the light most favorable  to Clearly Food, Top Shelf fails to carry its burden under either standard.(David Lilenfeld: the court bangs the gavel on Top Shelf's trademark abandonment argument). See Freecycle Sunnyvale, 626 F.3d at 515 (declining to decide which standard applied to a motion for summary judgment);Electro Source, LLC, 458 F.3d at 936 (same).

a.  Relevant facts (David Lilenfeld: facts pertinent to trademark abandonment ruling).

Top Shelf contends that the Clearly Canadian mark is presumptively abandoned because “there is no genuine dispute of material fact that there has not been any bona fide use of [the Clearly Canadian trademark] from 2008 to the present day.” (Mot. at 17.)

The relevant facts, taken in the light most favorable to Clearly Canadian, Reeves, 530 U.S. at 150, are as follows. CC Beverage’s last full-scale production run of beverages bearing the Clearly Canadian trademark occurred sometime in 2009. (Ledden Decl. Ex. 8 (“6/3/14 Khan Email”); Ledden Decl. Ex. 9 (“12/22/11 Khan Email”).) On September 4, 2009, Clearly shipped 432 cases of Clearly Canadian 20-ounce bottles to Paw Paw Wine Distributors (“Paw Paw”) in Michigan. (Bogen Decl. (Dkt. # 55) ¶ 5, Attach. A.) In turn, Paw Paw sold Clearly Canadian 20-ounce and 14-ounce beverages to retailers from 2009 through 2011. (Id. Attachs. B, C.) In an August 2009 transaction, GrayCo Sales Limited (“Grayco”), a beverages distributor in Ontario, Canada, sold approximately $225,000 worth of Clearly Canadian product to the retailer Big Lots. (Colley Dep. at 23:6-15; 24:19-25:3.)

Intrastate Distributors, Inc. (“Intrastate”), a beverage wholesale and manufacturing company located in Michigan, bottled Clearly Canadian product during 2011 and 2012.  (Dabish Decl. ¶¶ 2-3.) Graham Colley, the president of Grayco, maintained a trade booth at the Canadian National Exhibition in 2010 and 2011 featuring Clearly Canadian products. (2012 Bus. Plan. at 32-33 (“3/30/12 Colley Letter”).)  (David Lilenfeld: here the last use date by plaintiff was 2012).

(David Lilenfeld: court probably could have started fact discussion here since all that really matters at this point is plaintiff's date of last use of the trademark). In March, 2012, Graham Colley, the president of Grayco, negotiated a license with Clearly Food to sell Clearly Canadian beverages. (Colley Dep. at 32:22-33:1; 45:7-9; 47:15-23.) Under the license, Grayco was required to pay Clearly Food a royalty for  each case of product sold. (Id. at 46:10-47:8.) In 2012, Intrastate filled approximately 1,800 12-pack cases of 11-ounce bottles with Clearly Canadian product. (Dabish Decl. ¶ 5.) On August 14, 2012, Instrastate sold 1,872 cases of Clearly Canadian beverages (in raspberry and black cherry flavors) to Grayco. (Id. ¶¶ 5-6, Attachs. A, B.) The order totaled approximately $10,000.00, and was shipped to Grayco in Ontario, Canada, on August 15, 2012. (Id.; Colley Dep. at 33:15-18).) Grayco displayed and sold Clearly Canadian beverages during the 2012 Canadian National Exhibition. (3/30/12 Colley Letter.) This fair, which runs from mid-August to Labor Day, typically receives over 1.5 million attendees. (Id.) In October, 2012, Grayco sold 720 cases of Clearly Canadian beverages to an online retailer called  Beverages Direct, and transported the product to Beverages Direct in the United States. (Colley Dep. at 39:343:9; 66:11-24; 79:15-79; Khan Dep. at 79:21-80:6 (referencing a Grayco invoice dated October 23, 2012, to Beverages Direct).) In turn, Beverages Direct sold the Clearly Canadian product exclusively to retail purchasers located in the United States. (Colley Dep. at 91:6-92:4.)

In the summer of 2013, Intrastate sold another approximately $10,000.00 worth of Clearly Canadian product to Grayco. (Id. at 32:22-2; 67:1-17.) Grayco again sold several pallets worth of the beverage to Beverages Direct, and reserved the balance for the 2013 Canadian National Exhibition. (Id. at 67:1-17.)  (David Lilenfeld: so plaintiff's trademark continues in 2013 . . . different than the 2012 facts above).

Since then, Clearly Food’s 2014 online pre-sales campaign has generated over 10,000 orders, resulting in over 27,000 cases of product due to be shipped in 2015. (2d Khan Decl. ¶ 4.) Over 90% of those transactions are with customers in the United States.

Clearly Food has also received eight “full truckload” orders from seven different beverage distributors. (Id. ¶ 5.) As a result, Clearly Food will ship over 30,000 bottles of Clearly Canadian product in 2015. (David Lilenfeld: so we have only a two year or less period of non-use -- not going to be long enough to win for defendant). (Id.see also Billick Decl. Ex. N (invoices for the purchase orders).) Clearly Canadian will be sold directly to consumers at grocery stores  within those distributors’ networks. (2d Khan Decl. ¶ 5.)  Clearly Food has deployed various online, social media, and other marketing campaigns. (Khan Dep. at 46:12-19; 91:15-92:2; 95:8-15.)

b.  Application

Contrary to Top Shelf’s contention, Clearly Food’s evidence, viewed as a whole, shows that intermittent, yet appreciable commercial sales of Clearly Canadian beverages occurred from 2009 through the present. The court concludes that a jury considering this evidence could reasonably find that those sales are sufficient to preclude a finding that use of the trademark was discontinued. See Electro Source, LLC, 458 F.3d at 939  “Good faith nominal or limited commercial sales of trademarked goods are sufficient . . . to avoid abandonment[] where the circumstances legitimately explained the paucity of the sales.”) Specifically, a jury could find that the scope of trademark and business activity in which CC Beverage and Clearly Food engaged from 2009 to the present were commercially reasonable given the situation: namely, a brand transfer, during bankruptcy proceedings, by a declining business to a start-up company seeking to revitalize the brand. See Electro Source, LLC, 458 F.3d at 939 (finding no abandonment because a struggling business’s efforts to exhaust its remaining inventory prior to dissolution constituted “core trademark activities that necessarily contemplate trading upon the goodwill of the mark”). (David Lilenfeld: Even a “single instance of use is sufficient against a claim of abandonment of a mark if such use is made in good faith,” Wells Fargo & Co., 758 F.3d at 1072). Clearly Food puts forth evidence of multiple uses arguably made in good faith. Although Top Shelf adduces evidence suggesting that the sales made immediately after Clearly Food acquired the trademark were made solely for the purpose of preserving the mark, the court may not weigh the evidence on summary judgment. See Reeves, 530 U.S. at 150; (Ledden Decl. Ex. 4 (“10/2/12 Khan Email”), Ex. 5 (“3/15/12 Khan Email”), Ex. 9 (“12/22/11 Khan Email”); Khan Dep. at 51:20-52:6.) As such, when evidence of all Clearly Canadian sales between 2009 and the present is taken into account, summary judgment on the issue of non-use is inappropriate.  (David Lilenfeld: the court makes this analysis look even, suggesting it was not even a close call).

In its reply brief, Top Shelf contends for the first time that sales to third-party retailers or distributors do not constitute use in commerce within the meaning of the Lanham Act because such sales are not uses by or for the benefit of the trademark owner.  (Reply (Dkt. # 102) at 4-5.) Top Shelf bases its argument on two twenty-year-old opinions by the Trademark Trial and Appeal Board (“TTAB”) that stated: “A party cannot defend against a claim of abandonment by relying on some residual goodwill generated through post-abandonment sales of the product by distributors or retailers.” Parfums Nautee Ltd., 22 U.S.P.Q.2d 1306 (P.T.O. Jan. 15, 1992); (David Lilenfeld: Societe Des Produits Marnier Lapostolle, 10 U.S.P.Q.2d 1241, at *4 n.5 (P.T.O. Feb. 10, 1989) (finding a presumption of abandonment when the last shipment of trademarked products to the United States occurred more than three years prior, despite the fact that retailers continued to sell the product thereafter)).

Top Shelf does not explain how these TTAB rulings fit into Ninth Circuit jurisprudence regarding abandonment.2  (See Reply.) More importantly, in the court is aware of only one district court in this circuit that has followed those rulings.  See Zamacona v. Ayvar, No. CV0702767ABCFMOX, 2009 WL 279073, at *2 (C.D. Cal. Feb. 3, 2009); but see Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1189 (5th Cir. 1980) (finding no abandonment) (David Lilenfeld: this argument came too late).

Clearly Food has not had an opportunity to respond to Top Shelf’s newly raised argument, and because, as explained below, consideration of the argument would not change the outcome of this motion, the court declines to decide the issue at this time. See Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996) (stating that a court should not consider new issues or evidence submitted in a reply brief without giving the opposing party an opportunity to respond).

Even if the court agreed that Clearly Food could not rely on sales by unaffiliated retailers or distributors, summary judgment on the abandonment claim would not be appropriate. (David Lilenfeld: agreed -- use in commerce is use in commerce, whether by the trademark owner or a third-party). It is undisputed that Clearly Canadian beverages were sold in the United States by or on behalf of Clearly Canadian to Paw Paw in September 2009, and to Beverages Direct in October 2012. (See Bogen Decl. ¶ 5, Attach. A; Colley Dep. at 39:3-43:9; 66:11-24; 79:15-79: Khan Dep. at 79:21-80:6.); Star-Kist Foods, Inc. v. P.J. Rhodes & Co., 769 F.2d 1393, 1396 (9th Cir. 1985); 15 U.S.C. §1127.

30Jan/160

“Clearly Canadian” Makes for a Clearly Good Trademark Opinion

David Lilenfeld comments on this trademark infringement opinion, in which the owners of trademarks CLEARLY CANADIAN and CLEARLY KOMBUCHA do battle.

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON

THE CLEARLY FOOD & BEVERAGE CO., INC.,

Plaintiff,

v.

TOP SHELF BEVERAGES, INC.,

Defendant.

ORDER GRANTING IN PART AND DENYING IN PART SUMMARY JUDGMENT

I.      INTRODUCTION

Before the court is Defendant Top Shelf Beverages, Inc.’s (“Top Shelf”) motion for summary judgment. (See Mot. (Dkt. # 47).) (David Lilenfeld: we learn right away what the case is about; have you already formed an opinion?) This is a trademark case involving two brands of bottled beverages: “Clearly Canadian” sparkling water and “Clearly Kombucha” fermented tea. (David Lilenfeld: according to wikipedia, Kombucha refers to any of a variety of fermented, lightly effervescent sweetened black or green tea drinks that are commonly intended as functional beverages). Having considered the submissions of the parties, the balance of the record, and the relevant law, and deeming oral argument unnecessary, the court GRANTS in part and DENIES in part Top Shelf’s motion for summary judgment.

II.      BACKGROUND

Unless otherwise noted, the following facts are undisputed. Plaintiff The Clearly Food & Beverage Co. (“Clearly Food”) owns the trademark “Clearly Canadian,” United  States Trademark Registration No. 1,697,898, as used on “flavored mineral waters, fruit flavored mineral waters, non-flavored mineral waters, carbonated mineral waters, non-carbonated mineral waters, bottled drinking waters, spring waters, soft drinks and fruit juices.” (Resp. (Dkt. # 54)) at 4; Ledden Decl. (Dkt. # 47-3) Ex. 2 (“Assignment”).)

Clearly Food obtained this trademark from the now-defunct Clearly Canadian Beverage Corporation (“CC Beverage”) in January 2012. (David Lilenfeld: out of bankruptcy is always an interesting way to acquire trademark rights). (See Assignment.) CC Beverage sold bottles of flavored sparkling water under the brand name “Clearly Canadian.” (Req. for Not. (Dkt. # 49) Ex. E (“Trustee’s Rep.”).) After struggling for several years to compete in the beverage market (David Lilenfeld: which we all know is insanely competitive), CC Beverage filed for bankruptcy in March 2010. (Id.; Req. for Not. Ex. D (“Bank. Filing”).) In January, 2012, the Clearly Canadian trademark was sold to Clearly Food on behalf of CC Beverage’s secured creditors. (Ledden Decl. Ex. 1 5    (“Not. of Seizure”).) Although by that time the product was no longer being manufactured (David Lilenfeld: how long had the trademark been unused -- an important issue), Clearly Food intended to “reintroduce Clearly Canadian” by “bringing back the original legacy line in its premium glass teardrop bottle (6+ flavors).” (David Lilenfeld: this sounds like there may be a trademark tacking issue here) Decl. Ex. 3 (“Khan 8/23/11 Email”), see also Ex. 14 (“2012 Bus. Plan”) (detailing Clearly Food’s product development and pricing, marketing, sales, and distribution strategies, with a goal to “enter full-scale commercial production by March 2013 for North America”).)

Since then, manufacturing of Clearly Canadian beverages in limited quantities has resumed. (Dabish Decl. (Dkt. # 56) ¶¶ 2-5.) (David Lilenfeld: again, how long was the non-use period?). Bottles of Clearly Canadian sparkling water have been sold online. (Colley Dep. (Dkt. # 57-1) at 91:6-92:4.) Clearly Food is engaged in an online pre-sales campaign directed at consumers, and has also received larger-scale orders from several beverage distributors. (2d Khan Decl. (Dkt. # 93-13) at ¶¶ 3-5.) (David Lilenfeld: Here an important fact to keep in mind). Clearly Food plans to begin selling its products in retail grocery stores in 2015.  (Lilenfeld PC: it seems that the period of non-use was roughly three years (from 2012 to 2015)).

Top Shelf was founded by Caleb Cargle and Alison Zarrow in 2009. (David Lilenfeld: could be setting-up a senior user debate). (Cargle Decl. (Dkt. # 47-1) ¶ 2; see generally Cargle Dep. (Dkt. # 57-3) at 35:17-37:19.) Top Shelf currently sells a flavored kombucha beverage under the trademarked label “Clearly Kombucha.” (Cargle Dep. ¶ 1.) Kombucha is a drink brewed from green tea and then fermented with a symbiotic colony of bacteria and yeast. (Id. ¶ 16.) Mr. Cargle and Ms. Zarrow have developed a unique type of kombucha that is “clear.” (Id. ¶ 7.) That is, due to the filtration process used during brewing, their kombucha is “free from solid ‘floaties’ typically associated with kombucha [that are] . . . caused by the symbiotic colony of bacteria and yeast.” (Id. ¶¶ 6-7.)

The co-founders originally sold their product under the brand “Top Shelf Kombucha.” (Id. ¶ 9.) They marketed Top Shelf Kombuhca as a high-end or “premium” mixer and non-alcoholic substitute, and sold it in a miniature champagne bottle. (Id. ¶ 8.)  (David Lilenfeld: note that no first use date for Top Shelf's use of CLEARLY KOMBUCHA is revealed yet).

Although supplies were limited by their production capabilities, they believed the sales results “showed promise.” (Id. ¶ 10.)  At the end of 2010, the co-founders changed strategies. (Id. ¶ 12; Zarrow Dep. (Dkt. # 57-5) at 9:11-17.) After consulting with brand advisors, they decided to differentiate their product from its competitors based on its “clear” character. (Cargle Decl. ¶ 12; Zarrow Dep. at 12:16-24.) They also decided that they wanted Top Shelf to be recognized as a socially conscious brewer with transparent manufacturing practices.  (Cargle Decl. ¶ 13)

To reflect those goals, they decided to change the name of their product to “Clearly Kombucha.” (Id.) (David Lilenfeld: Top Shelf changed to CLEARLY KOMBUCHA toward end of 2010). The co-founders applied for a federal trademark registration in November 2010, and the “Clearly Kombucha” mark was published for opposition in April 2011. (Req. for Not. Exs. A, B.) After the mark was published (David Lilenfeld: how soon after?), the Clearly Kombucha brand launched in Ralph’s grocery stores throughout California. (Cargle Decl. ¶ 14.) Clearly Kombucha beverages are now sold at various retailers, including, among others, Safeway stores in Northern California and the Pacific Northwest, Ralph’s stores in southern California, a few Whole Foods grocery stores in Northern California, and PCC natural food stores in Washington and Oregon. (Cargle Dep. at 73:3-74-12; Zarrow Dep. at 27:21-28.) Clearly Kombucha is also available for purchase over the Internet. (Cargle Dep. at 83:21-25.)

(David Lilenfeld: the trademarks and goods seem different enough that I would not expect to see a likelihood of confusion, but more facts to come). In September,2013, Clearly Food filed this action against Top Shelf, bringing claims for trademark infringement under the Lanham Act § 32, 15 U.S.C. § 1114, unfair competition under the Lanham Act § 43(a), 15 U.S.C. § 1125(a), trademark dilution under Lanham Act § 43(c), 15 U.S.C. § 1125(c), and trademark infringement and unfair competition under Washington State law. (See generally Compl. (Dkt. # 1).) Top Shelf’s Motion for summary judgment on all claims is now before the court. (See Mot.)

III.      ANALYSIS

A.        Summary Judgment Standard

Federal Rule of Civil Procedure 56 permits a court to grant summary judgment where the moving party demonstrates (1) the absence of a genuine issue of material fact and (2) entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir. 2007). The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323.  (David M. Lilenfeld: standard MSJ discussion).

If the moving party does not bear the ultimate burden of persuasion at trial, it can show the absence of an issue of material fact in two ways: (1) by producing evidence negating an essential element of the nonmoving party’s case, or (2) by showing that the nonmoving party lacks evidence of an essential element of its claim or defense. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1106 (9th Cir. 2000). If the moving party will bear the ultimate burden of persuasion at trial, it must establish a prima facie showing in support of its position on that issue. UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir. 1994). That is, the moving party must present evidence that, if uncontroverted at trial, would entitle it to prevail on that issue. Id. at 1473.

If the moving party meets its burden of production, the burden then shifts to the nonmoving party to identify specific facts from which a factfinder could reasonably find in the nonmoving party’s favor. Celotex, 477 U.S. at 324; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). In determining whether the factfinder could reasonably find in the nonmoving party’s favor, “the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).  (David Lilenfeld: Court providing a thorough discussion of MSJ standard).

B.        Judicial Notice

Top Shelf requests that the court take judicial notice (David Lilenfeld: why didn't Top Shelf just submit the documents) of the following documents:

(1) Top Shelf’s Trademark Application for the Clearly Kombucha mark, (2) the Notice of Publication of the Clearly Kombucha mark, (3) the Trademark Registration Certificate for the Clearly Kombucha mark, (4) the Combined Declaration of Use and/or Exclusable Nonuse /Application for Renewal of Registration of a Mark under Sections 8 & 9 for the Clearly Canadian mark, (5) the Proposal under the Bankruptcy and Insolvency Act filed in March 2010 by CC Beverage, and (6) the Trustee’s Report to Creditors filed in In the Matter of the Proposal of Clearly Canadian Beverage Corporation, dated March 17,  2010. (See Req. for Not. Exs. A-F.) Top Shelf obtained the trademark documents from the U.S. Patent and Trademark Electronic Search System, and obtained the bankruptcy documents from the Supreme Court of British Columbia (Vancouver Registry). (Id. ¶¶ 6- 7.)

Rule 201 of the Federal Rules of Evidence permits a federal court to take judicial notice of a fact that is not subject to “reasonable dispute” because it is “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably questioned.” Fed. R. Evid. 201(b)(2). (David Lilenfeld: seems like a detour from the main trademark issues). The public records of administrative agencies   and other courts are appropriate matters for judicial notice. Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (taking notice of court filings); see also Dahon N. Am., Inc. v. Hon, No. 2:11-CV-05835-ODW, 2012 WL 1413681, at *8 (C.D. Cal. Apr. 24, 2012) (taking judicial notice of documents filed on the United States trademark website); CDx Diagnostics Inc. v. Histologics LLC, No. CV 13-7909-DOC NBX, 2014 WL 3347525, at *3 (C.D. Cal. July 7, 2014) (collecting cases taking judicial notice of documents from administrative agencies). Clearly Food has not objected to Top Shelf’s request. Accordingly, for the purposes of this motion, the court grants Top Shelf’s request for judicial notice.  (David Lilenfeld: typically courts just do it without explanation; maybe plaintiff challenged it).

29Jan/160

Trademark Office Affirms Refusal to Register MAN O’WAR for Golf Equipment

Centex/Taylor, LLC filed an application to register the trademark MAN O’WAR for golf equipment. The trademark was refused under Section 2 (d) of the Trademark Act, 15 U.S.C. § 1052 (d) on the grounds that it resembled the already registered mark, MANOWAR, and thus is likely to cause confusion or deception.

The Examining Attorney presented evidence to show Centex/Taylor’s golf equipment and the already registered clothing items are related through third-party registrations. The Examining Attorney successfully demonstrated that the entities had registered a single mark for both golf items and clothing items. According to In re Albert Trostel & Sons Co., 29 USPQ2d 1783 (TTAB 1993), third-party registrations, which include different items and which are based on use in commerce, suggest that the goods may have emanated from a single source.

Man O'War posted by David Lilenfeld

Man O'War (courtesy Wikipedia)

Centex/Taylor admitted the same registrant often offers golf equipment and clothing items with identical trademarks. Also, past registrations serve to suggest that the goods emanate from the same source. Centex/Taylor’s arguments concerning use in the marketplace of the registrant’s mark are not persuasive. An applicant is not permitted to restrict the scope of the goods covered in the registrant’s registration by extrinsic evidence or unsupported statements. Therefore, Centex/Taylor’s unsupported statements do not rebut the Examining Attorney’s belief that these goods are related. Furthermore, since the registered goods are not limited to any specific channels of trade, there would be an overlap in trade channels.

While the appearance of Centex/Taylor’s trademark differs slightly from the trademark in the registration mainly because of an apostrophe in Centex/Taylor’s mark, the literal portion of the trademark is identical and the trademark sounds the same. Thus, Centex/Taylor did not persuade the TTAB that consumers would think of a racehorse when the mark is used in connection with golf equipment.

“TTAB ultimately affirmed the refusal to register because the marks are confusingly similar, the goods are related and the channels of trade are overlapping.  A fairly straightforward decision after all,” said David Lilenfeld, founder of intellectual property law firm, Lilenfeld PC.

28Jan/160

Trademark Office Rules ORION for Fishing Rods is Unregisterable

L.L. Bean sought to register the trademark ORION for fishing rods but was refused by the Trademark Office because the trademark was confusingly similar to the identical trademark already registered for golf clubs.

The Trademark Office relied upon Section 2(d) of the Tradetrademark Act, 15 U.S.C. § 1052 (d) likelihood of confusion when refusing to register ORION for fishing rods.

L.L. Bean argued that the goods in question, namely the fishing rods and the golf clubs, are not related, that the trade channels cannot overlap, and that the consumers for these goods are sophisticated and discriminating. Applicant also alleged that the use of its house trademark in connection with the involved trademark on applicant’s goods reduces the likelihood of confusion between the registered trademark and the applicant’s trademark. Lastly, L.L. Bean argued that, should there be a finding of likelihood of confusion, L.L. Bean should be permitted to amend its application limiting the channels of trade of the goods to L.L. Bean outlets.

On the contrary, the Examining Attorney, Georgia Ann Carty Ellis, contended that ORION is a strong arbitrary trademark for sporting goods, that L.L. Bean presented an identical trademark, and that its use of its house trademark could not reduce the likelihood of confusion. The Examining Attorney relied upon 140 third-party registrations covering golf clubs and fishing rods to show that customers are often exposed to golf and fishing goods sold in the same market.

The Trademark Office’s decision under Section 2 (d) is based upon an analysis of the likelihood of confusion factors detailed in In re E. I. du Pont de Nemours & Co., 476 F.2d 1357, 177 USPQ 563 (CCPA 1973). The du Pont factors all favor the position taken by the Examining Attorney that the trademarks are identical. Thus, the TTAB found that even when the relationship between the goods is not as closely related there can still be a finding of common source.

There is no per se rule that all sporting tools are related. However, the Examining Attorney noted third-party registrations show that goods can come from the same source and be offered under the same trademark.

Regarding the du Pont factor that focused on the trade channels, L.L. Bean argued that it established its own channels of trade because L.L. Bean markets and sells all of its products through L.L. Bean stores, catalogs and websites. The TTAB recognized that even if the goods were not sold in the same store, they would be sold in the same type of stores.

Lastly, L.L. Bean offered to amend its identification of goods to limit the channels of trade. The TTAB agreed with the PTO that the amendment was untimely. Nevertheless, even if the amendment were allowed it would not avoid a likelihood of confusion. In conclusion, when consumers who are familiar with ORION golf clubs learn of ORION fishing rods, they are likely to believe there is a connection between the goods.

28Jan/160

Sovereign Military Hospitaller Oder v. Florida Priory of the Knights Hospitallers

This case has been a long-standing trademark battle between two religious organizations with long and similar names:

(1) Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta and Florida Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical Order.

(2) Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes and of Malta

The 11th Circuit Court of Appeals overruled a district court’s decision that one branch of the Knights of Malta committed fraud when it filed its federal trademark application in 1958. Another branch of the Knights of Malta sued for trademark infringement alleging false advertising under the Lanham Act, 15 U.S.C. § 1051 and state law claims for Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla. Stat. § 501.201. Fraud requires a showing of the registrant’s awareness of competing marks.

The district court found the plaintiff’s federally registered trademark was obtained fraudulently because the plaintiff knew of the defendant’s prior use of the mark. Judge Charles Reginald Wilson of the appeals court first reversed the fraud judgment. According to 15 U.S.C. § 1064 (3), 1119, “a party may petition to cancel a registered mark on the ground that the registration was procured by fraud.” It was held in Angel Flight of Ga., Inc. v. Angel Flight Am., Inc., 522 F.3d 1200, 1209 (11th Cir. 2008) that an applicant commits fraud when he “knowingly makes false, material representations of fact in connection with an application for a registered mark.” Fraud requires a purpose or intent to deceive the PTO. The defendant, the party alleging the fraud, has the burden of proving this claim by clear and convincing evidence.

Furthermore, the appellate court overruled the district court’s finding of fraud because the facts show the person who signed the trademark application did not know about the use of a similar mark. If the declarant believes the applicant has a superior right to use the mark, there is no fraud even if the declarant is mistaken.

Also, the district court found plaintiff’s failure to inform defendant is evidence of willful blindness. To rule on the knowledge element of fraud, the district court relied upon recent case law from Global-Tech Appliances Inc. v. SEB S.A., 131 S.Ct. 2060, 98 USPQ2d 1665 (U.S. 2011) that willful blindness could satisfy actual knowledge as to liability for inducing infringement. The appeals court rejected the effort to apply this case law to a trademark case because the case law is from a patent law case. Courts do not automatically apply a standard from one area of intellectual property law to another area of intellectual property law.

In conclusion, the 11th Circuit found in favor of the plaintiff because a lack of clear and convincing evidence. On remand, the district court misapplied several factors in its analysis of likelihood of confusion, incorrectly assessed the defense of prior use, relied upon testimony that the appellate court previously deemed inadmissible and misinterpreted the 11th Circuit’s instructions about consulting facts outside the record.

28Jan/160

David Lilenfeld Breaks Down TTAB’s Reversal Re: KID TENNIS

The Trademark Office reversed a Section 2 (d) refusal of the KID TENNIS mark because they found it dissimilar to the TENNISKIDS mark. Even though the brands are selling nearly identical goods, the Trademark Office ruled that KID TENNIS is not likely to cause confusion with TENNISKIDS.

The Board of the Trademark Office disagreed with the Examining Attorney’s belief that the wording of KIDS TENNIS is the dominant feature of the mark’s commercial impression. In this case, the wording as well as the design creates the Applicant’s trademark.

Furthermore, the Trademark Office was not convinced that TENNISKIDS was registered in standard character form. The trademark owner’s mark is so stylized that it does not fall within the range of reasonable manners of display that should be reserved for registered standard character mark. Therefore, the Trademark Office found the marks to be visually dissimilar.

In regards to how the respective trademarks sound, the Trademark Office ruled the marks are more similar than dissimilar but found the meaning of the marks to be different. The applicant’s mark, KID TENNIS, connotes a character named “Kid Tennis” as opposed to the registered mark, TENNISKIDS, which connotes children who play tennis.

“The Trademark Office ruled that the dissimilarity of the marks outweigh other factors, but clearly from the ruling, it was a close call, said, David Lilenfeld of Lilenfeld PC.

 

23Jan/160

David Lilenfeld Comments on Order in Trademark Dispute

Below is Judge Pannell's Order on Motion for Summary Judgment in HEALTHIER CHOICE FLOORING, LLC v. CCA GLOBAL PARTNERS, INC., Northern District of Georgia, Case No. 1:11-CV-2504-CAP.  The seven likelihood of confusion factors are analyzed.  There is also a rare discussion of trademark dilution under Georgia state law (O.C.G.A. § 10-1-451(b)).  Finally, according to David Lilenfeld, the trade dress discussion is instructive.

ORDER

This matter is before the court on Healthier Choice Flooring, LLC’s

(“HCF”) motion to exclude expert testimony of Donald A. Irwin [Doc.

No. 216], HCF’s motion for leave to file under Federal Rules of Civil

Procedure 15(a)(2) and 16(b)(4) to amend the amended complaint and remove

certain counts [Doc. No. 272], HCF’s motion for partial summary judgment

[Doc. No. 278], CCA Global Partners, Inc.’s (“CCA”) motion for summary

judgment [Doc. No. 279], DCO, Inc. (“DCO”) and Etowah Decorating Center,

Inc.’s (“Etowah”) motion for summary judgment [Doc. No. 280], and the

defendants’ motion to exclude the expert testimony of Michael Norton [Doc.

No. 281].

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 1 of 59

2

As an initial matter, the court GRANTS the motion to amend the

complaint [Doc. No. 272]. The motion seeks merely to dismiss with prejudice

certain of the plaintiff’s claims. The defendants have no objection. Because

the amendment does not add claims, the court will not require the filing of a

second amended complaint. Rather, the court will simply dismiss the claims

identified in the motion to amend and continue the litigation with the

amended complaint being the operative pleading. Therefore, counts II, III,

VI, VIII, and IX are DISMISSED WITH PREJUDICE.

The parties filed their motions for summary judgment prior to the court

ruling on HCF’s motion to amend the amended complaint. To the extent that

the parties seek summary judgment on the counts of the amended complaint

that have now been dismissed with prejudice, the court will not address those

arguments.

I. Factual and Procedural History

This trademark action concerns carpet cushion with attributes that

supposedly make it healthier to use in customers’ homes. HCF makes and

wholesales carpet cushion that is sold in retail stores—including Costco and

Home Depot—throughout the United States. HCF makes a premium carpet

cushion that has “healthier” properties that it claims make it superior to

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 2 of 59

3

other cushions. HCF uses various logos with its products, including the

registered trademark Healthier Choice®.

CCA is a corporation that is owned by other, independently owned and

operated, individual retail floor covering companies. DCO (doing business as

Dalton Carpet One Floor and Home) and Etowah are two of the independent

retail floor covering stores that are members of CCA’s ownership cooperative.

CCA does not buy or sell carpet cushion itself; rather, it negotiates with

product vendors on behalf of its retail store owners and creates marketing

programs for use by its owners to sell carpet and cushion, and to provide

installation services.

A marketing program that CCA recommends to its members is its

“Healthier Living® Flooring Installation System” (hereinafter “the Healthier

Living® System”). It involves using a multiple step process in an attempt to

provide an improved option for installation of carpet. There are many

elements that make up the Healthier Living® System, such as the type of

carpet cushion used and the process to install it.

For purposes of this order, the operative complaint is HCF’s amended

complaint filed on June 18, 2012. The amended complaint alleges that CCA’s

Healthier Living® System infringes on HCF’s trademark rights and falsely

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 3 of 59

4

advertises certain attributes of the Healthier Living® System and its carpet

cushion. HCF sets forth the following claims in its amended complaint:

• Count I: Federal trademark infringement under 15 U.S.C. § 1114,

• Count IV: Federal trade dress infringement under 15 U.S.C. § 1125(a),

• Count V: False advertising under 15 U.S.C. § 1125(a),

• Count VII: Trademark dilution under O.C.G.A. § 10-1-451(b),

• Count X: Attorney’s fees and expenses of litigation.

The defendants filed the following counterclaims in response to the amended

complaint:

• Counterclaim I: Declaratory judgment of non-infringement,

• Counterclaim II: Declaratory judgment of no dilution,

• Counterclaim III: Federal trademark infringement under

15 U.S.C. § 1125,

• Counterclaim IV: Common law trademark infringement,

• Counterclaim V: Fraud on the United States Patent and Trademark

Office under 15 U.S.C. § 1120.

II. Motions to Exclude Expert Testimony

The parties have filed two separate motions to exclude the testimony of

two witnesses designated as experts. HCF seeks to exclude the expert

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 4 of 59

5

testimony of Donald A. Irwin. The defendants seek to exclude the expert

testimony of Michael Norton.

The Eleventh Circuit Court of Appeals has held that a district court

must act as a “gatekeeper” under Federal Rule of Evidence 702 and Daubert

v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) to admit only

expert testimony that is both reliable and relevant. Rink v. Cheminova, Inc.,

400 F.3d 1286, 1291 (11th Cir. 2005). To perform this role as “gatekeeper,”

the court must determine whether the following requirements are met:

(1) the expert is qualified to testify competently regarding the

matters he intends to address; (2) the methodology by which the

expert reaches his conclusions is sufficiently reliable as

determined by the sort of inquiry mandated in Daubert; and

(3) the testimony assists the trier of fact, through the application

of scientific, technical, or specialized expertise, to understand the

evidence or to determine a fact in issue.

City of Tuscaloosa v. Harcross Chems., Inc., 158 F.3d 548, 562 (11th Cir.

1998). The court of appeals has held, “[A]lthough there is some overlap

among the inquiries into an expert’s qualifications, the reliability of his

proffered opinion and the helpfulness of that opinion, these are distinct

concepts that courts and litigants must take care not to conflate.” Quiet Tech.

DC-8 v. Hurel-Dubois UK Ltd., 326 F.3d 1333, 1341 (11th Cir. 2003). The

burden of proof lies with the party offering the expert to show by a

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 5 of 59

6

preponderance of the evidence that each of the elements has been satisfied.

Rink, 400 F.3d at 1292.

A. Expert Testimony of Donald A. Irwin

HCF asserts a claim in the amended complaint for false advertising

under 15 U.S.C. § 1125(a). HCF alleges that the defendants have made

claims in their marketing and advertising regarding the moisture resistance

of carpet cushions that are literally false or misleading. To defend against

the false advertising claim, the defendants retained Irwin to supervise

testing concerning the moisture resistance of the carpet cushion component of

the Healthier Living® Flooring Installation System, and to evaluate tests

disclosed by HCF’s expert. Irwin has since conducted laboratory testing

regarding the moisture resistance of the defendants’ carpet cushions. In

addition, the defendants have served an expert report completed by Irwin in

connection with his testing and evaluation of the moisture resistance of the

carpet cushions. HCF moves to exclude the expert testimony of Irwin

because his testimony does not meet the requirements set forth in Federal

Rule of Evidence 702 and Daubert. HCF argues that the defendants cannot

meet their burden with respect to the requirements set forth above.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 6 of 59

7

1. Expert Qualifications

The first requirement under the court’s analysis is that the expert

witness must be qualified to testify competently on the matters he intends to

address. “Federal Rule of Evidence 702 takes a liberal view of expert witness

qualifications.” Leathers v. Pfizer, Inc., 233 F.R.D. 687, 692 (N.D. Ga. 2006).

An expert witness must be “competent and qualified by knowledge, skill,

experience, training, or education to render the opinion.” Id. Accordingly,

“an expert’s training does not always need to be narrowly tailored to match

the exact point of dispute in a case.” McGee v. Evenflo Co., No. 5:02-cv-259-4

(CAR), 2003 WL 23350439, at *3 (M.D. Ga. Dec. 11, 2003) (concluding that a

mechanical engineer with some experience involving accident reconstruction

and safety restraints was minimally qualified to testify about the

performance of a car seat in an accident). Generally, any gaps in an expert’s

qualifications or knowledge affect the weight of the witness’s testimony, not

the admissibility of the witness’s testimony. Trilink Saw Chain, LLC v.

Blount, Inc., 583 F. Supp. 2d 1293, 1304 (N.D. Ga. 2008)

With respect to this requirement, HCF argues that Irwin’s expert

report does not disclose any background, education, or training regarding the

testing that is the subject of his opinions. HCF notes that the defendants

have failed to identify any instance of Irwin’s having performed or supervised

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 7 of 59

8

a moisture barrier test prior to this litigation. HCF’s position is that Irwin

has generalized knowledge regarding the flooring industry at best, which it

contends is not sufficient to satisfy the first requirement.

Irwin states in his expert report that he has been asked to provide the

following in this matter: (1) his opinion concerning certain tests selected by

HCF and a disclosure from Michael Norton and (2) to supervise and analyze

testing of certain cushion samples. Expert Report of Irwin ¶ 1 [Doc. No. 216-

2]. Irwin’s summary of his experience and the background provided in his

expert report reveal that he has a bachelor’s degree in chemistry and a

master’s degree in organic chemistry. He has worked within the field of

polymer chemistry for more than 50 years.1 During the course of his work

experience, Irwin has been involved in the development and marketing of

attached polyurethane carpet cushion and polyurethane membranes for

roofing applications. He has also provided consulting services related to the

product development and manufacturing of polymer-based applications for

carpet, carpet cushion, underlayment, roofing products, and synthetic turf

backings. Irwin is also the named inventor for a number of patents,

including one for carpet with a fluid barrier. The defendants argue that

Irwin’s experience confirms that he is competent and qualified to testify on

 

1 Polymers comprise a substantial portion of the carpet cushions at issue.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 8 of 59

9

the matters he intends to address. While the defendants concede that Irwin

is not a laboratory professional, they argue that he has substantial

knowledge regarding the products and retained a competent testing lab to

perform the actual tests—Independent Textile Testing Service, Inc.

Based on the court’s review of the summary of experience and expert

report provided by Irwin, the court is satisfied that he is competent to testify

as an expert. Irwin’s background in the field of polymer chemistry, including

the development and patent of moisture resistant membranes, qualifies him

to develop, supervise, and analyze tests regarding the moisture resistance of

carpet cushions. The court concludes that Irwin is qualified to render an

opinion in this case based on his background and experience.

2. Methodology

The second requirement is that Irwin used a reliable methodology in

reaching his conclusions. The Eleventh Circuit Court of Appeals has held

that district courts should assess the following factors—originally set forth in

Daubert—to determine the reliability of proffered scientific testimony:

(1) [W]hether the theory or technique “can be (and has been)

tested,” (2) “whether the theory or technique has been subjected

to peer review and publication,” (3) “in the case of a particular

scientific technique, . . . the known or potential rate of error,” and

(4) whether the theory or technique is generally accepted by the

relevant scientific community.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 9 of 59

10

Hendrix ex rel. G.P. v. Evenflo Co., Inc., 609 F.3d 1183, 1194 (11th Cir. 2010)

(quoting Daubert, 509 U.S. at 592–94)). The list of factors noted above is not

exhaustive, and a district court is afforded considerable discretion when

deciding how to determine the reliability of an expert. Id.

The British Spill Test is a testing method commonly used to determine

the effectiveness of a moisture barrier in a carpet sample. Irwin employed a

modified version of the British Spill Test to test the moisture resistance of

the carpet cushions at issue in this case. Irwin modified the British Spill

Test by adding a carpet sample to the carpet cushion prior to applying the

colored liquid, and then using of a standard cushion as a control and timelapse

examination of the carpet cushions.

The first factor the court considers is whether the modified British Spill

Test employed by Irwin can be tested. While there is no evidence that the

technique has been tested, there is a sufficient basis for the court to find that

it can be tested. HCF touts the British Spill Test as the proper technique for

testing the moisture resistance of carpet and carpet cushions. The court does

not believe the modifications to the classic British Spill Test render the

technique unfit for testing. Irwin sets forth the procedure he used to test the

moisture resistance of the carpet cushions. Therefore, the technique used by

Irwin to test the moisture resistance of the carpet cushions—modified British

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 10 of 59

11

Spill Test—can be tested. Contrary to HCF’s classification of the modified

British Spill Test as “novel,” the court concludes that the first factor weighs

in favor of its reliability.

Two additional factors weigh in favor of the reliability of the modified

British Spill Test employed by Irwin. While the modified British Spill Test

has not been subjected to peer review and publication and no evidence has

been presented to the court that the technique is generally accepted by the

relevant scientific community, the classic British Spill Test satisfies both of

these factors. As discussed with respect to the previous factor, the court does

not believe that Irwin’s modifications to the classic British Spill Test render

the technique unreliable. Upon consideration of the factors set forth above,

the court concludes that the modified British Spill Test is reliable for

purposes of the Federal Rule of Evidence 702 and Daubert analysis.

3. Assistance to the Trier of Fact

Prior to addressing the third requirement regarding the admissibility

of expert testimony, the court addresses an issue raised by the defendants in

response to the motion to exclude. The defendants assert that HCF has

improperly raised a new theory in its motion. The defendants argue that

HCF initially based its false advertising claim on the defendants’ use of

“moisture resistant” on its advertising but now allege that the issue is

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 11 of 59

12

whether the defendants properly advertise that the carpet cushions block

spills or are moisture proof. In its reply brief, HCF argues that the

defendants were on notice that the operative claim was “98% moisture

resistant . . . to block spills,” and that this phrase includes the words “block

spills.”

HCF is correct that the defendants use this phrase in its advertising,

but that alone does not put the defendants on notice that it is the operative

claim for purposes of the false advertising cause of action. Upon review of the

amended complaint, the court concludes that it does not clearly identify “98%

moisture resistant . . . to block spills” as the operative claim. HCF does not

set forth the entire phrase at any point in the amended complaint. HCF uses

only the words “moisture resistant.” Count V of the amended complaint,

which sets forth a claim for false advertising under 15 U.S.C. § 1125(a),

states the following:

Defendants make certain claims in their marketing and

advertising materials for the Healthier Living Flooring

Installation System and/or Healthier Living Pad regarding the

alleged “healthier,” lower VOC-emitting, moisture resistant,

and/or superior properties that extend the life of the Healthier

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 12 of 59

13

Living Flooring Installation System and/or Healthier Living Pad

that are literally false and/or misleading.

Am. Compl. ¶ 106 [Doc. No. 70]. Regarding this issue, the court concludes

that HCF put the defendants on notice that an issue with respect to the false

advertising claim is the moisture resistance of the carpet cushions. While a

difference of degree exists between moisture resistant and moisture blocking,

the two claims fall within the broad category of moisture resistance. The

court does not determine whether the moisture blocking properties of the

carpet cushions is an appropriate issue for trial. The defendants may file a

properly supported motion in limine with respect to this issue should this

matter proceed to trial.

The third requirement is that the expert testimony must assist the

trier of fact to understand the evidence or to determine a fact at issue. The

defendants argue that Irwin’s expert testimony does not “fit” the issue in this

case of whether the defendants claim that the carpet cushion is “98%

moisture resistant . . . to block spills.” The defendants argue that Irwin

focuses his opinions on the faulty premise that the issue is whether the

carpet cushion is moisture resistant. As discussed in the preceding

paragraphs, the moisture resistance of the carpet cushions is an issue in this

case. The court concludes that the expert testimony of Irwin will assist the

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 13 of 59

14

trier of fact to understand the evidence related to the moisture resistance of

the carpet cushions and to determine the accuracy of the defendants’

advertising claims.

4. Conclusion

Based on the foregoing, HCF’s motion to exclude the expert testimony

of Irwin [Doc. No. 216] is DENIED.

B. Expert Testimony of Michael Norton

HCF has retained Norton as an expert to analyze and interpret testing

conducted of the antimicrobial and moisture resistance of carpet cushions

sold by the defendants. Norton has been designated as an expert witness to

testify regarding these issues. The defendants move to exclude the proposed

expert testimony of Norton for failure to satisfy two requirements under

Federal Rule of Evidence 702 and Daubert—reliability and assistance to the

trier of fact. HCF states in its response to the motion to exclude that it will

not use Norton as an expert for issues relating to antimicrobial testing.

Therefore, the court does not address the arguments regarding the exclusion

of expert testimony on antimicrobial testing because the issue is moot. The

court addresses only the exclusion of expert testimony by Norton on the

moisture resistance of the carpet cushions.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 14 of 59

15

1. Expert Qualifications

Norton has a degree in chemistry and has worked as a researcher and

in other technical positions for more than 40 years. Norton has been

employed by HCF since January 8, 2007, and he is responsible for technical

activities and for all testing conducted of HCF products. The defendants do

not challenge the background or qualifications of Norton as an expert

witness. Accordingly, the court concludes that the first requirement for

Norton’s testimony to qualify as expert testimony is met.

2. Methodology

Norton commissioned two forms of testing to determine the moisture

resistance of the defendants’ carpet cushions: (1) the British Spill Test

Method E (hereinafter “the British Spill Test”), and (2) the Water Penetration

by Impact Test (hereinafter “the Impact Test”). These tests are designed to

determine different moisture resistance properties of carpeting and carpet

cushions. Norton used these tests to determine the validity of the

defendants’ advertising claims regarding moisture resistance.

As discussed earlier in this order, the Eleventh Circuit Court of

Appeals has held that district courts should assess certain factors—originally

set forth in Daubert—to determine the reliability of proffered scientific

testimony. The defendants argue that Norton’s testimony is inadmissible

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 15 of 59

16

because of the flaws in his methodology, including the following: (1) Norton

prevented the defendants from inspecting the tested carpet cushions by

permitting them to be destroyed, (2) Norton has never seen the cushions after

the tests and cannot testify as to their condition, and (3) Norton ignores

results that do not support his position. None of the flaws alleged by the

defendants relate to the four factors set forth by the court of appeals. Rather,

the court concludes that the tests used by Norton—British Spill Test and

Impact Test—satisfy each of the factors set forth by the court of appeals. The

court concludes that the second requirement for Norton’s testimony to qualify

as expert testimony is met.

3. Assistance to the Trier of Fact

The final requirement is that the expert testimony must assist the trier

of fact to understand the evidence or to determine an issue of fact. The

Eleventh Circuit Court of Appeals has held, “[E]xpert testimony is admissible

if it concerns matters that are beyond the understanding of the average lay

person.” United States v. Frazier, 387 F.3d 1244, 1262 (11th Cir. 2004).

The defendants argue that Norton’s testimony will not assist the trier

of fact for the following reasons: (1) no expertise is required to interpret tests

where the results consist of pass or fail, (2) Norton did not witness the

testing, and (3) only some of the cushions marketed by the defendants were

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 16 of 59

17

tested. As an initial matter, the court notes that the first argument appears

disingenuous. Despite arguing that pass or fail test results do not require

expert testimony, the defendants have designated Irwin to testify regarding

test results that are similar. The test performed by Irwin indicates whether

liquid penetrated the carpet cushions at six time intervals by noting either

yes or no. The use of yes or no is comparable to pass or fail. Regardless of

the propriety of the defendants’ argument, the court concludes that Norton’s

testimony will assist the trier of fact. Norton has been designated as an

expert witness to testify regarding his analysis and interpretation of testing

of the moisture resistance of carpet cushions sold by the defendants. The

moisture resistance of the carpet cushions is an issue in this case, and

Norton’s testimony concerns matters that are beyond the understanding of

the average lay person. Therefore, the court concludes that the third

requirement for Norton to testify as an expert witness is met.

4. Conclusion

Based on the foregoing, the defendants’ motion to exclude the expert

testimony of Norton [Doc. No. 281] is DENIED.

III. Motions for Summary Judgment

HCF filed a motion for partial summary judgment as to two of the

counterclaims raised against it; CCA filed a motion for summary judgment as

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 17 of 59

18

to all claims raised against it and as to all of the counterclaims; and DCO and

Etowah filed a motion for summary judgment as to all claims raised against

them and as to all of the counterclaims.

A. Summary Judgment Standard

Rule 56(a) of the Federal Rules of Civil Procedure authorizes summary

judgment “if the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” The

party seeking summary judgment bears the burden of demonstrating that no

dispute as to any material fact exists. Adickes v. S.H. Kress & Co., 398 U.S.

144, 156 (1970). The moving party’s burden is discharged merely by

“‘showing’—that is, pointing out to the district court—that there is an

absence of evidence to support [an essential element of] the nonmoving

party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).

In determining whether the moving party has met this burden, the

district court must view the evidence and all factual inferences in the light

most favorable to the party opposing the motion. Johnson, 74 F.3d at 1090.

Once the moving party has adequately supported its motion, the nonmovant

then has the burden of showing that summary judgment is improper by

coming forward with specific facts showing a genuine dispute. Matsushita

Electrical Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 18 of 59

19

In deciding a motion for summary judgment, it is not the court’s

function to decide issues of material fact but to decide only whether there is

such an issue to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251

(1986). The applicable substantive law will identify those facts that are

material. Id. at 248. Facts that in good faith are disputed, but which do not

resolve or affect the outcome of the case, will not preclude the entry of

summary judgment as those facts are not material. Id. Genuine disputes are

those by which the evidence is such that a reasonable jury could return a

verdict for the nonmovant. Id. “Genuine” factual issues must have a real

basis in the record. See Matsushita, 475 U.S. at 586. The United States

Supreme Court has held the following:

[I]n ruling on a motion for summary judgment, the judge must

view the evidence presented through the prism of the substantive

evidentiary burden. . . . The question here is whether a jury

could reasonably find either that the plaintiff proved his case by

the quality and quantity of evidence required by the governing

law or that he did not. Whether a jury could reasonably find for

either party, however, cannot be defined except by the criteria

governing what evidence would enable the jury to find for either

the plaintiff or the defendant: It makes no sense to say that a

jury could reasonably find for either party without some

benchmark as to what standards govern its deliberations and

within what boundaries its ultimate decision must fall, and these

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 19 of 59

20

standards and boundaries are in fact provided by the applicable

evidentiary standards.

Anderson, 477 U.S. at 254–55. “Where the record taken as a whole could not

lead a rational trier of fact to find for the non-moving party, there is no

‘genuine issue for trial.’” Id. at 587 (citations omitted).

B. HCF’s Motion for Partial Summary Judgment

HCF has filed a motion for partial summary judgment with respect to

two counterclaims asserted by the defendants:2 (1) the defendants’

counterclaim for fraud on the United States Patent and Trademark Office

(“PTO”) under 15 U.S.C. § 1120 (Counterclaim V) and (2) the defendants’

request for an accounting of profits in connection with their counterclaims for

trademark infringement under federal and common law (Counterclaims III

and IV).

1. Fraud Counterclaim

HCF is the owner of a federal trademark registration for the word

mark Healthier Choice (“Healthier Choice® Mark”), U.S. Registration No.

3,210,413, for carpet underlay. On March 16, 2012, HCF’s president, Craig

Poteet, signed a declaration of incontestability that was eventually filed with

 

2 HCF states in a footnote that it cannot represent that the undisputed

material facts support summary judgment on its affirmative claims [Doc.

No. 278-1 at 2 n.1].

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 20 of 59

21

the PTO. A mark may become incontestable if it has been in continuous use

for at least five consecutive years and other conditions are met. 15 U.S.C.

§ 1065. After a mark has become incontestable, “[T]he registration shall be

conclusive evidence of the validity of the registered mark and of the

registration of the mark, of the registrant’s ownership of the mark, and of the

registrant’s exclusive right to use the registered mark in commerce.”

15 U.S.C. § 1115(b).

The defendants have asserted a counterclaim against HCF for fraud on

the PTO under 15 U.S.C. § 1120. HCF argues that the undisputed material

facts show that the defendants cannot meet their heavy burden to prove the

trademark fraud counterclaim “to the hilt” and with “no room for inference,

speculation, or surmise.”

a. Legal Standard

A party may seek to have a registered mark cancelled on the ground

that the registration of the mark was procured by fraud, even if the mark has

become incontestable. 15 U.S.C. §§ 1064(3), 1119. “An applicant commits

fraud when he ‘knowingly makes false, material misrepresentations of fact in

connection with an application for a registered mark.’” Sovereign Military

Hospitaller Order of St. John v. Florida Priory, 702 F.3d 1279, 1289 (11th

Cir. 2012) (quoting Angel Flight of Ga., Inc. v. Angel Flight Am., Inc., 522

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 21 of 59

22

F.3d 1200, 1209 (11th Cir. 2008)). To demonstrate fraud, it must be shown

that the applicant made the application for a registered mark with a purpose

or intent to deceive the PTO. Id.

b. Analysis

The incontestability declaration signed by Poteet on behalf of HCF

states in part: “Also, no final decision adverse to the owner’s claim of

ownership of such mark for those goods or services exists, or to the owner’s

right to register the same or to keep the same on the register; and, no

proceeding involving said rights pending and not disposed of in either the

U.S. Patent and Trademark Office or the courts exists.” Incontestability

Decl. at 6 [Doc. No. 305-32]. With respect to the “no proceeding involving

said rights” language present in the declaration, the Trademark Manual of

Examining Procedure (“TMEP”) states the following:

The §15 affidavit or declaration must state that there has been no

final decision adverse to the owner’s claim of ownership of the

mark for the goods or services, or to the owner’s right to register

the mark or to keep the mark on the register. It must also state

that there is no proceeding involving these rights pending in the

USPTO or in a court and not finally disposed of.

TMEP § 1605.04. The TMEP further states that the PTO “does not consider

a proceeding involving the mark in which the owner is the plaintiff, where

there is no counterclaim involving the owner’s rights in the mark, to be a

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 22 of 59

23

‘proceeding involving these rights’ that would preclude the filing or

acknowledgement of a §15 affidavit or declaration.” Id.

The operative pleading with respect to this issue is the initial answer

and counterclaim filed by the defendants on September 30, 2011 [Doc. No. 7].

In other words, the court must determine whether the answer and

counterclaim involved the owner’s rights such that a filing of a declaration of

incontestability was precluded. The defendants asserted two counterclaims,

one for a declaratory judgment of non-infringement and one for a declaratory

judgment of no dilution. Within the counterclaim for a declaratory judgment

of non-infringement, the defendants alleged that HCF’s marks are merely

descriptive, have not developed secondary meaning, are not recognized by

consumers as a source indicator, and were not intended to be a source

indicator.

HCF argues that only a counterclaim seeking cancellation of a

trademark qualifies as a counterclaim challenging its rights.3 The court

disagrees. First, the TMEP does not use the word “cancellation” when setting

forth the requirement that there be no proceeding involving the rights of the

owner. If the prohibition was intended to apply only to counterclaims seeking

 

3 HCF primarily relies on 3 McCarthy on Trademarks and Unfair

Competition § 19.140 to support its argument.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 23 of 59

24

cancellation, then it would include such language. Rather, the language of

the TMEP implies a broader scope than HCF argues the court should adopt.

Second, contrary to the treatise that HCF relies on, binding precedent on this

court does not support HCF’s position. The United States Court of Appeals

for the Federal Circuit has held that a counterclaim challenging the validity

of a registered trademark qualifies as a proceeding involving the rights in the

mark. Sunrise Jewelry Mfg. Corp. v. Fred S.A., 175 F.3d 1322, 1324 (Fed.

Cir. 1999). The court of appeals did not limit its holding to cases where a

party is seeking cancellation of a trademark. The Eleventh Circuit Court of

Appeals has similarly interpreted the language broadly. In a case involving a

trademark dispute, the court of appeals held that the defendant’s trademark

never became incontestable because the district court proceeding qualified as

a proceeding that involved the defendant’s rights in the trademark. Sizzler

Family Steak Houses v. Western Sizzlin Steak House, Inc., 93 F.2d 1529,

1540–41 (11th Cir. 1986). The court of appeals characterized the complaint

as challenging the defendant’s right to use “Sizzler” as a service mark and as

a trademark. Id. at 1541. The court of appeals did not indicate that the

complaint sought to cancel the defendant’s trademark. Therefore, the court

concludes as a matter of law that the phrase “no proceeding involving said

rights” is not limited to counterclaims for cancellation.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 24 of 59

25

Related to the argument discussed above, HCF also argues that the

defendants did not set forth an actual counterclaim involving the rights of the

owner. HCF contends that the defendants sought only findings and a

declaration of no liability for infringement. Once again, the court disagrees.

If the court rules in favor of the defendants on their counterclaim for a

declaratory judgment of non-infringement, then HCF’s rights to register its

mark or to keep its mark on the register would be affected. Accordingly, the

court concludes as a matter of law that the defendants set forth a

counterclaim challenging HCF’s rights in its mark.

Having found that a proceeding involving HCF’s rights in its mark was

pending when Poteet signed and submitted a declaration of incontestability,

the court must determine whether he knowingly made the false, material

misrepresentation. The court must also determine whether Poteet acted with

a purpose or intent to deceive the PTO. With respect to these issues, HCF

has submitted deposition testimony and copies of emails that show that it

retained the law firm of Sutherland Asbill & Brennan LLP—specifically,

attorney James Johnson—as its trademark counsel to determine the

propriety of filing the declaration of incontestability. Johnson concluded that

it was appropriate for HCF to file the declaration of incontestability after

researching the issue and reviewing the defendants’ answer and

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 25 of 59

26

counterclaim. Poteet testified that he relied on Johnson’s legal advice,

through communications with Meghan Rachford, when he signed the

declaration of incontestability. In response, the defendants argue that there

is no evidence that any attorney with Sutherland Asbill & Brennan LLP

directly provided the legal advice that Poteet professes to have relied on. The

defendants also cite deposition testimony by Poteet that they argue indicates

his knowledge that the defendants did not believe HCF could prohibit their

use of the phrase “healthier choice.” In light of Poteet’s explicit testimony

that he relied on counsel, and the defendants’ citation to deposition testimony

they contend undermines HCF’s position, there is a genuine dispute of

material fact on the remaining elements of the fraud counterclaim. The court

concludes that a reasonable trier of fact could find that HCF knowingly made

a false, material misrepresentation of fact and it acted with the purpose or

intent to deceive the PTO. Accordingly, the court denies HCF’s motion for

partial summary judgment with respect to the defendants’ counterclaim for

trademark fraud.

2. Accounting

HCF initiated this litigation by filing a complaint asserting various

claims against the defendants. HCF’s federal trademark infringement and

common law trademark infringement claims include allegations that CCA’s

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 26 of 59

27

“Spill Bloc” and “BioShield” marks infringed HCF’s “Moisture Bloc” and

“Made with Bio Materials” marks. The defendants claimed in their answer to

the amended complaint and counterclaim that CCA’s marks have priority

over HCF’s marks. The defendants also asserted counterclaims based on

allegations of infringement by HCF of CCA’s marks. A party that prevails on

a trademark infringement claim is entitled to three forms of monetary relief:

(1) an accounting of the infringer’s profits, (2) recovery of damages sustained

by the plaintiff,4 and (3) the costs of the action. 15 U.S.C. § 1117(a). HCF

moves for summary judgment on the defendants’ request for an accounting of

profits because it contends that the defendants cannot prove any of the three

predicates for such an award.

a. Legal Standard

The Eleventh Circuit Court of Appeals has held that an accounting of

profits furthers the purpose of § 35 of the Lanham Act, 15 U.S.C. § 1117, by

making infringement unprofitable. Burger King Corp. v. Mason, 855 F.2d

 

4 HCF states in its motion for partial summary judgment that the defendants

do not seek damages for their own sales under the trademark infringement

claim. Plt.’s Mem. of Law in Supp. of Mot. for Partial Summ. J. at 18 [Doc.

No. 278-1]. HCF cites to two of its statements of material fact to support this

position. Plt.’s Stat. of Facts ¶¶ 76–77 [Doc. No. 278-2]. The court believes

that the defendants deny the statement of material fact that they do not seek

damages based on their own profits. Defs.’ Resp. to Plt. Stat. of Facts at 37

[Doc. No. 287-1].

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 27 of 59

28

779, 781 (11th Cir. 1988). An accounting of profits is appropriate where

(1) the infringer’s conduct was willful and deliberate, (2) the infringer was

unjustly enriched, or (3) an accounting is necessary to deter future conduct.

Howard Johnson Co., Inc. v. Khimani, 892 F.2d 1512, 1521 (11th Cir. 1990).

A party seeking an accounting of lost profits based on unjust enrichment or

deterrence is not required to show the court that the infringer acted with a

higher level of culpability. Burger King, 855 F.2d at 781.

b. Analysis

HCF relies on Optimum Technologies, Inc. v. Home Depot U.S.A., Inc.,

217 F. App’x 899 (11th Cir. 2007) in support of its request for summary

judgment on this issue. In Optimum, the Eleventh Circuit Court of Appeals

held that the district court did not abuse its discretion in concluding that an

accounting of the defendant’s profits was not an appropriate remedy. Id. at

903. HCF compares its conduct in this matter to that of the defendant in

Optimum and argues that there is no evidence to warrant an accounting of

its profits.

HCF states that there is no evidence that it possessed knowledge of any

possible infringement of the defendants’ marks until the defendants filed the

amended answer and counterclaims. HCF also states that it promptly took

steps to cease use of the defendants’ marks in September 2012 and it no

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 28 of 59

29

longer uses any of the defendants’ marks in its advertising or marketing

materials. In response, the defendants argue that HCF did not cease use of

their marks for at least six months after it had received knowledge that it

lacked priority. The defendants also state that HCF actively sought

information related to CCA’s marketing program prior to initiating this

matter and that HCF was in possession of marketing materials that indicate

it had knowledge of the “Spill Bloc” and “BioShield” marks.

Based on the court’s review of the evidence filed by the parties, the

court concludes that there is a genuine dispute of material fact regarding the

propriety of an accounting of profits. The parties have pointed to evidence

that supports contrasting scenarios of when HCF became aware of the “Spill

Bloc” and “BioShield” marks, the manner by which it learned of the marks,

and its subsequent actions. The resolution of this factual dispute affects

whether HCF acted in a manner consistent with the defendant in Optimum.

Thus, the court denies HCF’s request for summary judgment on this issue.

3. Conclusion

Based on the foregoing, the court DENIES HCF’s motion for partial

summary judgment [Doc. No. 278].

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 29 of 59

30

C. The Defendants’ Motions for Summary Judgment

The defendants have filed two separate motions for summary judgment

on HCF’s claims as well as their counterclaims. CCA filed its own motion for

summary judgment, while DCO and Etowah have filed a separate motion for

summary judgment that incorporates by reference CCA’s motion for

summary judgment and memorandum. Because the issues raised in the

motions overlap, the court adjudicates the motions by addressing each claim

or counterclaim rather than adjudicating the motions separately.

HCF filed a motion to amend the amended complaint after the

defendants had filed their motions for summary judgment. At the outset of

this order, the court granted HCF’s motion thereby dismissing counts II, III,

VI, VIII, and IX of the amended complaint with prejudice. In addition, HCF

indicates in its response to the defendants’ motions for summary judgment

that it has dropped additional claims within the remaining counts. The court

addresses only the claims that HCF has not dropped and that have not

become moot.

1. Trademark Infringement

HCF has dismissed with prejudice most of its claims for trademark

infringement. However, Count I of the amended complaint still includes a

claim for trademark infringement of HCF’s Healthier Choice® mark. The

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 30 of 59

31

defendants counterclaim I seeks a declaratory judgment of non-infringement

of the Healthier Choice® mark. The defendants move for summary judgment

as to the infringement claim against them and as to the counterclaim for a

declaratory judgment of non-infringement.

A trademark is “any word, name, symbol or device, or any combination

thereof used to identify and distinguish one’s goods from those manufactured

or sold by others and to indicate the source of the goods.” Leigh v. Warner

Brothers, Inc., 212 F.3d 1210, 1216 (11th Cir. 2000) (citing 15 U.S.C. § 1127)

(internal punctuation omitted). “In a trademark infringement action, the

plaintiff must show, first, that its mark is valid and, second, that the

defendant’s use of the contested mark is likely to cause confusion.” Dieter v.

B & H Industries of Southwest Florida, Inc., 880 F.2d 322, 326 (11th Cir.

1989) (citations omitted). In addition, the infringing party must use the

mark in commerce without authorization. Optimum Technologies, Inc. v.

Henkel Consumer Adhesives, Inc., 496 F.3d 1231, 1242 (11th Cir. 2007). The

defendants argue that HCF cannot satisfy any of the elements necessary to

prevail on its trademark infringement claim.

a. Validity of the Mark

On March 16, 2012, HCF submitted a declaration of incontestability to

the PTO. The defendants argue that the declaration has no effect in this

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 31 of 59

32

matter because it was filed improperly. As discussed in the section of this

order addressing HCF’s motion for partial summary judgment, the court has

concluded that the defendants’ response to the initial complaint included a

counterclaim challenging HCF’s rights in its mark. This counterclaim was

filed prior to the date HCF filed its declaration of incontestability. This

evidence is sufficient to establish that HCF was unable to satisfy each of the

requirements for a declaration of incontestability at the time of its filing.

Therefore, the court concludes as a matter of law that the Healthier Choice®

mark is not entitled to incontestable status.

Trademark protection is available only to distinctive marks. Welding

Services, Inc. v. Forman, 509 F.3d 1351, 1357 (11th Cir. 2007). Distinctive

marks identify the source of the goods or services. Id. The Court of Appeals

for the Eleventh Circuit has held that there are four types of distinctive

marks: fanciful or arbitrary, suggestive, descriptive, and generic. Id. The

parties do not argue that the phrase “healthier choice” is fanciful or arbitrary,

or generic. Instead, the parties dispute whether the phrase is suggestive or

descriptive. “A suggestive mark refers to some characteristic of the goods,

but requires a leap of the imagination to get from the mark to the product

[e.g., Penguin Refrigerators]. A descriptive mark identifies a characteristic or

quality of the service or product [e.g., Vision Center].” Caliber Automotive

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 32 of 59

33

Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC, 605 F.3d 931, 938

(11th Cir. 2010). The phrase that remains at issue is the Healthier Choice®

mark used by HCF in the sale and marketing of carpet cushions.

To determine whether a mark is descriptive or suggestive, courts often

apply the imagination test. Under this test, “if a mark requires imagination,

thought, and perception to arrive at the qualities or characteristics of the

goods, then the mark is suggestive.” In re Nett Designs, Inc., 236 F.3d 1339,

1341 (Fed. Cir. 2001).

The defendants take the position that there is no dispute that the

phrase “healthier choice” is merely descriptive. There is deposition testimony

of the former vice president of sales for HCF where he answered affirmatively

to the following question, “Healthier choice describes what the product is?”

Dep. of Daniel Martin, Oct. 2, 2012, at 57:14–16 [Doc. No. 302-14]. The

defendants argue that the phrase “healthier choice” is a laudatory phrase

that conveys information about the characteristics of the product.5 With

respect to this issue, the Court of Appeals for the Eleventh Circuit has held,

 

5 The defendants cite ConAgra, Inc. v. George A. Hormel & Co., 784 F. Supp.

700 (D. Neb. Jan. 7, 1992), in which the district court concluded that the

phrase “healthy choice” was descriptive of frozen prepared dinners. The

district court made this determination following a trial, and the district court

was able to weigh the evidence unlike when dealing with a motion for

summary judgment.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 33 of 59

34

“‘Marks that are merely laudatory and descriptive of the alleged merit of a

product are . . . regarded as being descriptive. . . . Self-laudatory or puffing

marks are regarded as a condensed form of describing the character or

quality of the goods.’” DuoProSS Meditech Corp. v. Inviro Medical Devices,

Ltd., 695 F.3d 1247, 1256 (11th Cir. 2012) (quoting In re Boston Beer Co., 198

F.3d 1370, 1373 (Fed. Cir. 2001)). Laudatory marks extol a feature or

attribute of the product. 2 McCarthy on Trademarks and Unfair Competition

§ 11.17. Moreover, the defendants contend that HCF’s advertising proves

that the phrase is descriptive rather than suggestive.

In response, HCF argues that a trier of fact could determine that its

Healthier Choice® mark is suggestive because consumers must practice

“mental gymnastics to understand that it relates to carpet cushion.” Plt.’s

Resp. to Mot. for Summ. J. at 11 [Doc. No. 285]. HCF cites a declaration by

Poteet, the president of the company, wherein he states that end-use

consumers and other individuals in the flooring industry have asked him and

others in the company what the name Healthier Choice® means. Decl. of

Craig Poteet ¶ 14 [Doc. No. 303-28]. HCF also argues that market research

shows that durability is an important characteristic of carpet cushion, and

the phrase “healthier choice” does not address this characteristic. Because

HCF has adduced evidence from which a trier of fact could determine that

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 34 of 59

35

the mark is suggestive, the defendants are not entitled to summary judgment

on this issue.

b. Likelihood to Cause Confusion

To determine whether there is a likelihood of confusion between two

marks, the Eleventh Circuit has developed a seven-factor inquiry. Under this

inquiry, the court must assess:

(1) the strength of the plaintiff’s mark; (2) the similarity between

the plaintiff’s mark and the allegedly infringing mark; (3) the

similarity between the products and services offered by the

plaintiff and the defendant; (4) the similarity of the sales

methods; (5) the similarity of advertising methods; (6) the

defendant’s intent, e.g., does the defendant hope to gain

competitive advantage by associating his product with the

plaintiff’s established mark; and (7) actual confusion.

North American Medical Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1220

(11th Cir. 2008). When a court considers these factors, “the type of mark [i.e.,

the strength] and the evidence of actual confusion are the most important.”

Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1201 n.22 (11th

Cir. 2001).

i. Strength of HCF’s Mark

“The strength of a trademark is essentially a consideration of

distinctiveness.” BellSouth Corp. v. Internet Classifies of Ohio, 1:96-cv-0769-

CC, 1997 WL 33107251, at *14 (N.D. Ga. Nov. 12, 1997) (citations omitted).

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 35 of 59

36

The stronger (i.e., the more distinctive) the mark, “the greater the scope of

protection afforded it, [and] the weaker the mark, the less trademark

protection it receives.” Frehling Enterprises, Inc. v. International Select

Group, Inc., 192 F.3d 1330, 1335 (11th Cir. 1999); see also Jellibeans, Inc. v.

Skating Clubs of Georgia, Inc., 716 F.2d 833, 840 (11th Cir. 1983) (“[T]he

more distinct the plaintiff’s mark, the stronger it is considered, and the more

protection it is accorded from confusingly similar marks.”).

In this circuit, the factors generally considered when determining the

strength of a trademark include (1) the type of mark, (2) the amount of use of

the term by others in the same product and geographical area, and (3) the

extent of a mark’s use, taking into consideration the amount of advertising

and promotion done under the mark. Gold Kist, Inc. v. ConAgra, Inc., 708 F.

Supp. 1291, 1297 (N.D. Ga. 1989) (citing John H. Harland Co. v. Clarke

Checks, Inc., 711 F.2d 966, 973–75 (11th Cir. 1983)); BellSouth Corp., 1997

WL 33107251, at *14 (citing John H. Harland Co., 711 F.2d at 973–75 and

Safeway Stores, Inc. v. Safeway Discount Drugs, Inc., 675 F.2d 1160, 1164

(11th Cir. 1982)).

As discussed in the preceding section of this order, there is a genuine

dispute of material fact regarding whether HCF’s Healthier Choice® mark is

suggestive or descriptive. The court is unable to determine as a matter of law

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 36 of 59

37

the strength of the Healthier Choice® mark. This factor weighs in favor of

HCF, as the non-movant, for purposes of the defendants’ motions for

summary judgment.

ii. Similarity of the Marks

The next factor to consider in evaluating the likelihood of confusion

between a set of trademarks is the degree to which they are similar. In

undertaking such an evaluation,

“the court compares the marks at issue and considers the overall

impressions that the marks create, including the sound,

appearance, and manner in which they are used.” . . . [T]he more

similar the marks are in their sound, appearance, and manner,

the more likely it is that a reasonable consumer will be confused

as to the source of the product that each mark represents.

Board of Regents of the University System of Georgia v. Buzas Baseball, Inc.,

176 F. Supp. 2d 1338, 1352 (N.D. Ga. 2001) (quoting Frehling, 192 F.2d at

1337). As a general rule, “where the goods and services are directly

competitive, the degree of similarity required to prove a likelihood of

confusion is less than in the case of dissimilar products.” SunAmerica Corp.

v. Sun Life Assurance Co. of Canada, 890 F. Supp. 1559, 1575 (N.D. Ga.

1994) (citation omitted) (concluding that the marks Sun Life of America and

Sun Life (U.S.) were indistinguishable and that the marks Sun Life of

America and Sun Life of Canada were closely similar).

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 37 of 59

38

The defendants cite evidence that CCA’s Healthier Living® mark is

registered with the PTO. The defendants also cite examples of its advertising

that show that the Healthier Living® mark and the phrase “make the

healthier choice” are often accompanied by the Carpet One Floor & Home®

mark. The defendants argue that the fact that the Healthier Living® mark

and the Healthier Choice® mark have the word “healthier” in common does

not render them similar in overall impression. HCF notes that the phrase

“make the healthier choice” includes HCF’s Healthier Choice® mark and the

capitalization is identical in some instances. Scott Wheeler, CCA’s Rule

30(b)(6) witness, has testified that he assumed that the “Healthier Choice”

portion of the phrase “make the healthier choice” was styled in different color

font to make that portion of the phrase stand out. Dep. of Scott Wheeler,

June 8, 2012, at 108:1–17 [Doc. No. 310-6]. HCF also cites examples of the

defendants’ advertising materials that show the phrase “make the healthier

choice” is closer in proximity to the Healthier Living® mark than the Carpet

One Floor & Home® mark. Based on the evidence, the court concludes that a

reasonable trier of fact could find that the marks are similar. Therefore, the

court concludes that the similarity of the mark weighs in favor of HCF, the

non-movant.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 38 of 59

39

iii. Similarity of the Products and Services

The third factor that the court must consider in the likelihood of

confusion analysis is the similarity between HCF’s and the defendants’

products. “This factor requires a determination as to whether the products

are the kind that the public attributes to a single source.” Frehling, 192 F.3d

at 1338. “The issue is not whether the purchasing public can readily

distinguish between the products of the respective parties, but rather

whether the products are so related in the minds of consumers that they get

the sense that a single producer is likely to produce both.” Western Union

Holdings, Inc. v. Eastern Union Inc., No. 1:06-cv-01408, 2007 WL 2683714, at

*8 (N.G. Ga. Sept. 7, 2007) (citing Frehling, 192 F.3d at 1338).

The defendants argue that there is no overlap between CCA and HCF

because CCA does not sell carpet cushion, carpet, or installation services.

This argument does not weigh on the factor of the similarity of the products

and services. HCF cites deposition testimony of Michael Blanton and Mark

Saunders in which they state that defendants sell carpet cushion separately

from the Healthier Living® Flooring Installation System. Dep. of Michael

Blanton, June 6, 2012, at 30:8–10 [Doc. No. 302-2]; Dep. of Mark Saunders,

May 25, 2012, at 41:15–21 [Doc. No. 302-27]. The evidence establishes that

HCF and the defendants sell carpet cushion. Therefore, the court concludes

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 39 of 59

40

that a reasonable trier of fact could find that the products are similar. This

factor weighs in favor of HCF, the non-movant, for purposes of the

defendants’ motions for summary judgment.

iv. The Similarity of the Parties’ Retail Outlets

and Customers

The fourth factor “takes into consideration where, how, and to whom

the parties’ products are sold.” Western Union Holdings, 2007 WL 2683714,

at *9 (citing Frehling, 192 F.3d at 1339). Although “the parties’ outlets and

customer bases need not be identical” to support a likelihood of confusion,

“some degree of overlap should be present.” Frehling, 192 F.3d at 1339. In

this case, there is evidence that HCF’s and the defendants’ competing carpet

cushions are sold in the same stores. There is also evidence that the parties’

respective carpet cushions are sold in competing stores. The court concludes

that a reasonable trier of fact could find that the parties’ retail outlets and

customers are similar. Accordingly, this factor weighs in favor of HCF, the

non-movant, for purposes of the defendants’ motions for summary judgment.

v. The Similarity of Advertising Media Used

The “similarity of advertising” factor focuses on the methods the

companies use to advertise their products, “not necessarily on the precise

newspapers or magazines which are used.” Gold Kist, 708 F. Supp. at 1301.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 40 of 59

41

“The greater the similarity in the campaigns, the greater the likelihood of

confusion.” Ross Bicycles, Inc. v. Cycles USA, Inc., 765 F.2d 1502, 1508 (11th

Cir. 1985). The parties agree that there is potential overlap because of the

use of in-store bag samples and the internet. However, the defendants argue

that CCA does not use in-store bag samples and that consumers may not

purchase products from HCF’s or the defendants’ websites. This distinction

is irrelevant. Therefore, the court concludes that a reasonable trier of fact

could find that the parties’ advertising is similar. As such, this factor weighs

in favor of HCF, the non-movant, for purposes of the defendants’ motions for

summary judgment.

vi. Intent

The sixth factor that the court must consider in the likelihood of

confusion analysis is whether the defendants acted in bad faith in using the

Healthier Choice® mark. To prove that the defendants acted in bad faith,

HCF must show that the defendants adopted the Healthier Choice® mark

with the intention of deriving a benefit from HCF’s business reputation or

that the defendants were intentionally blind to confusion between the parties’

marks. Frehling, 192 F.3d at 1340; Board of Regents, 176 F. Supp. 2d at

1353. HCF does not cite evidence that would support a finding that the

defendants adopted the Healthier Choice® mark with the intention of

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 41 of 59

42

deriving a benefit from HCF’s business reputation. The court concludes that

no reasonable trier of fact could find that the defendants acted in bad faith in

using the Healthier Choice® mark. This factor weighs in favor of the

defendants for purposes of the defendants’ motions for summary judgment.

vii. Actual Confusion

The final factor the court considers is the existence of actual confusion.

“It is undisputed that evidence of actual confusion is the best evidence of

likelihood of confusion.” Frehling, 192 F.3d at 1340. “However, such

evidence is not a prerequisite, and thus it is up to individual courts to assess

this factor in light of the particular facts of each case.” Id. (citing Amstar

Corp. v. Domino’s Pizza, Inc., 615 F.2d 252, 263 (5th Cir. 1980)). The

Eleventh Circuit Court of Appeals has explained, “[I]it is not the number of

people actually confused by the marks that is important, but rather the type

of person confused.” Id. at 1341.

HCF has cited evidence of a number of instances when individuals were

confused regarding the Healthier Choice® mark and the defendants’ mark.

The defendants challenge the admissibility of the evidence. However, for

purposes of the motions for summary judgment, the court will consider the

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 42 of 59

43

evidence.6 The defendants have also offered testimony of consumers that

were not confused. The court concludes that a reasonable trier of fact could

find the existence of actual confusion. Therefore, this factor weighs in favor

of HCF, the non-movant, for purposes of the defendants’ motions for

summary judgment.

viii. Balancing of the Factors

The Eleventh Circuit Court of Appeals has discussed how the seven

factors should be weighed and has noted that it “entails more than the

mechanistic summation of the number of factors on each side.” Custom

Manufacturing and Engineering, Inc. v. Midway Services, 508 F.3d 641, 649

(11th Cir. 2007).

These factors imply no mathematical precision, but are simply a

guide to help determine whether confusion is likely. They are

also interrelated in effect. Each case presents its own complex

set of circumstances and not all of these factors may be

particularly helpful in any given case. . . . The ultimate question

remains whether relevant consumers are likely to believe that

 

6 Although the statements about actual confusion may be hearsay, the court

will consider the statements for purposes of the motion for summary

judgment because it is likely that it can be reduced to admissible evidence at

trial. See Jones v. UPS Ground Freight, 683 F.3d 1283, 1293–94 (11th Cir.

2012).

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 43 of 59

44

the products or services offered by the parties are affiliated in

some way.

Id. at 650 (internal citations omitted). In this case, one factor weighs in favor

of the defendants and six factors weigh in favor of HCF. Notably, one of the

most important factors—actual confusion—weighs in favor of HCF. Given

the heavy weight in favor of the non-movant, the court concludes that it

cannot enter judgment as a matter of law to the defendants on the issue of

likelihood of confusion.

c. Use of the Mark in Commerce

An additional element of a trademark infringement action is use of the

mark in commerce by the infringing party without authorization. Optimum

Techs., 496 F.3d at 1242. A mark is used in commerce if “it is placed in any

manner on the goods or their containers or the displays associated therewith

or on the tags or labels affixed thereto, or the nature of the goods makes such

placement impracticable, then on documents associated with the goods or

their sale.” 15 U.S.C. § 1127. In addition, use in commerce requires that “the

goods are sold or transported in commerce.” 15 U.S.C. § 1127. CCA claims

that it helped develop the marketing program but that it does not use the

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 44 of 59

45

mark at the retail level.7 However, HCF has presented evidence that CCA

receives money from the sale of the Healthier Living® Flooring Installation

System pursuant to a master service agreement and that the suppliers are

required to use advertising designed and provided by CCA. Therefore, the

court concludes that HCF has presented evidence of the relationship between

CCA and its member stores such that a jury could reasonably conclude that

CCA has used the mark in commerce.

d. Fair Use

The defendants assert an affirmative defense of fair use to HCF’s claim

for trademark infringement. “A fair-use defense is established if a defendant

proves that its use is ‘(1) other than as a mark, (2) in a descriptive sense, and

(3) in good faith.’” Int’l Stamp Art, Inc. v. U.S. Postal Serv., 456 F.3d 1270,

1274 (11th Cir. 2006) (quoting EMI Catalogue P’ship v. Hill, Holliday,

Connors & Cosmopulos, Inc., 228 F.3d 56, 64 (2d Cir. 2000)). According to

the court of appeals, “The ‘fair-use’ defense, in essence, forbids a trademark

registrant to appropriate a descriptive term for [its] exclusive use and so

prevent others from accurately describing a characteristic of their goods.” Id.

(citation omitted).

 

7 CCA notes the exception of its website but states that it does not and cannot

make any sales from its website.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 45 of 59

46

HCF relies on the same evidence in support of the defendants’ lack of

good faith as it relied on for the bad faith portion of the confusion analysis.

As set forth above in Section III.C.1.b.vi of this order, a reasonable trier of

fact could find for HCF on the issue of the defendants’ good faith. However,

the remaining issues present a genuine issue for trial. HCF has cited

sufficient evidence from which a reasonable trier of fact could find that the

defendants used the phrase as a mark and not in a descriptive sense. For

example, the phrase “healthier choice” is set apart through the use of a

different color font, capitalization, and large lettering on a few of the

defendants’ advertisements. The defendants’ placement of the phrase

“healthier choice” could also lead a reasonable trier of fact to find that the

defendants used the phrase as a mark and not in a descriptive sense. Thus,

the court concludes that a rational trier of fact could find for HCF on the

defendants’ fair use defense.

e. Conclusion

The court DENIES the defendants’ motions for summary judgment

with respect to HCF’s trademark infringement claim and the defendants’

counterclaim for a declaratory judgment of non-infringement.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 46 of 59

47

2. Trademark Dilution

HCF has dismissed its federal dilution claim under the Lanham Act.

Only a claim for dilution under O.C.G.A. § 10-1-451(b) remains. The

defendants move for summary judgment on the state law dilution claim and

for summary judgment on their counterclaim for a declaratory judgment of no

dilution. The relevant statutory section states,

(b) Every person, association, or union of working men adopting

and using a trademark, trade name, label, or form of

advertisement may proceed by action; and all courts having

jurisdiction thereof shall grant injunctions to enjoin subsequent

use by another of the same or any similar trademark, trade

name, label, or form of advertisement if there exists a likelihood

of injury to business reputation or of dilution of the distinctive

quality of the trademark, trade name, label, or form of

advertisement of the prior user, notwithstanding the absence of

competition between the parties or of confusion as to the source of

goods or services, . . .

O.C.G.A. 10-1-451(b). To prevail on a theory of dilution under this provision

of the Georgia law a party does not have to prove that the trademark is

famous or that the parties are in competition. Corbitt Mfg. Co., Inc. v. GSO

America, Inc., 197 F. Supp. 2d 1368, 1379 (S.D. Ga. 2002). The party seeking

to recover must show that the asserted mark is distinctive. Id. “To be

considered distinctive, the mark must be at least descriptive with a

secondary meaning.” Id. (citing omitted).

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 47 of 59

48

The defendants contend that HCF relies on a new theory of liability in

response to the defendants’ motion for summary judgment. The court has

reviewed the pleadings and the parties’ briefing and finds insufficient

support for this contention.

The next issue with respect to trademark dilution is whether

trademark registrations owned by the defendants for the phrase “healthier

living” bar HCF’s claim for dilution under O.C.G.A. § 10-1-451(b). Pursuant

to 15 U.S.C. § 1125(c)(6), ownership of a valid trademark registration is a

complete bar to state law causes of action brought with respect to that mark.

The defendants have valid trademark registrations for the Healthier Living®

mark. These valid trademark registrations bar HCF from bringing its state

law dilution claim with respect to the Healthier Living® mark.

While HCF is barred from bringing a portion of its state law dilution

claim, it may still assert a dilution claim for the defendants’ use of the phrase

“make the healthier choice.” The court cannot conclude as a matter of law

that a reasonable trier of fact could not find in favor of HCF on this claim.

First, as discussed in the section of this order addressing the validity of the

Healthier Choice® mark, there is a genuine issue for trial regarding the type

of mark at issue. Second, there exists a genuine issue for trial regarding the

similarity of the marks. Finally, the defendants have not shown that there is

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 48 of 59

49

no genuine dispute of material fact regarding the actual or likelihood of harm

to HCF’s business. Accordingly, the court grants in part and denies in part

the defendants’ motion for summary judgment with respect to the claim for

dilution under O.C.G.A. § 10-1-451(b) and the counterclaim for a declaratory

judgment of no dilution.

3. Trade Dress

Section 43(a) of the Lanham Act is the statutory provision that provides

for a federal cause of action for trade dress infringement. While HCF has

dismissed many of its claims, it continues to assert a claim for trade dress

infringement that focuses on the sample carpet cushion bag and the totality

of its appearance. The defendants have moved for summary judgment on this

claim. The Eleventh Circuit Court of Appeals has held, “‘The term “trade

dress” refers to the appearance of a product when the appearance is used to

identify the producer.’” Dippin’ Dots, Inc. v. Frosty Bites Distribution, LLC,

369 F.3d 1197, 1202 (11th Cir. 2004) (quoting Publications Int’l, Ltd. v.

Landoll, Inc., 164 F.3d 337, 338 (7th Cir. 1998)). The court of appeals has

held that three things must be proven to prevail on a claim for trade dress

infringement: “(1) the product design of the two products is confusingly

similar; (2) the features of the product design are primarily non-functional;

and (3) the product design is inherently distinctive or has acquired secondary

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 49 of 59

50

meaning.” Id. Each of the three elements is a threshold element because all

three elements must be established to support a finding of trade dress

infringement. Id.

The Eleventh Circuit Court of Appeals has held, “‘The functionality

doctrine prevents trademark law, which seeks to promote competition by

protecting a firm’s reputation, from instead inhibiting legitimate competition

by allowing a producer to control a useful product feature.’” Dippin’ Dots,

Inc., 369 F.3d at 1202–03 (quoting Qualitex Co. v. Jacobson Prods. Co., 514

U.S. 159, 164 (1995)). “‘Functional features are by definition those likely to

be shared by different producers of the same product and therefore are

unlikely to identify a particular producer.’” Id. at 1203 (quoting Landoll, 164

F.3d at 340). While there is not a bright line between non-functional and

functional features, courts apply either the traditional test or the competitive

necessity test to make this determination. Id. Under the traditional test, “‘“a

product feature is functional . . . if it is essential to the use or purpose of the

article or if it affects the cost or quality of the article.”’” Id. (quoting TrafFix

Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 32 (2001)). Under the

competitive necessity test, “‘a functional feature is one the “exclusive use of

[which] would put competitors at a significant non-reputation-related

disadvantage.”’” Id. (quoting TrafFix, 532 U.S. at 32).

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 50 of 59

51

HCF argues that its sample bag is non-functional because the features

of the bag are not essential to its general purpose—to allow the customers to

stand on the cushion samples and to receive information regarding the

characteristics of the cushions. These features include the location and font

of the name, organization of the statements regarding the cushion, and the

squiggly lines at the bottom of the bag. While these features of the bag may

not qualify as functional under the traditional test, the court concludes that

these features qualify as functional under the competitive necessity test.

This is so because to allow HCF the exclusive use of these bag features would

put competitors at a significant non-reputation-related disadvantage.

Competitors should be allowed to prominently display the name of their

product across the top of the advertisement. Competitors should also be

allowed to use sans serif font, display the features of the carpet cushion in a

linear display, and use squiggly lines in a display.

HCF cites language from the Eleventh Circuit Court of Appeals in

which the court of appeals held, “That individual elements of packaging are

function does not, however, render the package as a whole unprotectible.”

AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1538 (11th Cir. 1986). HCF does

not provide the court with any basis to conclude that the package as a whole

is non-functional. Rather, the evidence shows that the package as a whole is

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 51 of 59

52

functional. Therefore, the court concludes that no reasonable trier of fact

could find for HCF on the functional element of the trade dress infringement

analysis.

The court does not consider the remaining two elements—likelihood of

confusion and distinctiveness because HCF must satisfy each of the three

elements to prevail on his claim of trade dress infringement. Since HCF

cannot satisfy the functionality element, the defendants are entitled to

summary judgment on HCF’s claim for trade dress infringement.

4. False Advertising

The amended complaint includes a claim for false advertising pursuant

to 15 U.S.C. § 1125(a). HCF has abandoned a few of its allegations of false

advertising, but it continues to allege that the defendants’ claims regarding

the moisture resistance and the healthier nature of the Healthier Living®

carpet cushion constitute false advertising. The Eleventh Circuit Court of

Appeals has held that a claim for false advertising includes the following

elements: “‘(1) the ads of the opposing party were false or misleading, (2) the

ads deceived, or had the capacity to deceive, consumers, (3) the deception had

a material effect on purchasing decisions, (4) the misrepresented product or

service affects interstate commerce, and (5) the movant has been—or is likely

to be—injured as a result of the false advertising.’” Osmose, Inc. v. Viance,

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 52 of 59

53

LLC, 612 F.3d 1298, 1308 (11th Cir. 2010) (quoting Axiom Worldwide, 522

F.3d at 1224).

a. Moisture Resistance

The burden in a claim for false advertising depends on whether the

advertisement cites consumer testing to support a claim. Osmose, Inc. v.

Viance, LLC, 612 F.3d 1298, 1309 (11th Cir. 2010). An advertisement claim

qualifies as a “tests prove” or establishment claim through the express or

implied assertion that the fact is validated by testing. Id. at n.6. In this

case, the advertisement does not expressly state that the “98% moisture

resistant . . . to block spills” claim is supported by testing. However, the use

of a specific percentage implies that the claim is supported by testing. To

show the literal falsity of a “tests prove” or establishment claim, “the plaintiff

must prove only that the tests did not establish the proposition for which

they were cited.” Id. HCF cites evidence that the defendants do not have

test results that support the moisture resistance claims of the carpet

cushions. Furthermore, the parties present conflicting evidence on the tests

that have been conducted. In this case, the court concludes that there is a

genuine issue for trial regarding the tests performed to determine the

moisture resistance of the carpet cushions. The court also concludes that

there is a genuine issue for trial regarding the remaining elements of a false

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 53 of 59

54

advertising claim regarding the defendants’ use of the phrase “98% moisture

resistant . . . to block spills.” The court cannot conclude that no reasonable

trier of fact could find for HCF on this claim for false advertising.

b. Healthier

The defendants argue that the statement “healthier” is non-actionable

puffery. The defendants previously filed a motion to dismiss in which they

made the same argument [Doc. No. 83]. The court concluded that the claim

crossed the line of mere puffery into statements that are actionable under the

Lanham Act [Doc. No. 210]. The defendants have not provided any basis for

the court to reverse its earlier decision.

Unlike the previous claim, the court concludes that the “healthier”

claim used in the defendants’ advertising is not a “tests prove” or

establishment claim. To support the false advertising claim with respect to

the defendants’ use of “healthier,” HCF must show that the challenged

advertisement is literally false or literally true but misleading. Osmose, 612

F.3d at 1308. Based on the evidence cited by the parties, HCF has provided

no evidence to establish that the advertisement is literally false or true but

misleading. Accordingly, the court grants the defendants’ motion for

summary judgment with respect to this issue.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 54 of 59

55

c. Standing

The court has previously held that HCF has standing to assert a claim

for false advertising pursuant to 15 U.S.C. § 1125(a). The defendants once

again challenge HCF’s standing to assert its false advertising claim. The

United States Supreme Court recently resolved a split among circuits

concerning the proper test to determine standing to assert a claim under 15

U.S.C. § 1125(a). Lexmark Int’l, Inc. v Static Control Components, Inc., 2014

WL 1168967 (Mar. 25, 2014). The Supreme Court declined to adopt any of

the tests used by the various circuits. Id. at *10. Instead, the Supreme Court

held, “[A] direct application of the zone-of-interests tests and the proximatecause

requirement supplies the relevant limits on who may sue.” Id. With

respect to the first test, the Supreme Court held, “[T]o come within the zone

of interests in a suit for false advertising under § 1125(a), a plaintiff must

allege an injury to a commercial interest in reputation or sales.” Id. at *9.

Under the proximate-cause test, “a plaintiff suing under § 1125(a) ordinarily

must show economic or reputational injury flowing directly from the

deception wrought by the defendant’s advertising; and that that occurs when

deception of consumers causes them to withhold trade from the plaintiff.” Id.

at *10. While the Supreme Court set forth a different analytical framework

than previously employed in the Eleventh Circuit, this court arrives at the

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 55 of 59

56

same conclusion regarding standing in this case. The court concludes that

HCF meets the zone-of-interests test and the proximate-cause test. HCF has

alleged an injury to its commercial interest in reputation or sales and the

harm is sufficiently close in connection to the conduct 15 U.S.C. § 1125(a)

prohibits. Therefore, HCF has standing to assert a claim for false advertising

pursuant to 15 U.S.C. § 1125(a).

5. Fraud on the PTO

The defendants have alleged that HCF made false representations to

the PTO when it filed a declaration of incontestability. The defendants move

for summary judgment on this counterclaim. As discussed previously, HCF

has also moved for summary judgment on this claim. The court addressed

this portion of HCF’s motion for summary judgment in Section III.B.1 of this

order. The court denies the defendants’ motion for summary judgment for

the reasons discussed in Section III.B.1.

6. Infringement Counterclaims

The defendants move for summary judgment on their trademark

counterclaims for infringement pursuant to 15 U.S.C. § 1125(a) and the

common law. The defendants’ trademark counterclaims concern claims for

which HCF initially asserted trademark infringement. HCF has withdrawn

its trademark claims concerning “Spill Bloc” and “BioShield.” HCF concedes

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 56 of 59

57

that it initially asserted that there is a likelihood of confusion between its

“Moisture Bloc” and “Made with Bio Materials” marks and CCA’s “Spill Bloc”

and “BioShield” marks. This concession constitutes a judicial admission that

precludes HCF from contesting this issue. Go Medical Industries Pty, Ltd. v.

Inmed Corp., 300 F. Supp. 2d 1297, 1315 (N.D. Ga. 2003). However, the

defendants have not met their burden of showing that there is no genuine

dispute of material fact regarding their counterclaims. The court concludes

that there is a genuine issue for trial on the remaining elements of the

defendants’ trademark infringement counterclaims, e.g., whether there is a

protectable trademark interest and continuous commercial use. Accordingly,

the court denies the defendants’ motion for summary judgment on its

infringement counterclaims.

7. Damage Computation

DCO and Etowah’s motion for summary judgment includes an

additional argument that HCF cannot recover damages due to its failure to

disclose a computation of damages. Federal Rule of Civil Procedure

26(a)(1)(A)(iii) states that a party must provide a computation of each

category of damages claimed by the disclosing party. The court concludes

that HCF complied with this requirement in its supplemental initial

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 57 of 59

58

disclosures [Doc. No. 21]. Therefore, the court denies DCO and Etowah’s

request for summary judgment on this issue.

IV. Conclusion

The court GRANTS HCF’s motion to amend the amended complaint

[Doc. No. 272]; the claims identified in the motion are dismissed with

prejudice. The court DENIES HCF’s motion to exclude expert testimony of

Donald A. Irwin [Doc. No. 216]. The court DENIES the defendants’ motion to

exclude the testimony of Michael Norton [Doc. No. 281]. The court DENIES

HCF’s motion for partial summary judgment [Doc. No. 278], GRANTS IN

PART and DENIES IN PART CCA’s motion for summary judgment [Doc.

No. 279], and GRANTS IN PART and DENIES IN PART DCO and Etowah’s

motion for summary judgment [Doc. No. 280]. The following claims remain

for trial:8

• HCF’s claim for federal trademark infringement of the Healthier

Choice® mark.

• HCF’s state law dilution claim for the defendants’ use of the phrase

“make the healthier choice.”

 

8 The court does not include attorney’s fees and expenses in the list of claims

that remain for trial. Attorney’s fees and expenses are prayers for relief and

not substantive claims. This ruling does not preclude the parties from

seeking attorney’s fees and expenses as a form of relief.

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 58 of 59

59

• HCF’s false advertising claim related to the defendants’ use of the

phrase “98% moisture resistant . . . to block spills.”

• The defendants’ counterclaim for a declaratory judgment of noninfringement.

 

• The defendants’ counterclaim for a declaratory judgment of no dilution.

• The defendants’ counterclaim for federal trademark infringement.

• The defendants’ counterclaim for common law trademark infringement.

• The defendants’ counterclaim for fraud on the PTO.

The parties are directed to file their joint proposed pretrial order within 30

days of the date of this order.

SO ORDERED this 31st day of March, 2014.

/s/Charles A. Pannell, Jr.

CHARLES A. PANNELL, JR.

United States District Judge

Case 1:11-cv-02504-CAP Document 323 Filed 03/31/14 Page 59 of 59

 

22Jan/160

Before You Leave an Online Review, Consider This

When we experience bad service or a bad product, an immediate reaction is often to leave a negative review for the business online.  In a fury, a review can exaggerate what happened, and certainly only show one side’s perspective.  Such reviews can proliferate online and be very impactful.  Some companies have responded by threatening lawsuits for defamatory reviews – that is, for reviews that are not entirely truthful.

What is even more concerning is that not long ago, a court in the Commonwealth of Virginia ordered Yelp to turn over the names of seven of its users who left negative reviews for a carpet cleaning company.  Historically, people felt comfortable speaking critically online because their identities were hidden behind screen or user names.  But this ruling can change that.

The best way to protect yourself is to act in good faith and not exaggerate in your review.  Truth is always the best defense against a defamation claim.

David Lilenfeld

 


Go to top ↑
-->