David Lilenfeld Blog The intellectual property blog of David Lilenfeld

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.

 

27Jan/160

David Lilenfeld breaks down trademark infringement case from Middle District of Georgia

In this post, David Lilenfeld breaks down the Court's opinion in the trademark infringement lawsuit FN Herstal, S.A. v. Clyde Armory, Inc., in the District Court for the Middle District of Georgia Case No. 3:12-cv-102.

ORDER ON SUMMARY JUDGMENT

This trademark infringement action is currently before the Court on Plaintiff FN Herstal, S.A.’s Motion for Summary Judgment [Doc. 85] and Defendant Clyde Armory, Inc.’s Motion for Partial Summary Judgment [Docs. 85].  Having considered the parties’ arguments, the record, and the applicable law, both Motions are DENIED.1

LEGAL STANDARD

[David Lilenfeld: Here is not only a good review of the standard the Court uses to asses a Motion for Summary Judgment, but also the standard for Cross-Motions for Summary Judgment – very helpful]

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment must be granted “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.”2   A genuine issue of material fact only exists when “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.”3    Thus, summary judgment must be granted if there is insufficient evidence for a reasonable jury to return a verdict for the nonmoving party or, in other words, if reasonable minds could not differ as to the verdict.4    When ruling on a motion for summary judgment, the Court must view the facts in the light most favorable to the party opposing the motion.5

The  moving  party  “always  bears  the  initial  responsibility  of  informing  the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits,  if  any,  which it  believes  demonstrate the  absence  of  a  genuine  issue  of material fact” and that entitle it to a judgment as a matter of law.6    If the moving party discharges this burden, the burden then shifts to the nonmoving party to go beyond the pleadings  and  present  specific  evidence  showing  that  there  is  a  genuine  issue  of material fact.7    This evidence must consist of more than mere conclusory allegations or legal conclusions.8

The standard of review for cross‐motions for summary judgment does not differ from the standard applied when only one party files a motion, but simply requires a determination of whether either of the parties deserves judgment as a matter of law on the facts that are not disputed.9   The court must consider each motion on its own merits, resolving all reasonable inferences against the party whose motion is under consideration.10   The Eleventh Circuit has explained that “[c]ross‐motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed.”11    Cross‐motions may, however, be probative of the absence of a factual dispute where they reflect general agreement by the parties as to the controlling legal theories and material facts.12

BACKGROUND

[David Lilenfeld: a detailed discussion of the respective uses of the trademarks in the firearms industry begins here.  The facts are slightly more involved since one of the parties’ is a foreign corporation.]

The current trademark dispute arises out of the parties’ use of the “SCAR” and “SCAR‐Stock” trademarks in the firearms industry.  Unless otherwise indicated, the facts presented below are undisputed.

A. Plaintiff’s Use of SCAR

Plaintiff is a firearms and weapons manufacturer incorporated under the laws of Belgium with  its principal place of  business  in Herstal,  Belgium.13   Plaintiff manufactures and distributes a full range of firearms and accessories for defense, law enforcement, hunting, marksmanship, and others having an interest in acquiring such firearms and accessories.14  The current dispute arises out of Plaintiff’s development and branding of its SCAR rifle.

1.   Plaintiff’s Sales to the US Military

[David Lilenfeld: This portion is important for the interplay between trademarks and acronyms, an issue many people confuse.]

In 2003, the United States Special Operations Command (“USSOCOM”) initiated the Special Operation Forces (“SOF”) Combat Assault Rifle Program, which was abbreviated at times as the “SCAR” Program.15     Publicized as the first full and open competition  since  the  M16  trials  held  in  the  mid‐1960s,  the  USSOCOM  Program solicited an open bid to firearm manufacturers to design a new modular assault rifle system for the US Military.16    Defendant contends that the USSOCOM Program serves as the origin of the SCAR mark at issue in this case.  [David Lilenfeld: here is the first mention of Dates of First Use – an important issue in almost every trademark infringement case]. Plaintiff, however, represents that it adopted the SCAR mark in 2003 prior to the USSOCOM Program to designate a specifically designed weapon for commercialization in the North American market and abroad.17

Pursuant to the Program, USSOCOM specified that the SCAR rifle would be a modular  system in  two  threshold  configurations,  a  “SCAR‐Light (SCAR‐L)” and a “SCAR‐Heavy (SCAR‐H).” 18   Both the SCAR‐L and the SCAR‐H were available in three variants: Standard (S), Close Quarter Combat (CQC), and Sniper Variant (SV).

In 2003 and 2004, Plaintiff and other firearm manufacturers submitted prototypes of rifles meeting USSOCOM specifications.20   USSOCOM officially awarded the contract to Plaintiff to produce the SCAR rifle and attachments on November 5, 2004.21    On that same day, USSOCOM ordered over $634,000 of firearms and attachments from Plaintiff.22    Shortly thereafter, the ordered weapons were shipped to Crane, Indiana, inspected, and accepted by the US government.23     [David Lilenfeld: again, another mention of the Date of First Use]. To fulfill its obligations under the USSOCOM Program, Plaintiff shipped firearms bearing the SCAR trademark throughout 2004 and 2005 to various US military institutions, including USSOCOM, Naval Air Systems Command (“NAVAIR”) and Naval Surface Warfare Center (“NSWC”).24

Throughout 2005 and 2006, magazine and newspaper articles tracked the development of the new assault rifle for the USSOCOM Program, highlighted Plaintiff’s role in the Program, and outlined the features and benefits of the different variants and forms of the new SCAR rifle system.

2.   Promotion of Plaintiff’s SCAR Rifles

[David Lilenfeld: here the Court is discussing the breadth of use of the trademark, another issue that is important in most trademark infringement cases]. After the USSOCOM Program award, Plaintiff began promoting its SCAR mark to the wider commercial market.  In 2005 and 2006, Plaintiff promoted its SCAR rifles at trade shows and during visits to gun dealers, law enforcement agencies, stores, and distributors.26    For example, in February 2006, Plaintiff unveiled its SCAR‐Light and SCAR‐Heavy prototypes during the SHOT Show held in Las Vegas, Nevada, a major industry trade show attended by military personnel, other government agencies, law enforcement organizations, manufacturers, distributors, retailers, sportsmen, hunters, and other firearms enthusiasts.27

[David M. Lilenfeld: just as it is important to discuss what uses each party made of their respective trademarks, it is important to discuss the relevant ways in which each party does not use their respective trademarks]. During these promotional activities, it is undisputed that Plaintiff did not have a semi‐automatic version available for purchase by law enforcement and civilian consumers.   The firearms displayed at the tradeshows were fully automatic machine guns, the sale of which is restricted to military and law enforcement agencies only.28   In order for Plaintiff to sell a semi‐automatic SCAR to the civilian market, Plaintiff first needed government approval.

[David Lilenfeld: note how detailed and “granular” the Court has to get with the types *quality and quantity) of uses Plaintiff made of its trademarks]. Nevertheless, Plaintiff continued to promote its SCAR rifle to law enforcement and civilian markets.  Plaintiff distributed hats, t‐shirts, brochures, and other marketing materials bearing the SCAR mark to others in the firearm industry.30        Plaintiff even referenced the  new  SCAR rifle  in  its  2006  product  log  and  highlighted  its  role  in creating USSOCOM’s SCAR rifle.31     In several of Plaintiff’s advertisements, the SCAR mark is displayed beside or above the words “S.O.F. Combat Assault Rifle” or some variant thereof.32    Several of Plaintiff’s advertisements boast that Plaintiff’s SCAR rifle was chosen by “US Special Operations Command,”33 and three of those advertisements depict the official emblem of the U.S. Special Operation Forces for the US Military in connection with Plaintiff’s SCAR mark.34

Then, on March 2, 2006, Plaintiff issued a press release, entitled “The Making of the 21st Century Assault Rifle: SCAR SOF Combat Assault Rifle,” announcing its plan to introduce a semi‐automatic version of the SCAR “in the next two years” for law enforcement and commercial markets.35

Plaintiff began accepting orders for SCAR rifles from law enforcement agencies in either 2007 or 2008, and filled its first orders to law enforcement and civilian consumers in late 2008.36   [David Lilenfeld: amount of goods sold under a particular trademark is also very often a pertinent factor in a trademark infringement analysis]. Since that time, Plaintiff has sold nearly one hundred million dollars ($100,000,000.00) of SCAR firearms to law enforcement and civilian consumers.37

3.   Plaintiff’s Trademark and Patent Registrations

[David Lilenfeld: Obviously, trademark registrations of the parties’ is an important consideration, along with their age (typically the older the registration is the stronger it is)]. To protect its interest in the SCAR mark, Plaintiff filed three trademark applications with the United States Patent and Trademark Office (the “USPTO”).38    On April 22, 2008, Plaintiff filed the first application (the ‘575 Application) for the use of SCAR on firearms and related items, which is still pending before the USPTO.39     On January 13, 2009, Plaintiff filed a trademark application for SCAR and Design for use in connection with firearms and related items.40      The application claimed Plaintiff first used the mark in commerce on November 1, 2008.41    The USPTO registered the SCAR and Design mark on June  15,  2010  (the  ‘448 Registration).42      On January 13,  2011, Plaintiff  filed  its third trademark application for SCAR for  use  in connection with games, toy replicas of weapons, and other related items.43     The USPTO registered the SCAR mark on February 21, 2012 (the ‘728 Registration).44

In addition to registering the SCAR mark, Plaintiff obtained a design patent for its assault rifle (the ‘824 Patent) on July 19, 2011.45   On January 10, 2012, Plaintiff filed an action for patent and trade dress infringement involving the ‘824 Patent in the US District Court for the Northern District of Texas, wherein Plaintiff alleged that it “introduced the FNH SCAR (Special Combat Assault Rifle) assault rifle, today known by  two  different  models  including  the  FN  SCAR  16  and  FN  SCAR  17”  in  2009.46

Plaintiff voluntarily dismissed the Texas suit prior to service of the complaint.47

B.  Defendant’s Use of SCAR‐Stock

[David Lilenfeld: Here, the Court discusses Defendant’s uses of its trademark and the landscape of the trademark battle begins to reveal itself]. Defendant is a firearms retailer and distributor incorporated under the laws of Georgia with its principal place of business in Bogart, Georgia.48      In 2005, Andrew Clyde, Defendant’s CEO and owner, contacted John Klein, the president of Sage International, Ltd., to discuss the possibility of making replacement stock for certain rifles made by Sturm Ruger & Co., including the Mini‐14, Mini‐30, and AC‐556, among others.49     The two followed up with each other in person at the February 2006 SHOT show in Las Vegas to discuss the details of the new product.50    [David Lilenfeld: here we learn that Plaintiff’s product is different from Defendant’s trademark (rifle v. a stock for a rifle.  This is leading us down the path of “relatedness” issue). After the February 2006 SHOT Show, Defendant adopted the SCAR‐Stock mark as an acronym for “Sage Clyde Armory Rifle Stock” to refer to the new product and to reflect the collaborative effort behind the product’s design.

The testimony regarding the circumstances and purpose of adopting the SCAR‐ Stock mark, however, is somewhat disputed.  Mr. Clyde testified that before deciding to adopt the mark, he conducted several searches online through Google and the USPTO’s website to check the availability of SCAR as a viable mark and found no prior use of the mark in the firearms industry.52    However, Defendant has no documentary evidence to substantiate those searches.53   [David Lilenfeld: how often will you have documents to prove a Google search you conducted years ago?  This is a tough as.  Also, it’s the first indication see of the Judge leaning in Plaintif ’s direction]. M [David Lilenfeld: Another “bad fact” for Defendant.  The Court’s leaning begins to be unveiled]. Moreover, at the time Defendant adopted the SCAR‐Stock mark, Defendant was aware of Plaintiff’s participation in the USSOCOM Program to create the SOF Combat Assault Rifle and knew that the acronym for that rifle was SCAR.54     [David Lilenfeld: Well, this next sentence/fact might be the death knell for Defendant. Bad intent is another factor taken into consideration by courts in a trademark infringement case]. Defendant’s former Chief Operating Officer, Joshua Smith, testified that Defendant  adopted  SCAR‐Stock,  in  part,  to  take  commercial  advantage  of  the popularity  of  the  SCAR  rifles  in  the  firearms  industry.55   [David Lilenfeld: Ouch!] Mr.  Clyde,  however, specifically disclaims any such purpose in adopting the mark.

[David Lilenfeld: Clearly, Plaintiff has earlier Dates of First Use, so that does not appear to be in dispute]. By early fall of 2006, Defendant and Sage completed initial manufacturing of the SCAR‐Stock product and introduced it to the firearms market.57    On August 29, 2006, Defendant began soliciting customer orders for its SCAR‐Stock products.58    Defendant received  and  accepted  its  first  order  for  SCAR‐Stock  on  September  14,  2006.59

Defendant then shipped orders beginning the week of September 18, 2006.60     It is undisputed that the gun stock bearing Defendant’s SCAR‐Stock is not compatible with and cannot be used with Plaintiff’s SCAR rifle. From the end of 2006 through 2008, Defendant enjoyed an annual increase in sales of its SCAR‐Stock product.62      In 2009, sales dropped slightly due to the unavailability of the product and delivery issues from Sage.63    During that time, Sage had substantial orders from the military, and those orders were given priority over all other orders, including those for Defendant’s SCAR‐Stock product.64

C.  Events Leading to the Current Dispute

[David M. Lilenfeld: This letter is sent about three years after Defendant started using the SCAR trademark, but that is still not so long for Plaintiff as to be concerned about a laches defense]. On February 6, 2009, Louis Dillais, President and CEO of FNH USA, LLC, a subsidiary of Plaintiff, sent Defendant a letter asserting senior rights in the SCAR mark and demanding that Defendant cease and desist all use of its SCAR‐Stock mark.65    Mr. Clyde responded on Defendant’s behalf indicating he had no knowledge of Plaintiff’s rights in the mark and requesting documentation to support that claim.66   The following day  Defendant  filed  a  trademark  application  for  the  SCAR‐Stock  mark  (the  ‘128 Application) with the USPTO for use on “gun stocks” and claiming a first use date in commerce of September 14, 2006.67

Defendant received a reply from FNH USA68 stating that “the acronym SCAR in US Government jargon does refer to the USSOCOM Program.”69    The letter went on to state “[h]owever, in Commercial firearms use of the term SCAR has been registered by [Plaintiff], our parent company, as a Trademark.”70

Defendant then filed a Petition for Cancellation with the USPTO of Plaintiff’s '448 Registration for SCAR and Design and an Opposition to Plaintiff’s ‘575 Application 65 Def.’s Statement of Material Facts, Ex. J at CA00021 [Doc. 90‐10].

66 Id. at FN101158.

67  Umansky Decl. ¶ 12, Ex. 10 [Doc. 89‐3]. The USPTO initially denied registration of the SCAR‐Stock mark because it was merely descriptive of a feature and characteristic of the product. Def.’s Statement of Material Facts, Ex. D, p. 9 [Doc. 90‐4]. The initial refusal explained that a “scar rifle” is a modular rifle created by Plaintiff for USSOCOM to satisfy the requirements of the SCAR Program, and the “scar stock” is a gun stock that is specifically made for a “scar assault rifle.” Id. at 10.  In response to the first refusal, Defendant explained that SCAR as used in its SCAR‐Stock mark is an arbitrary acronym for “Sage/Clyde Armory Rifle” and that Defendant’s SCAR‐Stock products are not compatible with Plaintiff’s SCAR rifles. Id. at  12‐13.  Thereafter,  the  USPTO  refused  registration  of  Defendant’s  mark  on  the  grounds  that consumers would likely confuse Defendant’s mark with Plaintiff’s SCAR mark in the ‘448 Registration. Id. at 17.

68  It is unclear which individual responded on behalf of FNH USA. The letter includes a signature block

with Dillais’ name, but the handwritten signature appears to belong to someone else.

69 Def.’s Statement of Material Facts, Ex. J at CA0022 [Doc. 90‐10].

70 Id.

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for SCAR.71       The USPTO suspended those proceedings pending the outcome of this

 

 

case.72

 

 

D. Procedural History

 

 

[David Lilenfeld: interesting to me that the lawsuit was filed six years after Defendant began using the allegedly infringing trademark]. On March 12, 2012, Plaintiff filed this suit in the Eastern District of Virginia against Defendant and Sage.  Thereafter, the Court dismissed Sage for lack of personal jurisdiction and transferred the remaining case against Defendant to the Northern District of Georgia.  Upon determining that Defendant’s principal place of business is located in the Middle District of Georgia, the case was transferred to this Court on August 8, 2012.

Shortly  after  the  transfer,  Plaintiff  filed  an  Amended  Complaint.    Therein, Plaintiff raises federal claims for trademark infringement, unfair competition, and dilution,73  in violation of the Lanham Act, 15 U.S.C. § 1051, et seq.  Plaintiff also raises state   law   claims   for   unfair   competition,   deceptive   trade   practices,   and   unjust enrichment.   Plaintiff seeks punitive damages and litigation expenses, including attorney’s  fees.    Plaintiff  also  seeks injunctive  relief  enjoining  Defendant  from  any further  use  of  SCAR‐Stock  and  ordering  Defendant  to  (1)  abandon  its  pending

 

 

 

 

 

 

71 Id. at pp. 9‐20.

72 Id. at pp. 21‐22.

73  In its Motion for Summary Judgment, Plaintiff represents that it is withdrawing its federal dilution claim.

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trademark application for SCAR‐Stock and (2) dismiss its opposition and cancellation

 

 

petitions to Plaintiff’s ‘448 Registration and “575 Application.

 

 

Defendant asserts affirmative defenses based on priority of use in its SCAR‐Stock mark and unlawful use of the SCAR mark by Plaintiff.  In addition, Defendant raises counterclaims for federal trademark infringement and declaratory relief, seeking cancellation  of  Plaintiff’s  trademark  registrations  and  refusal  of  the  pending  ‘575

Application pursuant to 15 U.S.C. § 1119 due to Defendant’s superior rights in the

 

 

SCAR‐Stock mark and Plaintiff’s lack of bona fide use or intent to use the SCAR mark in commerce. Defendant seeks similar damages and injunctive relief.

DISCUSSION

 

 

As acknowledged by the parties, the success of all the claims and counterclaims in  this  case  depends  on  the  outcome  of  their  trademark  infringement  claims.74

Accordingly, the Court will limit its discussion to the trademark infringement issues presented.

Both parties have moved for summary judgment, each asserting a superior trademark right in the use of SCAR or SCAR‐Stock.  Plaintiff claims a superior right in its SCAR mark arguing that the mark is distinctive, and Plaintiff was the first to use the

74 Univ. of Georgia Athletic Assʹn v. Laite, 756 F.2d 1535, 1539 n.11 (11th Cir. 1985) (observing that the standards governing Georgia state law claims for trademark infringement, deceptive trade practices, and unfair competition are “similar, if not identical, to those under the Lanham Act.”); see also Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 n.4 (11th Cir. 2001) (“Courts may use an analysis of federal infringement claims as a “measuring stick” in evaluating the merits of state law claims of unfair competition.”).

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mark in commerce in 2004.  Like Plaintiff, Defendant also asserts superior rights in its

 

 

SCAR‐Stock mark arguing that SCAR‐Stock is distinctive, and Defendant was the first to use the mark in commerce in September 2006.  [David Lilenfeld: Here is a sneak preview of the Court’s ruling – obviously will deny both Parties’ Motion for Summary Judgment]. For the reasons set forth below, the Court finds genuine issues of material fact exist as to which party used the mark first in commerce, and whether the parties’ SCAR and SCAR‐Stock trademarks are distinctive.

A trademark is “any word, name, symbol, or device, or any combination thereof [used] to identify and distinguish [a producer’s] goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.”75     To prevail on a trademark infringement claim, a party must prove that (1) it owns a valid and protectable mark, and (2) the opposing party’s use of an identical or similar mark is likely to cause confusion.76     Because the parties market and sell their SCAR and SCAR‐Stock products in the firearms industry, they agree that simultaneous use of the trademarks would likely confuse the purchasing public.77

Therefore, the only issue before the Court is whether either party owns a protectable mark.  In order to establish a valid protectable trademark, a party must prove (1) it used the mark in commerce and (2) the mark is distinctive.78

 

 

 

75 15 U.S.C. § 1127.

76 Gift of Learning Found., Inc. v. TGC, Inc., 329 F.3d 792, 797 (11th Cir. 2003) (citing 15 U.S.C. § 1125(a)).

77  In addition to the parties’ agreement on the likelihood of confusion issue, the USPTO found consumers will likely confuse the two marks, as evidenced by its refusal to register Defendant’s SCAR‐Stock mark. See Second Office Action, Ex. D, p. 17 [Doc. 90‐4].

78 Knights Armament Co. v. Optical Sys. Tech., Inc., 654 F.3d 1179, 1188 (11th Cir. 2011).

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With respect to the issue of whether a party owns a protectable trademark, the

 

 

Lanham Act provides that registration is prima facie evidence that the registrant owns the mark and has the exclusive right to use the mark.79         Accordingly, registration creates a rebuttable presumption of ownership dating back to the filing date of the application.80   Here, however, Plaintiff did not file the applications giving rise to its ‘448

Registration  and  ‘728  Registration  until  January  13,  2009  and  January  13,  2011. Defendant began using its SCAR‐Stock mark prior to either of those dates in September

2006.   The heart of this dispute centers on Plaintiff’s use of SCAR prior to September

 

 

2006  and  the  circumstances  surrounding  Defendant’s  adoption  of  the  SCAR‐Stock mark.  Because these events occurred prior to the filing of Plaintiff’s first trademark application, the presumption of ownership and exclusive use afforded to Plaintiff’s trademark registrations does not operate against these earlier uses.81

Thus, the Court now turns to the issues of which party first used the mark in commerce and whether their trademarks are distinctive.

I.          First Use in Commerce

 

 

[David Lilenfeld: This is a great Trademark 101 discussion – perfect for Chapter I of a textbook]. In determining which party has a protectable trademark, the Court first examines the trademarks’ “use in commerce.” Under common law, “actual and continuous use is required to acquire and retain a protectable interest in a trademark.”82   Under the Lanham Act, a mark is used in commerce when

(A) 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 if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and

 

 

(B)  the goods are sold or transported in interstate commerce.83

 

 

To determine whether use is sufficient to create a protectable trademark interest, the Eleventh Circuit requires a trademark claimant to show it (1) adopted the mark and (2) “used [the mark] in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.”84    Courts should evaluate whether a party has met both prongs of this test by considering “the ‘totality of the circumstances’—including sales, advertisements, and distribution of goods—in order to determine whether the mark has been sufficiently used in commerce.”

[David Lilenfeld: I am regularly asked if one can file for registration of a trademark before he/she has any sales – the answer is “yes” and here is why]. Under this approach, evidence of sales is “highly persuasive,” but actual sales

 

are not required to prove prior use.86    When sales are absent, a party may show use by “analogous use.”  Analogous use refers to pre‐sale promotional efforts such as “advertising brochures, catalogs, newspaper ads, and articles in newspapers and trade publications.”    When a party relies on analogous use to establish trademark rights “actual technical trademark use must follow the use analogous to trademark use within a commercially reasonable period of time.”89   Moreover, whatever activities are utilized to establish rights in a mark, such use must be continuous.90

[David Lilenfeld: this argument by Defendant is a bit bewildering.  It clearly is not the senior user of the marks that are in contention.  Defendant may be the senior use of its exact trademark, but that is not the question. The question is who is the senior user of the respective marks]. When, as here both parties claim a protectable trademark interest, the Court must determine who used the mark first.91   Not surprisingly, both parties claim to be the senior user of the mark in the firearms industry.  Plaintiff argues that it was the first to use SCAR in commerce, as evidenced by its sale of SCAR rifles to USSOCOM as well as its pre‐sale promotional activities for its civilian‐friendly SCAR rifle.  Defendant, on the other hand,  argues it  was the  first  to  use its SCAR‐Stock mark in September 2006 because Plaintiff did not have a semi‐automatic SCAR rifle available for that time.  In support of its Motion, Defendant argues the undisputed evidence shows (1) Plaintiff admitted it did not use the SCAR mark in commerce until November 1, 2008; and (2) Plaintiff’s pre‐sale promotional activities constituted unlawful use of the SCAR mark, and thus cannot create a protectable trademark interest in SCAR.  Having reviewed both arguments, the Court finds that a genuine issue of material fact remains as to which party used the mark in commerce first.

A. Plaintiff’s Admission of First Use Date

 

 

Defendant first argues that Plaintiff cannot claim prior use in its SCAR mark because, in the trademark application giving rise to the ‘448 Registration, Plaintiff admitted it did not use the SCAR mark in commerce until November 1, 2008—over two years after Defendant’s first use of SCAR‐Stock in September 2006.92      Similarly, Defendant argues that Plaintiff alleged in its complaint filed in the Texas patent infringement case that it did not introduce the SCAR rifle until 2009.  [David Lilenfeld: wow, I didn't expect this and not sure I agree with the Court, with all due respect, but let’s see the Court’s reasoning]. Plaintiff, however, is not bound by either of these dates.

With respect to the patent infringement case, Defendant submits that Plaintiff’s allegation operates as an admission that Plaintiff did not introduce the SCAR rifle in commerce until 2009.   Defendant, however, overstates the evidentiary effect of this allegation.  Pleadings by a party in one suit do no serve as binding judicial admissions against that party in subsequent litigation, but may serve as evidentiary admissions, which the party may explain or contradict.  [David Lilenfeld: this also goes to Defendant’s credibility, which needs to be weighed].

Similarly, Plaintiff is not bound by the first use date alleged in its trademark application and instead may prove an earlier date of use by clear and convincing evidence.  This is a particularly “heavy burden” upon a plaintiff when “the date on which the trademark application was filed is substantially contemporaneous with the date of first use alleged therein and an attempt is made many years later to establish an earlier date.”  Evidence in support of a prior use date “should not be characterized by contradictions, inconsistencies, and indefiniteness, but should carry with it conviction of its accuracy and applicability.”

Here, Plaintiff filed its trademark application for SCAR and Design for use in connection with firearms on January 13, 2009, claiming a first  use in commerce on November 1, 2008.   Now, Plaintiff seeks to prove a first use date nearly four years before the date claimed in its application.   Therefore, to overcome Defendant’s arguments and prevail on summary judgment, Plaintiff must show, by clear and convincing evidence, that it adopted and used the SCAR mark in commerce prior to September 2006.

Plaintiff argues the undisputed facts show it was the first to use the mark in commerce as evidenced by its (1) actual sale of SCAR rifles to the US Military in 2004 and (2) analogous use of its SCAR mark through pre‐sale promotional activities of its civilian‐friendly SCAR rifle.  A genuine issue of material fact, however, exists as to whether these activities were sufficiently continuous and public to allow firearms customers to distinguish Plaintiff’s products from others in the firearms industry.

With  respect  to  actual  sales,    the  evidence  shows  that  Plaintiff  sold  SCAR firearms to USSOCOM on November 5, 2004, but did not sell SCAR firearms to the rest of the firearms industry—namely to law enforcement and civilian consumers—until late

2008.  A reasonable juror could find that a sale to a single customer is not sufficiently public to constitute use in commerce. Moreover, because additional sales of SCAR rifles did not occur until four years later, one may conclude that Plaintiff’s use of SCAR was too sporadic to give rise to a protectable interest.

On the other hand, certain factors unique to this case could allow a reasonable

 

juror to  conclude  that  Plaintiff’s  sales  to  USSOCOM coupled with  its  promotional activities were sufficiently continuous and public to constitute use in commerce. Unlike other cases involving a single sale,97  the sale to USSOCOM was significant, amounting to over $634,000 in SCAR rifles.98    To fulfill its obligations under the contract, Plaintiff shipped firearms bearing the SCAR mark to various military institutions from the end of 2004 throughout 2005.

Moreover, evidence in the record suggests the US Military is a prominent and influential consumer in the firearms industry, and therefore, Plaintiff’s development and sale of the SCAR rifle pursuant to the USSOCOM Program could be viewed as sufficiently  public  for  trademark  protection  purposes.     Indeed,  several  witnesses testified that the US Military orders get first priority in the firearms industry, including Mr. Clyde who acknowledged that delivery of SCAR‐Stock from Sage was postponed because Sage had to dedicate its manufacturing capacity to fulfilling military orders first.  In addition, since the USSOCOM Program was the first open competition to create a new rifle in approximately forty years, the Program and Plaintiff’s participation in it generated publicity through numerous magazine and newspaper articles throughout 2005 and 2006.

Moreover, Plaintiff’s pre‐sale promotional activities for its civilian‐friendly SCAR assault rifle prior to September 2006 may constitute analogous use of the mark.  In that regard, Plaintiff promoted its SCAR rifles during visits to gun dealers and at trade shows, including the SHOT Show in Las Vegas, Nevada in February 2006, one of the largest tradeshows in the industry.  In addition, Plaintiff distributed brochures, t‐shirts, hats, and its 2006 product log bearing the SCAR mark or referencing its SCAR rifle at these events.  Finally, in March 2006, Plaintiff issued a press release announcing its plan to release a semi‐automatic version of its SCAR rifle to the law enforcement and civilian markets within the next two years.  Plaintiff, however, did not sell its SCAR rifle to law enforcement and civilian consumers until late 2008.

Whether these promotional activities constituted analogous use sufficient to give rise to a protectable trademark interest is a question of fact for the jury.  As mentioned above, to constitute analogous use, actual use must follow the promotional activities within a commercially reasonable time.  Here, approximately two years lapsed before Plaintiff sold its first SCAR rifle to law enforcement and civilian consumers, a delay one witness attributed to the need for prior government approval before release of a semi‐ automatic  SCAR  rifle  to  the  general  public.  Whether  such  a  delay  constitutes  a

“commercially reasonable time” within the firearms industry is an issue for the jury’s

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determination.

 

 

B.  Unlawful Use

 

 

Alternatively, Defendant argues Plaintiff cannot rely on its pre‐September 2006 promotional activities to show use of the SCAR mark because its advertisements and promotional activities violated federal regulations and thus cannot provide the basis for a protectable trademark interest in SCAR.

The United States Trademark Trial and Appeal Board interprets the  “use in

 

 

commerce” requirement to mean lawful use.99    In what has now become known as the “unlawful use doctrine” or the “unlawful use defense,” ʺthe sale or shipment of the product under the mark ha[s] to comply with all applicable laws and regulations” before a party may claim trademark protection for the mark.100

While the unlawful use defense has long been recognized by the Trademark Trial and Appeal Board, it has not been widely adopted by federal courts.101     The Ninth, Tenth, and Federal Circuits have expressly adopted the unlawful use defense.102  The

Eleventh Circuit has not adopted the defense; however, a district court in this Circuit has applied the defense in trademark infringement actions.103      Thus, the Court will

address Defendant’s arguments.  Having considered the merits of Defendant’s unlawful use defense, however, the Court finds it to be without merit.

“Unlawful use will be found where: (1) the issue of compliance has previously been determined (with a finding of non‐compliance) by a court or government agency having competent jurisdiction under the statute involved, or (2) where there has been a per  se violation  of  a  statute  regulating  the  sale  of  a  partyʹs  goods.”104       Not  every violation, however, will be sufficient to justify denial of trademark protection based on unlawful use.  There must be a nexus between the use of the mark and the violation, and the violation must be material.105     To be material, the violation must be of “such gravity and significance that the usage must be considered unlawful—so tainted that, as a matter of law, it could create no trademark rights.”106   A party raising the unlawful use defense must prove all these elements by clear and convincing evidence.107    “[T]he

 

 

 

 

103  See, e.g., Davidoff Extension S.A. v. Davidoff Intern., Inc., 612 F. Supp. 4, 7 (S.D. Fla. 1984) (holding that defendants failed to meet their burden of showing plaintiff unlawfully used the Davidoff mark in the sale of cigars by illegally selling cigars containing Cuban tobacco in the US); see also Kratom Lab, Inc. v. Mancini, No. 11‐80987‐CIV, 2013 WL 3927838, at *3‐5 (S.D. Fla. July 29, 2013) (finding plaintiff had no valid trademark in “Mr. Nice Guy” mark used on incense because plaintiff fraudulently misrepresented that the incense was not for human consumption but plaintiff’s principals pled guilty to violating the Analogue Act, 21 U.S.C. § 813, and admitted that they intended the product to be used for human consumption).

104 Dessert Beauty, Inc., 617 F. Supp. 2d at 190.

105  General Mills Inc. v. Health Valley Foods, 24 U.S.P.Q.2d 1270, 1274 (T.T.A.B. 1992) (citing Santinine Societa

v. P.A.B. Produits, 209 U.S.P.Q. 958 (T.T.A.B. 1988)).

106 General Mills, Inc., 24 U.S.P.Q.2d at 1274.

107 Dessert Beauty, Inc., 617 F. Supp. 2d at 190; Davidoff Extension S.A., 612 F. Supp. at 7.

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proofs submitted by the party [charging noncompliance] must leave no room for doubt

 

 

speculation, surmise, or interpretation.”108   Here, Defendant cannot meet this burden.

 

 

Defendant argues that Plaintiff’s use of the SCAR mark outside of its sales to the US Military constitutes a per se violation of Federal Acquisition Regulations (“FAR”) related to Department of Defense contracts, more specifically USSOCOM contracts regulated  under  the  USSOCOM  FAR  Supplement  (“SOFARS”).    SOFARS  Section

5652.204‐9003 prohibits those who contract with USSOCOM from releasing unclassified

 

 

information  regarding  those  contracts,  associating  themselves  with  USSOCOM  or Special Operation Forces, or using the USSOCOM emblem or logo, without prior authorization from USSOCOM.109

Defendant contends Plaintiff, through its advertisements and promotional materials, violated this regulation by printing unclassified information regarding Plaintiff’s participation in the USSOCOM Program and unlawfully attempting to associate its commercial SCAR rifle with USSOCOM by displaying the official emblem of US Special Operation Forces.   Defendant further argues that Plaintiff’s adoption of the SCAR mark constitutes an unlawful attempt to associate itself with USSOCOM in the commercial arena.

 

 

 

108 General Mills, Inc., 24 U.S.P.Q.2d at 1274 (quoting Santinine Societa, 209 U.S.P.Q. at 965).

109  Defendant cites to this regulation as “48 C.F.R. § 5652.204‐9003.” The Court, however, was unable to find the cited provision. The Court is relying on the text of the regulation as set forth in a letter from USSOCOM to Plaintiff’s subsidiary. Pl.’s Resp. to Def.’s Statement of Material Facts, Ex. 9 [Doc. 100‐3].

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The Court, however, cannot find Plaintiff’s activities constitute a per se violation

 

 

because Defendant fails to establish that the original contract between Plaintiff and

 

 

USSOCOM even incorporated the regulation prohibiting such conduct.   On May 14,

 

 

2010, USSOCOM addressed a letter to FNH USA, Plaintiff’s subsidiary, acknowledging the ambiguity as to whether the regulation even applied to Plaintiff’s contract.  In that letter, USSOCOM notified FNH USA that SOFARS Section 5652.204‐9003 provides that release  of  unclassified  information  related  to  USSOCOM  contracts  requires  prior written authorization.  However, USSOCOM further explained that “this guidance was not made clear in the contract, as the applicable contract clause that identifies this guidance had not yet been established at the time of the contract award. Therefore, a unilateral modification to the contract incorporating SOFARS clause 5652.204‐9003 will be issued.”110     Because USSOCOM acknowledged that the guidance regarding the applicability of this regulation to Plaintiff’s contract was unclear, the Court cannot find that  Plaintiff’s  advertisements  in  2006  constituted  a  per  se violation  of  federal regulations.

Even  if  Plaintiff’s  advertisements  constituted  a  per  se violation,  any  such violation is  immaterial.                     One  of the  primary purposes behind trademark law is to

 

 

 

 

 

 

 

110 Pl.’s Resp. to Def’s Statement of Undisputed Facts, Ex. 9 at FN102837 [Doc. 100‐3].

27

 

 

 

 

 

 

protect the consumer.111     Unlike the cases cited by Defendant involving violations of

 

 

Food and Drug Administration regulations, the violation here does not implicate consumer protection concerns.  On the contrary, the regulation was enacted to protect USSOCOM.   Thus, even if Plaintiff’s use of SCAR in its pre‐sale promotional advertisements constituted a per se violation, the violation was immaterial and therefore nullifies Defendant’s unlawful use defense.112

Because Defendant cannot proceed with its unlawful use defense, the jury may

 

 

consider evidence of Plaintiff’s pre‐sale promotional activities when determining whether those activities, coupled with Plaintiff’s sale of SCAR rifles pursuant to the USSOCOM Program, constitute sufficient prior use of the mark in commerce to create a protectable trademark interest in SCAR prior to September 2006.

II.        Distinctiveness of SCAR and SCAR‐Stock

 

 

In addition to showing use of the mark in commerce, the parties must also show that SCAR and SCAR‐Stock are distinctive in order to receive trademark protection.113

A distinctive mark is one that “serve[s] the purpose of identifying the source of the

 

 

 

 

 

111 See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 774 (1992) (noting that the dual purpose behind the Lanham Act is to “secure to the owner of the mark the goodwill of his business and to protect the ability of consumers to distinguish among competing producers.”).

112 See S. California Darts Assʹn v. Zaffina, 762 F.3d 921, 931‐32 (9th Cir. 2014) (finding unlawful use defense

failed, in part, because“[e]ven assuming that [plaintiff] unlawfully failed to pay taxes, its misconduct would be unrelated to the purpose of the federal trademark laws and, therefore, collateral and immaterial.”) (emphasis added).

113 Knights Armament Co., 654 F.3d at 1188.

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goods  or  services.”114        “An  identifying  mark  is  distinctive  and  capable  of  being

 

 

protected if  it  either (1)  is inherently distinctive or (2)  has acquired distinctiveness

 

 

through secondary meaning.”115   In that regard, trademark law recognizes the following

 

 

four categories of distinctiveness:

 

 

(1) generic—marks that suggest the basic nature of the product or service; (2) descriptive—marks that identify the characteristic or quality of a product or service; (3) suggestive—marks that suggest characteristics of the product or service and require an effort of the imagination by the consumer in order to be understood as descriptive; and (4) arbitrary or fanciful—marks that bear no relationship to the product or service, and the strongest category of trademarks.116

Arbitrary, fanciful, and suggestivetrademarksare considered inherently distinctive and, therefore, are protectable without a showing of secondary meaning.117     A descriptive mark, by contrast, is not inherently distinctive, and receives trademark protection only if it acquires distinctiveness through secondary meaning.118    A descriptive mark has acquired distinctiveness through secondary meaning “when the primary significance of the  [mark]  in  the  minds  of  the  [consuming]  public  is  not  the  product  but  the producer.”119    The key factor in determining whether a descriptive mark has acquired secondary meaning is how the mark is perceived by the average prospective consumer

 

 

 

 

 

114 Id.

115 Two Pesos, Inc., 505 U.S. at 769 (emphasis in original).

116 Gift of Learning Found., Inc., 329 F.3d at 797‐98.

117 Coach House Rest., Inc. v. Coach & Six Restaurants, Inc., 934 F.2d 1551, 1560 (11th Cir. 1991).

118 Knights Armament Co., 654 F.3d at 1188.

119 Welding Servs., Inc. v. Forman, 509 F.3d 1351, 1358 (11th Cir. 2007).

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in the relevant industry.120    Whether a mark is distinctive is a question of fact not easily

 

 

adjudicated on summary judgment.121

 

 

Here, both parties argue no genuine issue of material fact exists as to whether their respectivetrademarksare distinctive.  This Court disagrees.

A. Distinctiveness of Plaintiff’s SCAR Mark

 

 

Plaintiff argues that its SCAR mark is inherently distinctive, or alternatively, if it is descriptive, it has acquired distinctiveness through secondary meaning.  In response, Defendant argues that Plaintiff’s use of the SCAR mark was merely descriptive of the firearms solicited by the USSOCOM Program, and the mark did not acquire secondary meaning in the firearms industry prior to Defendant’s first use of SCAR‐Stock in September 2006.   As explained below, facts support both parties’ positions, and, therefore, a genuine issue of material fact remains as to whether Plaintiff’s SCAR mark is merely descriptive or inherently distinctive of the rifles upon which it is used.

When determining the distinctiveness of an abbreviation or acronym such as SCAR,  the  Court  must  consider  the  relationship  between  the  acronym  and  its underlying phrase.122   For classification purposes, an abbreviation is treated similarly to its  underlying  phrase  “where  the  average  prospective  consumer  recognizes  the

 

 

 

120 G. Heileman Brewing Co. v. Anheuser‐Busch, Inc., 873 F.2d 985, 995 (7th Cir. 1989).

121 Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 232 (5th Cir. 2009).

122  Knights Armament Co. v. Optical Sys. Tech., Inc., 647 F. Supp. 2d 1321, 1331 (M.D. Fla. 2009), affʹd, 654

F.3d 1179 (11th Cir. 2011).

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abbreviation as equivalent to the underlying phrase.”123    “An abbreviation of a generic

 

 

or descriptive phrase is protectable ‘if the party claiming protection for the abbreviation shows that the abbreviation has a meaning distinct from the underlying words in the mind of the public.’”124      When determining how the public views the mark, courts should consider sources such as consumer surveys, use of the mark in media publications, use of the mark by competitors in the industry, and the trademark claimant’s use of the mark.125     After considering these factors in this case, the Court finds a genuine issue of material fact exists as to whether SCAR is distinctive.

On the one hand, SCAR may be considered descriptive of a type of rifle because it serves as an acronym for “Special Operation Forces Combat Assault Rifle”—a descriptive phrase used to designate a particular rifle requested by the USSOCOM Program.  Indeed, evidence in the record shows that Plaintiff and others associated the term SCAR with this underlying descriptive phrase.  For example, the majority of the newspaper and magazine articles reference SCAR in connection with “Special Combat Assault  Rifle”  or  some  variant  thereof.    In  addition,  a  representative  for  another firearms manufacturer testified that he recognized SCAR as an identifier of the rifles

 

 

 

 

 

 

123Am. Historic Racing Motorcycle Assʹn, Ltd. v. Team Obsolete Promotions, 33 F. Supp. 2d 1000, 1004 (M.D. Fla. 1998), affʹd sub nom., Am. Historic v. Team Obsolete, 233 F.3d 577 (11th Cir. 2000).

124 Knights Armament Co., 647 F. Supp. 2d at 1331 (quoting Forman, 509 F.3d at 1359).

125 See Colt Defense LLC v. Bushmaster Firearms, Inc., 486 F.3d 701, 706 (1st Cir. 2007).

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solicited by the USSOCOM Program.126    Even Plaintiff’s own subsidiary indicated that

 

 

SCAR is recognized as an acronym in government jargon to refer to the USSOCOM Program.

Moreover, Plaintiff’s own use of SCAR with its underlying phrase could support a finding that the mark is descriptive.   If a trademark claimant uses the acronym in conjunction with its underlying phrase, courts are reluctant to find that the acronym has an independent meaning apart from the underlying phrase.127      In several of its advertisements and promotional materials, Plaintiff displays the SCAR mark with the underlying phrase presented predominately beside or underneath it.   For example, Plaintiff places the two side by side in its March 2006 press release entitled “The Making of the 21st Century Assault Rifle: SCAR SOF Combat Assault Rifle.”128   Because SCAR is used at times with Special Operation Forces Combat Assault Rifle, the public could perceive that SCAR does not have a meaning distinct from its underlying phrase, and, by extension, is merely descriptive of a type of rifle.

On the other hand, because SCAR has an ordinary meaning outside the firearms industry, and no other competitors in the market use the mark commercially, the mark

 

 

126 Paul Hochstrate Dep. 19:25‐20:18 [Doc. 91‐6].

127 See, e.g., Forman, 509 F.3d at 1360 (finding that party failed to show “WSI” as abbreviation for “Welding

Services Inc.” had a distinct meaning apart from the underlying phrase because advertising material displayed the WSI logo next to the underlying phrase);  Knights Armament Co., 647 F. Supp. 2d at 1331 (finding that party failed to show “UNS” had a distinct meaning where the party “consistently use[d] UNS in conjunction with and as an abbreviation of ‘Universal Night Sight.’”).

128 Mills Dep., Ex. 4 [Doc. 89‐5].

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could be viewed as inherently distinctive. “Scar” is a common word in the English

 

 

language signifying a mark left on the skin by the healing of injured tissue.129    To the extent that the public views SCAR as synonymous with its dictionary definition, the mark would be inherently distinctive because the word bears no relationship to the firearm upon which it is used.  Indeed, such a connotation would be creatively fitting for a firearm capable of causing bodily injury.   Plaintiff even attempts to invoke this alternative meaning of “scar” in one of its SCAR rifle advertisements by including the words “BATTLE SCARS.”130   Because the word doubles as both a mark on the skin and as an acronym for Special Operation Forces Combat Assault Rifle, the public could view the mark as inherently distinctive.131

Another factor that weighs in favor of finding Plaintiff’s SCAR mark distinctive is the fact that other competitors in the firearms industry do not use the mark commercially.  If other competitors in the market use the mark, then that is probative evidence that the mark is merely descriptive or generic because, the more the public sees the mark used by others in the industry, the less likely the public will identify the mark with one particular producer.132    Here, there is no evidence in the record showing

 

 

129 Umansky Decl., Ex. 6 [Doc. 89‐3].

130 Def.’s Statement of Material Facts, Ex. H at FN100415 [Doc. 90‐8].

131  Accord American Historic Racing Motorcycle Association, Ltd., 33 F. Supp. 2d 1000, 1004‐05 (M.D. Fla.

1998)   (holding that “BEARS,” an abbreviation for “British‐European‐American‐Racing Series” was inherently distinctive for a class of motorcycles, in part, because BEARS doubled as both an animal and as an abbreviation, and thus consumers may associate the word with multiple things).

132 See Colt Defense LLC, 486 F.3d at 706.

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that competitors, other than Defendant, use the SCAR mark to sell firearms or related

 

 

products.  Therefore, a reasonable juror could find that SCAR is inherently distinctive.

 

 

B.  Distinctiveness of Defendant’s SCAR‐Stock Mark

Similarly,  Defendant  argues  its  SCAR‐Stock  mark  is  inherently  distinctive because  it  is an  arbitrary  acronym for “Sage Clyde  Armory Rifle Stock,” a  phrase

 

 

adopted to reflect the origin of the product’s design.   Plaintiff, however, argues that

 

 

Defendant’s position that SCAR‐Stock is inherently distinctive is inconsistent and contradicts its position that Plaintiff’s SCAR mark is merely descriptive.  According to Plaintiff,  SCAR  is  either  inherently  distinctive  for  firearm  products  or  it  is  not; Defendant cannot have it both ways. This Court disagrees.

When determining whether a mark is distinctive, the factfinder must look to the particular goods or services upon which the mark is used.133   The same mark “may shift categories depending upon the product to which it is affixed.”134     Here, the products upon which Plaintiff and Defendant use their respectivetrademarksare different: one is a type of firearm (a rifle) and the other is replacement gun stock (i.e., a gun accessory) compatible  with  Ruger  rifles.    Because  the trademarks are  used  to  designate  different

products, the  factfinder could also  determine that  their distinctiveness differs.   An

 

 

 

 

133   See 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 11:16 (4th ed.) (“The

possible descriptiveness of a designation is highly dependent on the goods or services in connection with which the designation is used. A term can be descriptive of one product and nondescriptive of another.”).

134 Polo Fashions, Inc. v. Extra Special Products, Inc., 451 F. Supp. 555, 559 (S.D.N.Y. 1978).

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illustrative example of this principle is the “polo” mark in the clothing industry.  One

 

 

district court noted held that the “polo” mark “[is] generic to polo shirts and coats, descriptive as to other shirts and coats and fanciful as it is applied to other articles of wearing apparel.”135    Although the products were sold in the same industry, i.e. the clothing market, the distinctiveness of the mark changed based on the type of clothing. Similarly, in this case, although SCAR and SCAR‐Stock are both used in the firearms industry, the products upon which they are used differ.  Thus, the factfinder could find that the distinctiveness of SCAR and SCAR‐Stock also differ.136

Nevertheless, given the conflicting evidence regarding Defendant’s motive in adopting the mark, the Court finds a genuine issue of material fact exists as to whether SCAR‐Stock actually serves as an acronym for the product’s origin.   Although Mr.

Clyde testified that SCAR‐Stock is an acronym for “Sage Clyde Armory Rifle Stock,”

 

 

Mr. Clyde knew of the USSOCOM Program and that the rifle developed pursuant to

 

 

the Program was known as the SCAR rifle at the time he adopted the SCAR‐Stock

 

 

 

135 Id.

136   Plaintiff  further  argues  that  Defendant’s  position  contradicts  its  argument  made  to  the  USPTO following  denial  of  its  SCAR‐Stock  application  on  descriptiveness  grounds.    Specifically,  Plaintiff contends  Defendant  admitted  that  SCAR  could  not  be  both  descriptive  and  distinctive  as  used  on firearms products. In response to the initial denial of its application, Defendant stated “[i]t seems incongruous to suggest that a term like SCAR, which has no dictionary definition connected to firearms, rifles or gun stocks, is both descriptive of a type of assault rifle and at the same time a distinctive trademark for a particular brand of assault rifle.” Def.’s Statement of Material Facts, Ex. D [Doc. 90‐4]. While the Court recognizes the tension between these two arguments, they are not wholly inconsistent because the argument before USPTO refers to the use of SCAR specifically on rifles.   Defendant’s arguments to the USPTO are merely additional evidence for the jury to weigh in its determination of distinctiveness.

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mark.    Further,  Joshua  Smith,  Defendant’s  former  COO,  testified  that  Defendant

 

 

adopted the SCAR‐Stock mark, in part, to take commercial advantage of the popularity of  the  SCAR  rifle.    Although  Mr.  Clyde  specifically  disclaims  any  bad  faith  and attempts to cast doubt on Smith’s credibility, it is not the province of this Court to weigh the evidence or make credibility determinations at the summary judgment stage.137     Accordingly, a genuine issue of material fact exists as to the reasons for adopting, and the meaning behind, Defendant’s mark.  Therefore, whether the mark is distinctive is a question for the jury.

CONCLUSION

 

 

Based on the foregoing, the Court finds that genuine issues of material fact exists as to which party first used the mark in commerce and whether either or both parties’trademarksare distinctive.   Because these issues are central to all the claims raised in this case, the parties Motions for Summary Judgment [Docs. 84 & 85] are DENIED.

SO ORDERED, this 8th day of January, 2015.

 

 

 

 

 

 

 

 

ADP/ssh/jrf
S/ C. Ashley Royal

C. ASHLEY ROYAL

UNITED STATES DISTRICT JUDGE

 

 

 

 

 

 

 

 

 

 

 

137Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

36

 

23Jan/160

Lilenfeld PC Discusses Trademark Infringement Order

Below is a copy of Judge Thrash’s Order in Bel v. Foster, Civil Action File No. 1:13-Cv-405-Twt, in the United States District Court For The Northern District Of Georgia (Atlanta).  The Order contains a good discussion of the seven factor likelihood of confusion analysis adopted by the Eleventh Circuit Court of Appeals.  The Court also has a thorough discussion of damages available to the trademark owner for trademark infringement, as well as injunctive relief available.

OPINION AND ORDER

This is a trademark infringement action concerning the late Jack Gibson’s alias “Jack the Rapper.” It is before the Court on the Plaintiffs’ Motion for Summary Judgment against the Defendant Billy Darren Foster [Doc. 38]. For the reasons set forth below, the Plaintiffs’ Motion is GRANTED in part and DENIED in part.

I. Background (David Lilenfeld: Here is a detailed discussion of the facts giving rise to this trademark infringement dispute)

From the late 1940s until his death on January 30, 2000, Jack Gibson was well known as the radio personality “Jack the Rapper.” (Pls.’ Statement of Facts ¶ 1.) He founded the National Association of Radio Announcers for Black Radio DJs, was the first National Director of Promotions and Public Relations for Motown Records, and opened the first African American owned and operated radio station in the United States. (Id. ¶ 3.) From 1977 until his death, Jack Gibson also hosted an annual event for radio and music artists called “Jack the Rapper’s Family Affairs Convention.” (Id. ¶ 5.) Many rhythm, blues, hip hop, and rap artists attended every year. (Id.) The “Jack the Rapper” alias is still used today in reference to Jack Gibson. (Id. ¶ 4.) Gibson’s heirs and licensees continue to promote the alias. (Id. ¶ 2.) Since 2007, the Jus’ Blues Music Foundation in Memphis, Tennessee has annually awarded the “Jack the Rapper Gibson Radio Pioneer Award.” (Id. ¶ 6.)

The Defendant Billy Foster, in concert with the other Defendants, hosted a series of events in different cities. Each was titled “The New Jack the Rapper Convention.” The first one was held in Atlanta, Georgia from December 6, 2012 to December 8, 2012. (Id. ¶ 13.) Prior to the Atlanta Convention, Foster contacted the Plaintiff Jill Bell through e-mail and expressed his interest in doing a tribute to Jack Gibson. (Id. ¶ 10.) Once Bell realized that Foster and the other Defendants were planning on using “Jack the Rapper” in the event’s title, she communicated her objection to no avail. (Id. ¶ 13.) Foster went on to file a trademark application for the title “The New Jack the Rapper Convention.” (Id. ¶ 12.) A second “New Jack the Rapper Convention” was then advertised and held in Houston, Texas from February 14, 2013 to February 16, 2013. (Id. ¶ 14.) Prior to the Houston Convention, on February 6, 2013, the Plaintiffs filed for a temporary restraining order to enjoin it. (Id.¶ 15.) A hearing was held over the TRO application on February 8, 2013, and the Plaintiffs entered into a Settlement Agreement with Foster. (Id. ¶ 16.)

Under this Agreement, Foster was to:

(1) pay to Plaintiffs $1,000.00 within three days;

(2) pay to Plaintiffs $5,000.00 on or before February 16, 2013;

(3) pay for Plaintiff Jill Bell or her representative, up to $1,000.00, to attend the

Houston, Texas convention;

(4) provide Plaintiffs with access to their books and records with respect to the

Houston, Texas convention;

(5) pay to Plaintiffs ten percent of the gross registration fees and sponsorship

revenues from their use of the “Jack the Rapper” mark as a license fee; and

(6) withdraw and cancel, upon execution of a licensing agreement, their federal

trademark application for “The New Jack the Rapper Convention,” serial

number 85787701, filed November 27, 2012.

(Id. ¶ 17; Pls.’ Mot. for Summ. J., Ex. C.) Foster made the initial $1,000.00 payment and covered a portion of the travel expenses for Bell’s representative to attend the Houston Convention. (Pls.’ Statement of Facts ¶¶ 19-21.) Foster did not fulfill the remaining obligations in the Settlement Agreement. (Id. ¶ 22.) A third “New Jack the Rapper Convention” was then held in New York City from April 18, 2013 to April 21, 2013. (Id. ¶ 23.)

It is undisputed that Foster used the “Jack the Rapper” mark when promoting these Conventions. (Id. ¶ 24.) The mark was also used to promote and sell products and services associated with the Conventions. (Id. ¶ 27.) Aside from the Settlement Agreement which covered the Houston Convention, the Plaintiffs never gave Foster permission to use the “Jack the Rapper” mark. (Id. ¶¶ 28, 30.) Foster did not receive permission from any other source. (Id. ¶ 31.) The Plaintiffs asserted claims for trademark infringement under 15 U.S.C. § 1125(a), trademark dilution under 15 U.S.C. § 1125(c), trademark infringement under Georgia law, unfair competition under Georgia law, and infringement of the right of publicity under Georgia law. The Plaintiffs now move for summary judgment against the Defendant Foster. Foster did not file a response.

II. Summary Judgment Standard (David Lilenfeld: Good summary of the law used to resolve a Motion for Summary Judgment in a trademark infringement case)

Summary judgment is appropriate only when the pleadings, depositions, and affidavits submitted by the parties show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c).

The court should view the evidence and any inferences that may be drawn in the light most favorable to the nonmovant. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970). The party seeking summary judgment must first identify grounds that show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The burden then shifts to the nonmovant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). "A mere 'scintilla' of evidence supporting the opposing party's position will not suffice; there must be a sufficient showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990). The Court “cannot base the entry of summary judgment on the mere fact that the motion was unopposed, but, rather, must consider the merits of the motion.” United States v. One Piece of Real Prop. Located at 5800 SW 74th Ave., Miami, Fla., 363 F.3d 1099, 1101 (11th Cir. 2004). However, the Court “need not sua sponte review all of the evidentiary materials on file at the time the motion is granted, but must ensure that the motion itself is supported by evidentiary materials.” (1 Id).

III. Discussion (David Lilenfeld: This is the “meat” of the Order (i.e., getting to the good stuff))

A. Trademark Infringement

The Plaintiffs’ “claims for trademark infringement under Georgia common law and unfair competition under Georgia common law and O.C.G.A. § 23-2-55 are governed by the same standard as [the Plaintiffs’] trademark infringement claim[] under the Lanham Act.” Alaven Consumer Healthcare, Inc. v. DrFloras, LLC, No. 1

Requests for admission were sent to Foster. He did not reply. “A matter is admitted unless, within 30 days after being served, the party to whom the request is directed serves on the requesting party a written answer or objection addressed to the matter and signed by the party or its attorney.” FED. R. CIV. P. 36(a)(3).

Thus, the Court need only resolve whether the Plaintiffs are entitled to judgment as a matter of

law on their section 1125(a) claim.  Section 43(a) of the Lanham Act creates a federal cause of action for the infringement of trademarks, regardless of registration status. 15 U.S.C. § 1125(a).

“To establish a prima facie case of trademark infringement under § 43(a), a plaintiff must show (1) that it had trademark rights in the mark or name at issue and (2) that the other party had adopted a mark or name that was the same, or confusingly similar to its mark, such that consumers were likely to confuse the two.” Tana v. Dantanna’s, 611 F.3d 767, 773 (11th Cir. 2010) (internal quotation marks omitted).

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which:

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 15 U.S.C. § 1125(a).

Here, the Plaintiffs had a proprietary right in the mark “Jack the Rapper” as used in the market for radio and music conventions. “[A] plaintiff need not have a registered mark.” Id. “However, only those marks that are capable of distinguishing the owner’s goods from those of others, i.e., that are sufficiently ‘distinctive,’ are eligible for federal registration or protection as common law marks under the Lanham Act.” Id. There are four categories of distinctiveness: “(1) generic--marks that suggest the basic nature of the product or service; (2) descriptive--marks that identify the characteristic or quality of a product or service; (3) suggestive--marks that suggest characteristics of the product or service and require an effort of the imagination by the consumer in order to be understood as descriptive; and (4) arbitrary or fanciful—marks that bear no relationship to the product or service, and the strongest category of trademarks.” Id. at 774. In this context, “Jack the Rapper” is at minimum a suggestive mark. It does not reference the particular service in question: hosting radio and music conventions. By using the word “rapper” it only alludes to the nature of the conventions. It is entitled to trademark protection. See id. (“Suggestive . . . marks are deemed ‘inherently distinctive’ because ‘their intrinsic nature serves to identify a particular source of a product’ and are generally entitled to trademark protection.”).

“The New Jack the Rapper Convention” was likely to mislead consumers into believing that it was endorsed by those with the right to the mark “Jack the Rapper.”

(David Lilenfeld: the seven factor likelihood of confusion analysis begins here:)

“In evaluating whether there is a likelihood of confusion between two marks, [the Court] applies a multifactor test, evaluating the following seven factors: (1) strength of the mark alleged to have been infringed; (2) similarity of the infringed and infringing marks; (3) similarity between the goods and service offered under the two marks; (4) similarity of the actual sales methods used by the holders of the marks, such as their sales outlets and customer base; (5) similarity of advertising methods; (6) intent of the alleged infringer to misappropriate the proprietor’s good will; and (7) the existence and extent of actual confusion in the consuming public.” Id. at 774-75.

“In this circuit, we are required to consider each of the seven factors.” Welding Services, Inc. v. Forman, 509 F.3d 1351, 1361 (11th Cir. 2007). (David Lilenfeld: Here, Judge Thrash applies the law to the particular facts of this trademark infringement lawsuit:) Six out of the seven factors support finding a likelihood of confusion. First, “[t]he strength of a trademark is essentially a consideration of distinctiveness.” Trilink Saw Chain, LLC v. Blount, Inc., 583 F. Supp. 2d 1293, 1310 (N.D. Ga. 2008)

(internal quotation marks omitted). As noted, the mark is “inherently distinctive” because it is only suggestive of the service. “The . . . more distinctive a trademark . . . the greater the likelihood of confusion and the greater the scope of protection afforded it.” Welding Services, 509 F.3d at 1361. The second factor also favors the Plaintiffs. Each Convention was given a title that included the protected mark: “The New Jack the Rapper Convention.” (Pls.’ Statement of Facts ¶¶ 9, 14, 23.) It is true that this includes additional words aside from “Jack the Rapper.” However, whether “an addition is sufficient to prevent confusion in a particular instance depends upon the strength of the main part of the mark and the distinctiveness of the mark and the distinctiveness of the additional feature.” Safeway Stores, Inc. v. Safeway Discount Drugs, Inc., 675 F.2d 1160, 1166 (11th Cir. 1982) (internal quotation marks omitted).

Here, of course, the mark “Jack the Rapper” is not only distinctive, but it was the focal point of the Conventions’ titles. Third, the services offered by Foster and the other Defendants were similar to those offered by Jack Gibson himself. They all hosted conventions for radio and music artists. The fourth and fifth factors also favor the  Plaintiffs. Foster targeted the same subsection of the music industry that Jack Gibson had targeted for his conventions, and Foster advertised in the same major market (Atlanta, Georgia). (Pls.’ Mot. for Summ. J., at 11; Bell Aff. ¶ 7.) The sixth factor favors the Plaintiffs as well. Foster intended to misappropriate “Jack the Rapper’s” goodwill. This inference may be drawn from his use of the highly distinctive mark itself. In addition, Foster contacted the Plaintiff Bell to express his interest in putting together a tribute to Jack Gibson. (Pls.’ Statement of Facts ¶ 10.) Thus, Foster certainly used the mark “Jack the Rapper” intending to capitalize on the popularity of Jack Gibson’s radio personality. The seventh factor, however, does not favor the Plaintiffs. They have not supplied any evidence of actual confusion. Nevertheless, the remaining factors are sufficient to show that there is a likelihood of confusion.

(David Lilenfeld: Here, the Court discusses the damages available to plaintiff in this trademark infringement lawsuit) The Plaintiffs are entitled to damages. They may recover (1) Foster’s profits, (2) any damages they sustained, and (3) the costs of this action. 15 U.S.C. § 1117(a). Here, further discovery is necessary to establish the amount that the Plaintiffs may recover. First, the Plaintiffs assert that they are entitled to the "$15,000 profits realized by [Foster] by reason of his unlawful acts," as well as treble damages. (Pls.' Mot. For Summ. J., at 21-22.) The Plaintiffs claim that this amount is derived from the Settlement Agreement that the parties reached regarding “The New Jack the Rapper Convention” held in Houston, Texas. This does not, however, speak to Foster’s profits from the Conventions held in Atlanta, Georgia and New York City. The record lacks evidence necessary to calculate Foster's profits for those two Conventions. Second, the Plaintiffs assert that they suffered damages in the amount of $36,000. The evidence in the record does not support this. For example, the Plaintiffs claim that they would have received $25,000 from a "Jack the Rapper" conference that they planned on holding in Atlanta in August 2013. (Pls.’ Mot. for Summ. J., at 21-22.)

There is no evidence indicating that they would have made $25,000. There is also no argument for why they were prohibited from holding this conference and no evidence indicating that -- due to Foster's infringement -- they would have made less money if they had held it. The Plaintiffs also allege that they lost $10,000 from the "loss of value in licensing Plaintiffs' trademark to persons other than Defendants for other Jack the Rapper events." (Pls.’ Mot. for Summ. J., at 22.) This suffers from the same evidentiary deficiencies. The Plaintiffs further allege that they are entitled to $1,000 pursuant to the Settlement Agreement. This may be true, but these are not damages that they are entitled to under section 1117(a).

(David Lilenfeld: This is the detailed Court discussion about injunctive and equitable relief in this trademark infringement action) The Plaintiffs also request equitable relief. The Court may “grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable . . . to prevent a violation under subsection (a).” 15 U.S.C. § 1116(a). Here, the Plaintiffs are entitled to injunctive relief but not in the form they suggest. They request that the Court issue an injunction with six vague, overly broad provisions. For example, they request that Foster be enjoined from “using in any manner any of the Plaintiffs’ Marks, including the Jack the Rapper Mark, or any other mark which so resembles said trademark as to be likely to cause confusion, deception, or mistake, on or in connection with . . . sale of any goods or services not emanating from Plaintiffs,” and that he be enjoined from “otherwise competing unfairly with Plaintiffs in any manner.” (Pls.’ Mot. for Summ. J., at 19-20.) "Every order granting an injunction . . . must . . . (B) state its terms specifically; and (C) describe in reasonable detail . . . the act or acts restrained or required." FED. R. CIV. P. 65(d)(1). "A court order should be phrased in terms of objective actions, not legal conclusions." S.E.C. v. Goble, 682 F.3d 934, 950 (11th Cir. 2012) (internal quotation marks omitted). The specificity requirement is "designed to prevent uncertainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be understood." Schmidt v. Lessard, 414 U.S. 473, 476 (1974). The Plaintiffs’ requested wording is too vague. See John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 985 (11th Cir. 1983) (“[T]he injunction should clearly let defendant know what he is ordered to do or not to do. . . .[a]n injunction which merely forbids a defendant from performing ‘acts of unfair competition,’ or from “infringing on plaintiff's trademarks and trade secrets” adds nothing to what the law already requires.”). The Plaintiffs also do not specify the other marks that they believe are protected aside from “Jack the Rapper.” The Court will limit the injunction to the specified infringing acts. Thus, the injunction should bar Foster from using the “Jack the Rapper” mark, or causing the “Jack the Rapper” mark to be used, in connection with conventions catering to the radio and music industries, as well as associated services and merchandise.

The Plaintiffs also generally request that the Foster turn over, for destruction, certain items bearing the "Jack the Rapper" mark. (Pls.’ Mot. for Summ. J., at 20-21.) The Court may grant such relief under 15 U.S.C. § 1118. However, there is no evidence in the record regarding what these items are, or that Foster possesses them. To the extent that the Plaintiffs allege that certain goods and services were sold in application he filed with the United States Patent and Trademark Office, (Pls.’ Mot. for Summ. J., Ex. B), to register the mark “The New Jack the Rapper Convention.”

The Plaintiffs also seek attorneys' fees. "The court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). "While Congress has not further defined 'exceptional,' the legislative history of the Act suggests that exceptional cases are those where the infringing party acts in a 'malicious,' 'fraudulent,' 'deliberate,' or 'willful' manner." Burger King Corp. v. Pilgrim's Pride Corp., 15 F.3d 166, 168 (11th Cir. 1994) (citing H.R. Rep. No. 93-524, 93rd Cong., 1st Sess. (1974), reprinted in 1974 U.S.C.C.A.N. 7132, 7133). Here, attorneys’ fees are appropriate. Foster used the protected mark "Jack the Rapper" knowing that it was the distinctive alias of Jack Gibson. That is precisely why he used it. The Plaintiffs are entitled to attorneys' fees in the amount of $11,994.86. (Pls.' Mot. for Summ. J., at 23.) The Plaintiffs also ask for punitive damages. However, connection with the infringing conventions, the injunction will prohibit further sale of those goods and services by Foster.

Other courts have also issued injunctions requiring an infringer to withdraw a trademark application. See, e.g., A.V. By Versace, Inc. v. Gianni Versace, S.p.A., 96 CIV.9721-PKL-THK, 2004 WL 691243 (S.D.N.Y. Mar. 31, 2004) (The defendant “was obligated under the preliminary injunction to withdraw all such applications and registrations made or granted throughout the world . . ..”); Simon Prop. Grp., L.P. v. mySimon, Inc., IP 99-1195-C H/G, 2001 WL 66408 (S.D. Ind. Jan. 24, 2001); A.C. Legg Packing Co., Inc. v. Olde Plantation Spice Co., Inc., 61 F. Supp. 2d 426 (D. Md. 1999).

“Punitive damages are not available under the Lanham Act.” Rain Bird Corp. v. Taylor, 665 F. Supp. 2d 1258, 1272 (N.D. Fla. 2009); see also Huddle House, Inc. v. Two Views, Inc., 1:12-CV-03239-RWS, 2013 WL 1390611, at *5 (N.D. Ga. Apr. 4, 2013); Babbit Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161, 1183 (11th Cir. 1994) ("Such an award is discretionary, but it may not be punitive, and must be based on a showing of actual harm.").

B. Trademark Dilution Under Section 1125(c)

A plaintiff is entitled to injunctive relief if (1) the plaintiff owns a distinctive famous mark, (2) another person began using a mark after the plaintiff’s mark became famous, and (3) the person’s mark is likely to cause “dilution by blurring” or “dilution by tarnishment” of the plaintiff’s famous mark. See 15 U.S.C. § 1125(c)(1).

A plaintiff does not need to show actual or likely confusion, competition, or actual economic injury for this claim. See id. Here, “Jack the Rapper” is a famous mark. “[A] mark is famous if it is widely recognized by the general consuming public of the United States as a designation of "[T]he owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner's mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring . . . of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury."15 U.S.C. § 1125(c)(1). Source of the goods or services of the mark’s owner.” 15 U.S.C. § 1125(c)(2)(A). The Court may look to factors such as: (1) “[t]he duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties”; (2) “[t]he amount, volume, and geographic extent of sales of goods or services offered under the mark”; (3) “[t]he extent of actual recognition of the mark”; and (4) [w]hether the mark was registered . . ..” 15 U.S.C. § 1125(c)(2)(A)(i)-(iv). Although the “Jack the Rapper” mark is not registered, multiple factors suggest that it is famous. Jack Gibson began using this alias in the late 1940s, and it has been promoted throughout the world ever since. (Pls.’ Statement of Facts ¶¶ 1-2, 4.) Jack Gibson used this alias in connection with his radio programming as well as the conventions he hosted for those in the radio and music industries. (Id. ¶¶ 5.) This mark is widely recognized. (Id. ¶¶ 4, 6, 10.) Further, there is no dispute that the Conventions hosted by the Defendants were held after the “Jack the Rapper” mark became famous.

To satisfy the third prong, the Plaintiffs argue that the title “The New Jack the Rapper Convention” “dilutes by blurring” the “Jack the Rapper” mark. “‘[D]ilution by blurring’ is association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.” 15 U.S.C. § 1125(c)(2)(B). The Court must consider factors similar to those assessed in the “likelihood of confusion” analysis for the section 1125(a) claim.

The Court need not reiterate the same conclusions. The Plaintiffs have established that Foster’s use of “Jack the Rapper” in naming the Conventions impairs the distinctiveness of the mark.

C. Right of Publicity (David Lilenfeld: A rare discussion of Right of Publicity under Georgia law, especially in a trademark infringement case)

"Violation of the right of publicity is a state tort." Toffoloni v. LFP Publ'g Grp., LLC, 572 F.3d 1201, 1205 (11th Cir. 2009). "[T]he appropriation of another's name and likeness . . . without consent and for the financial gain of the appropriator is a tort in Georgia, whether the person whose name and likeness is used is a private citizen, entertainer, or . . . a public figure who is not a public official." Martin Luther King, Jr., Ctr. for Soc. Change, Inc. v. American Heritage Products, Inc., 250 Ga. 135, 143 (1982). "[T]he right of publicity survives the death of its owner and is inheritable and “In determining whether a mark or trade name is likely to cause dilution by blurring, the court may consider all relevant factors, including the following: (i) The degree of similarity between the mark or trade name and the famous mark. (ii) The degree of inherent or acquired distinctiveness of the famous mark. (iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark. (iv) The degree of recognition of the famous mark. (v) Whether the user of the mark or trade name intended to create an association with the famous mark. (vi) Any actual association between the mark or trade name and the famous mark.” 15 U.S.C. § 1125(c)(2)(B).

(David Lilenfeld: here is the normal discussion of injunctive relief in a trademark infringement case): In addition to injunctive relief, the Plaintiffs also request damages identical to those requested pursuant to their section 1125(a) claim. The Court addressed these  damages in the section 1125(a) analysis.

"[T]he measure of damages to a public figure for violation of his or her right of publicity is the value of the appropriation to the user." Id. at 143. Here, the Plaintiffs have established each element against Foster. He appropriated the alias “Jack the Rapper,” which is known to be associated with Jack Gibson. (Pls.’ Statement of Facts ¶¶ 9, 13-14, 20, 23-27.) He did not have permission from any party possessing the right to Jack Gibson’s publicity. (Id. ¶¶ 29, 30-31.) He used the alias to promote the Conventions for financial gain. (Id. ¶ 32.) Consequently, Foster is liable to the Plaintiffs for the amount he gained through his appropriation of the “Jack the Rapper” alias.

IV. Conclusion

For these reasons, the Court GRANTS in part and DENIES in part the Plaintiffs’ Motion for Summary Judgment in this trademark infringement case against the Defendant Billy Darren Foster [Doc. 38]. The Court ORDERS that the Defendant Billy Darren Foster: (1) discontinue further use and attempts to cause further use of the “Jack the Rapper” mark in connection with conventions catering to the radio and music industries, as well as associated services and merchandise; and (2) withdraw the application filed with the United States Patent and Trademark Office to register the mark “The New Jack the Rapper Convention,” U.S. Trademark Application Serial No. 85,787,701 (filed Nov. 27, 2012).

SO ORDERED, this 2 day of December, 2013.

/s/Thomas W. Thrash

THOMAS W. THRASH, JR.

United States District Judge

T:\ORDERS\13\Bell\msjtwt.wpd -18-

Case 1:13-cv-00405-TWT Document 42 Filed 12/02/13 Page 18 of 18

 

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

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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

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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

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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

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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

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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.

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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

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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.

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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.

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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

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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

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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

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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

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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.

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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

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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

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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

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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).

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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

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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].

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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

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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

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‘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.

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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.

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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

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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

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“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].

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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

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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].

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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

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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

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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

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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.

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“‘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

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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).

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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

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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).

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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.

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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

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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.

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“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

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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

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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).

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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

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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.

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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.

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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).

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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• 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

Reasons to Conduct a Proper Trademark Search

Why do we recommend a trademark clearance search?  I hear that question fairly often.

As trademark attorneys, we are asked that question often.  Here is our answer, at least a summary of our answer.

The United States trademark laws are based upon the “first to use” – in other words, whoever uses the trademark first for particular goods or services, generally speaking, has the best rights to that trademark for those goods or services.

You don’t want to knowingly (this includes the “should have known” standard) infringe on someone’s trademark. This can result in possibly having to pay damages such as: (1) disgorgement of profits; (2) damages caused by the infringement, which can be trebled; (3) costs of bringing the lawsuit; (4) attorney’s fees; and (5) destruction of inventory.

A trademark owner can use your failure to search as a willful attempt to “blind yourself” to readily available information.

Searching prior to applying for registration may help you identify potential obstacles to registration, such as those encountered by a similar trademark. You can even see how the applicant responded to the Office Actions under the TSDR tab on the USPTO website.

A report also shows the types of trademarks which tend to be accepted or rejected by the USPTO and design your trademarks accordingly, thereby optimizing your chances of approval.

While a trademark search report costs a few hundred dollars, it is obviously preferable to spend a small amount of money up front rather than a lot of money later in litigation.

David Lilenfeld

 

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

 

20Jan/160

Nestlé Can’t Get a Trademark Break for its Kit Kat Bar

Kit Kat, the iconic chocolate-covered wafer candy, was first produced in Great Britain in 1935.  Nestlé understandably wanted to register the Kit Kat’s four-finger shape as a trademark, filing an application there in 2010.

In arguing for registration of the trademark, Nestlé’s relied heavily on a survey its experts conducted.  In administering the survey, Nestlé presented a photograph of the four-finger shape to consumers and asked them – to describe what they saw.  According to Nestlé, more than 90% of those surveyed made a reference to the Kit Kat bar, upon viewing the four-finger shape.  

However, the British courts were not enticed and cooked up another bad break for Nestlé.  The European Court of Justice Court refused to acknowledge the four-finger anatomy of the Kit Kat bar as a protectable trademark.  The rejected trademark, described in the case as the “shape of a four finger chocolate-coated wafer," likely leaves wide-open the market for other four finger chocolate covered candies, undoubtedly leaving a bad taste in Nestlé’s mouth.

First up to explore that wide-open market could be Nestlé’s rival, Cadbury, who led the charge to ensure the high court rejected Nestlé’s four-finger trademark application.

By the way, David Lilenfeld's research into this story revealed the Kit Kat is made by a division of Hershey, under a license from Nestlé and taste great.

19Jan/160

Cuozzo Speed v. Lee — IPR Patent Proceedings

Late last week, the @SCOTUS granted cert. in Cuozzo Speed v. Lee. The case will have a significant impact on post-grant patent proceedings before the Patent and Trademark Office.  Two questions are presented to the Supreme Court:

Question 1. Whether, even if the Board exceeds its statutory authority in initiating an IPR proceeding, the Board's decision whether to institute an IPR proceeding is judicially unreviewable.

Question 2. Whether in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

"This one will be fun to watch," said David Lilenfeld, founder of Lilenfeld PC.

 


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