SCOTUS: Willfulness Not Required for Trademark Infringement Plaintiff to Recover Defendant’s Profits

Author: Patrick Mulkern

On April 23, 2020, the Supreme Court resolved a long-standing circuit split regarding whether a trademark infringement plaintiff must show willfulness as a prerequisite to recovery of the defendant’s profits. In Romag Fasteners, Inc. v. Fossil, Inc., Case No. 18-1233 (Apr. 23, 2020),1 a near-unanimous Court2 lowered the bar for half the country, announcing: no, a trademark holder need not show willfulness before it can recover the accused infringer’s profits.

Summary of Underlying Dispute

Petitioner Romag Fasteners, Inc. (“Romag”) sells magnetic snap fasteners for use with leather goods, while Respondent Fossil, Inc. (“Fossil”) sells fashion accessories. The parties entered an agreement under which Fossil would use Romag’s fasteners in Fossil’s handbags. Eventually, Romag learned that Fossil’s manufacturer was using counterfeit fasteners instead of authentic Romag products.

At trial, the jury agreed with Romag, finding that Fossil had infringed and acted “in callous disregard” of Romag’s rights—but ultimately rejected the contention that Fossil had acted “willfully” as that term had been defined by the judge. Therefore, pursuant to then-applicable Second Circuit precedent under which a trademark plaintiff must first prove the infringement was willful, Romag could not recover Fossil’s profits. A well-defined split among the circuit courts on this issue led to the Supreme Court’s grant of certiorari.

Court’s Decision

The Court’s decision can be broken down into three sections: a statutory interpretation portion, a historical analysis portion, and a policy argument portion.

The statutory interpretation segment began with the language of the Lanham Act, noting the only limitation on recovery under Section 1117(a) (including “defendant’s profits”) was “subject to the principles of equity.” The Court explained why this limitation was significant, as the Lanham Act does explicitly require willfulness as a precondition for profits under Section 1125(c) (governing dilution)—but Romag had proceeded under Section 1125(a) (relating to false or misleading use of trademarks). The Court identified a slew of instances in which the Lanham Act clearly required specific mental states,3 and concluded that “this court [does not] usually read into statutes words that aren’t there. It’s a temptation we are doubly careful to avoid when Congress has (as here) included the term in question elsewhere in the very same statutory provision.”

The Court then reviewed Fossil’s argument that “principles of equity” provided a historical basis for requiring willfulness—an argument that the Court characterized as a “curious suggestion.” Citing first to Black’s Law Dictionary, then treatises from the 1800s, as well as several of the Supreme Court’s own decisions, the Court held “principles of equity” is a “trans-substantive” concept and does not relate or call to mind any trademark-specific requirements. Even if the Court were to assume the Lanham Act sought to incorporate common law principles, it was “far from clear whether trademark law historically required a showing of willfulness before allowing a profits remedy.” On this point, the Court acknowledged competing authority—with Fossil’s cases seeming requiring willfulness, and the fact that “Romag cites other cases that expressly rejected any such rule”—and then reiterated “the ordinary, trans-substantive principle that a defendant’s mental state is relevant to assigning an appropriate remedy.”

Finally, the Court’s decision concluded by identifying the parties’ competing policy arguments, then punted, stating, “the place for reconciling competing and incommensurable policy goals like these is before policymakers” (i.e., Congress).

Concurring Opinions

Justices Alito, Breyer, and Kagan wrote one of two concurrences, in which they simply reiterated the point that “willfulness is a highly important consideration in awarding profits under § 1117(a), but not an absolute precondition.” Justice Sotomayor wrote the other concurrence, in which she rejected the majority’s suggestion that profits would (or should) ever be awarded for innocent infringement, but agreed in the ultimately judgment. In so finding, she wrote to explicitly disagree with any interpretation of the Lanham Act in which profits could be awarded “for innocent or good-faith trademark infringement[.]”

Impact

This decision lowers the bar for nearly half the country, as the First, Second, Eighth, Ninth, Tenth, and D.C. Circuits had previously used willfulness as a threshold requirement in trademark infringement claims seeking defendants’ profits. Now, it is likely that defendant’s profits analysis will track that which has been used in the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits, where willfulness was just one of several factors in a flexible analysis. See, e.g., Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 349 (5th Cir. 2002) (stating that “willful infringement” is “an important factor”).

Ultimately, the following passage from the Court’s opinion (together with the language found in both concurring opinions) will likely serve as support for those circuit courts that wish to make willfulness a key factor in their analysis going forward:

[I]t is a principle long reflected in equity practice where district courts have often considered a defendant’s mental state, among other factors, when exercising their discretion in choosing a fitting remedy. . . . Given these traditional principles, we do not doubt that a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate. But acknowledging that much is a far cry from insisting on the inflexible precondition to recovery Fossil advances.

About the author: Patrick J. Mulkern is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on intellectual property litigation and transactional matters, with a particular emphasis on patent, trademark, and trade secret litigation. Mr. Mulkern is a registered patent attorney and his biography can be found here.
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1 https://www.supremecourt.gov/opinions/19pdf/18-1233_5he6.pdf.
2 Justice Gorsuch delivered the opinion of the court, with which all but one justice joined. Justice Sotomayor concurred in the judgment only.
3 See, e.g., § 1117(b) (requiring treble damages and attorney’s fees when certain conduct is intentional); § 1117(c) (increasing cap on statutory damages for certain willful violations); § 1118 (permitting courts to destroy infringing items for any violation of section 1125(a) or any willful violation of section 1125(c)); § 1114 (providing certain innocent infringers subject only to injunction); § 1125(d)(1)(A)(i) (prohibiting certain conduct only if undertaken with “bad faith intent”).

Lions, Tigers, and Trademarks: IP Lessons from “Tiger King”

Author: Alison Pringle

Netflix’s recent docu-series “Tiger King” has quarantined Americans captivated—a reported 34 million viewers binged the series within the first ten days of its release alone. Amongst the series’ tiger-related exploits lies a bitter trademark lawsuit brought against the series’ mullet-sporting anti-hero Joseph Maldonado-Passage (known to viewers as “Joe Exotic”).

Maldonado-Passage created the Oklahoma-based “GW Exotic Animal Memorial Park” and filled it with tigers, lions, and other exotic animals. Throughout the 2000s, Maldonado-Passage became infamous in animal rights circles for breeding tiger cubs and exhibiting his animals at malls across the country.

The “Tiger King” series chronicles the long-standing feud between Maldonado-Passage and Carole Baskin. Baskin is the founder of “Big Cat Rescue,” a non-profit sanctuary for big cats. Maldonado-Passage was eventually put on trial after an unsuccessful plot to murder Baskin went awry. While Maldonado-Passage is currently serving a twenty-two year prison sentence for attempted murder-for-hire and violations of the Endangered Species Act, it was a trademark judgment that served as the catalyst for Exotic’s downfall.

Trademark Litigation

In 2005, the Big Cat Rescue Corp. registered a BIG CAT RESCUE logo for charitable fund raising services, animal rescue services, and entertainment services such as animal exhibition1:

After trying to shut down Maldonado-Passage for years, it was Baskin’s trademark rights that allowed her to finally pounce and take legal action against him. In 2011, Big Cat Rescue filed a lawsuit in the Middle District of Florida against Maldonado-Passage and GW Exotic after the latter adopted the trade name “BIG CAT RESCUE ENTERTAINMENT.” Big Cat Rescue alleged Maldonado-Passage and GW Exotic sought to disparage Big Cat Rescue through the “BIG CAT RESCUE ENTERTAINMENT” mark by causing the public to believe Big Cat Rescue was engaged in the exploitation of exotic animals.

For a trademark infringement claim, a plaintiff must show that: (1) it has developed a protectable trademark right in a trademark; (2) the defendant uses a confusingly similar mark in such a way that creates a likelihood of confusion, mistake and/or deception with the public; and (3) the plaintiff incurred damages as a result of the defendant’s infringing actions.

Big Cat Rescue’s trademark registration evidenced its rights in the “BIG CAT RESCUE” mark. Big Cat Rescue also did not have a large hurdle to jump in demonstrating Maldonado-Passage’s “BIG CAT RESCUE ENTERTAINMENT” mark was confusingly similar to the “BIG CAT RESCUE” mark. Big Cat Rescue further presented three key facts demonstrating Maldonado-Passage willfully infringed its mark.

First, Maldonado-Passage created the below ad featuring the “BIG CAT RESCUE ENTERTAINMENT” mark over a photo of a snow-leopard’s eyes, which Big Cat Rescue alleged was “virtually identical” to a photograph Big Cat Rescue used as the banner for its website at the time. The ad for the Oklahoma-based zoo displayed a Florida telephone number and the words “Florida Office,” which Big Cat Rescue argued would confuse the public into believing “Big Cat Rescue Entertainment” was affiliated with the Florida-based Big Cat Rescue.

Second, Big Cat Rescue demonstrated Maldonado-Passage used the BIG CAT RESCUE ENTERTAINMENT mark to try to divert Google traffic to his sites rather than those of Big Cat Rescue. A Facebook post created by a user named “Joe Exotic” stated, “If you must know, I registered Big Cat Rescue Entertainment and leased the name out so you could ruin BCR on Google all by yourself, and it is working. LOL.” Another “Joe Exotic” post referred to Big Cat Rescue Entertainment as “My new company LOL.” Maldonado-Passage attributed both posts to hackers.

Finally, Big Cat Rescue alleged Maldonado-Passage had also sought to file the trade name “The Caroll Baskin Entertainment Group.”

In defense of the infringement claim, Maldonado-Passage argued in his pre-trial statement that his actions were a necessary response to BCR’s campaign of disseminating misinformation about him in an effort to shut him down:

Defendants had no alternative but to respond, in part, by reflecting the egregious conduct of BCR and the Baskins back upon BCR through a counter-campaign designed to do nothing more than cause BCR to suffer from its own misconduct.

This lawsuit, and BCR’s abuse of copyright laws, is merely one more tool for the Baskins and BCR in their all-out assault on Defendants.

This argument did not absolve Maldonado-Passage from liability for the trademark claims brought against him. The parties ultimately stipulated to entry of a consent judgment against Defendants prior to trial.

References to Baskin’s Late Husband Excluded from Trademark Trial

Of note for fans of the series and legal procedure buffs, Big Cat Rescue filed a motion in limine to exclude any reference at trial to Baskin’s late husband, Jack Donald Lewis. Lewis’s 1997 disappearance remains a significant source of controversy and was featured heavily in the docu-series. Throughout his feud with Baskin, Maldonado-Passage frequently spouted his belief that Baskin killed Lewis and fed him to one of her tigers. Maldonado-Passage even went so far as to reference Lewis’s disappearance in his pretrial statement and press releases related to the lawsuit. As Big Cat Rescue argued, and the Court affirmed in granting the motion (unsurprisingly), mention of Lewis’s disappearance would likely prejudice a jury against Big Cat Rescue and had no relevance to the trademark infringement claims at issue.

Trademark Judgment

 The docu-series demonstrates the power and value of a trademark as well as the potentially high stakes of an infringement suit. The trademark judgment aided in eventually bringing down the “Tiger King.” Big Cat Rescue was able to recover all of Maldonado-Passage and GW Exotic’s profits from their mall road shows during the time period Defendants adopted the “BIG CAT RESCUE ENTERTAINMENT” mark. Total gross receipts from Defendants’ road shows between 2010 and 2011 equaled $653,000.00. Big Cat Rescue was also entitled to $300,000 for its attorneys’ fees and costs related to the trademark lawsuit, amounting to a total judgment of $953,000.

As shown in the series, the judgment financially ruined Maldonado-Passage and GW Exotic. Big Cat Rescue’s aggressive judgment enforcement actions seem to have sent Maldonado-Passage into a tailspin that eventually led to him hiring a hitman to take out Baskin.

Tiger King offers much in the way of Jerry Springer-esque entertainment and nothing when it comes to moral guidance. Viewers can take away one lesson, though: don’t use your competitor’s trademark as a weapon and brag about it on the internet.

Alison Pringle is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on intellectual property and commercial litigation, with an emphasis on trademark, copyright, contract, technology, and privacy disputes. She also counsels clients on transactional intellectual property issues. Ms. Pringle’s biography can be found here.
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1 USPTO Serial No. 76568568. In 2014, the Big Cat Rescue Corp. also registered the word mark BIG CAT RESCUE under USPTO Serial No. 85850084.

Damages in Trademark Infringement: Is Willfulness Required for Defendant’s Profits?

Author: Patrick Mulkern

Introduction

On June 28, 2019, the Supreme Court agreed to take up a case that looks to settle an equally-divided circuit split regarding the threshold evidentiary showing required before a trademark infringement plaintiff can recover the infringer’s profits. In Romag Fasteners, Inc. v. Fossil, Inc. et al., Case No. 18-1233, the petitioner sought a writ of certiorari on the question of: “Whether, under section 35 of the Lanham Act, 15 U.S.C. § 1117(a), willful infringement is a prerequisite for an award of an infringer’s profits for a violation of Section 43(a), 15 U.S.C. § 1125(a).”

Underlying Dispute

The case stems from a long-standing dispute between Petitioner Romag Fasteners, Inc. (“Romag”) and Respondents Fossil, Inc. and its retailers (collectively, “Fossil”). Romag sells patented magnetic snap fasteners under the ROMAG trademark. Fossil designs and distributes various items like handbags. In 2002, Romag and Fossil entered into an agreement where Fossil would use Romag’s fasteners in its products. In 2010, however, Romag discovered certain Fossil products were being sold in the United States with counterfeit fasteners bearing the ROMAG mark.

Romag brought suit against Fossil in November 2010, alleging both patent and trademark infringement. In April 2014, a jury found that Fossil had infringed Romag’s trademark, infringed Romag’s patent, but that none of Fossil’s violations were willful. The jury then awarded about $90,000 in Fossil profits to Romag “to prevent unjust enrichment” and another $6.7 million in profits to Romag “to deter future trademark infringement”—attributing 1% of Fossil’s profits to its trademark infringement. The district court ultimately determined, however, that “Romag is not entitled to any award of profits as a result of [its] failure to prove that Fossil’s trademark infringement was willful.”

Romag appealed to the Federal Circuit, which affirmed the district court’s ruling, though noting the circuit split on the issue of whether willfulness was required for an award of an infringer’s profits. Romag then filed a writ petition, seeking resolution of two questions: (1) the trademark question raised here, and (2) an unrelated patent question involving laches. The Supreme Court had addressed the second patent question in an intervening decision and so Romag’s petition was granted, the Federal Circuit’s decision was recalled, and the case was remanded to the district court for evaluation of that patent damages issue.

In November 2017, the district court entered an amended judgment. Romag again appealed, though Fossil opposed review of the trademark issue claiming it had already been litigated. In February 2019, the Federal Circuit agreed with Fossil and limited the appeal to the patent damages issues. Romag then petitioned the Supreme Court for review.

Petition for Certiorari

Romag’s petition is predicated on the significant and stark split among the circuits with respect to whether a trademark plaintiff must establish willful infringement before it can be entitled to an award of the infringer’s profits. Six have said “yes, they do”; six have said “no, they do not.”

The Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits do not require a willfulness showing before an award of profits. Instead, the infringer’s intent is just one of several factors in a flexible analysis. See, e.g., Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 349 (5th Cir. 2002) (“plain language of 1117(a)” includes no bright-line rule; “willful infringement” is instead “an important factor which must be considered”).

The First, Second, Eighth, Ninth, Tenth, and D.C. Circuits do require a threshold showing of willfulness before a plaintiff can litigate their entitlement to recover an infringer’s profits. The Second, Eighth, Ninth, Tenth, and D.C. Circuits require that willfulness showing in all instances. See, e.g., Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d 426, 441 (9th Cir. 2017) (“willfulness remains a prerequisite for awarding a defendant’s profits”). The First Circuit requires a willfulness showing only if the litigants are not direct competitors. See, e.g., Fishman Transducers, Inc. v. Paul, 84 F.3d 187, 191 (1st Cir. 2012) (describing the direct-competition context as the “primary exception” to the “usual[] require[ment]” of willfulness).

Against this backdrop, Romag argued that a willfulness requirement “often determines whether the mark holder can recover any monetary remedy for a trademark violation” for compensation based on a plaintiff’s actual damages “is often difficult to measure and obtain.” Pet. at 20. While many courts require actual confusion to receive damages, “literally hundreds of cases . . . have universally acknowledged that proof of actual confusion is extremely difficult, if not almost impossible, to secure.” Id. Therefore, Romag explained, “[a]n award of the infringer’s profits . . . can be the difference between a meaningful recovery for trademark infringement and no recovery at all.”

Next Steps

The Supreme Court granted the petition without comment. Though not yet formally set, a joint motion following the petition being granted suggests the case will be heard during the January 2020 term—with a decision likely announced in Summer 2020. Given the binary outcome that is likely to result—yes, willfulness is required; or no, willfulness is not required—the decision may potentially have a significant impact on the scope of damages available in trademark cases for half the country. Whether they become easier or more difficult to secure for that half, though, remains to be seen.

About the author: Patrick J. Mulkern is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on intellectual property litigation and transactional matters, with a particular emphasis on patent, trademark, and trade secret litigation. Mr. Mulkern is a registered patent attorney and his biography can be found here.

Craft Beer Attorneys Can Describe Their Services As Craft Beer Attorneys

Author: Michael Kanach

In an interesting case for intellectual property lawyers specializing in craft beer, distilled spirits, and wine, the trademark dispute between a dozen law firms over the use of the phrase “CRAFT BEER ATTORNEY” is now over.

Craft beer attorneys everywhere are relieved. They can go back to describing themselves as CRAFT BEER ATTORNEYS without the threat of a lawsuit due to a pending application to federally register the trademark for the phrase that describes their legal services.

Like other descriptive terms in the craft brewing industry, such as BREWING COMPANY, BREWERY, ALE, or NE IPA, and descriptive terms in the legal industry, such as ATTORNEY, ESQ. or LAW FIRM, these terms may be used without the apprehension of suit for trademark infringement when used to accurately describe one’s goods or services. Typically, an attempt to register as a trademark a generic and merely descriptive word or phrase will be refused by the United States Patent and Trademark Office (“USPTO”). The public policy behind refusing registration of these words and phrases – or disclaiming them – is to permit individuals and companies to describe their goods and services in fair competition.  In addition, such words and phrases do not indicate a single source of those goods and services, so they do not function as a trademark.

Here, the applicant, the law firm of The Craft Beer Attorney, APC, filed an application to register the trademark CRAFT BEER ATTORNEY in connection with legal services. The application was filed almost three years ago, on January 15, 2015 (Serial No. 86504533). The USPTO sent an office action refusing the mark as (1) generic, and, alternatively, (2) merely descriptive, and (3) lacking sufficient evidence of acquired distinctiveness. This was followed by the Applicant’s response, which overcame the refusals, and a notification of publication was issued on December 16, 2015. On January 5, 2016, the mark was published in the Official Gazette for the purpose of opposition “by any person who believes he will be damaged by the registration of the mark.”

Who would file an opposition? It turns out that eleven law firms filed oppositions in the allotted time: (1) Funkhouser Vegosen Liebman & Dunn Ltd.; (2) Nossaman LLP; (3) GrayRobinson, PA; (4) Tannenbaum Helpern Syracuse & Hirschtritt LLP; (5) Lehrman Beverage Law, PLLC; (6) Davis Wright Tremaine LLP; (7) Ward and Smith PA; (8) Strike & Techel LLP; (9) Martin Frost & Hill PC; (10) Spaulding Mccullough & Tansil LLP; and (11) Wendel Rosen Black & Dean LLP (See USPTO Trademark Trial and Appeal Board (“TTAB”) Opposition No. 91227647 (parent)).

In their Oppositions, the other law firms argued that the trademark CRAFT BEER ATTORNEY was generic and/or descriptive, among other things. A generic name is entitled to no trademark protection, as it is part of the common language that we need to identify such services or goods. A generic name refers to the services or goods, rather than to the mark owner’s brand for the services or goods. A descriptive name is a word or phrase that identifies or describes some aspect, characteristic, or quality of the services or goods to which the mark is affixed in a straightforward way that requires no exercise of imagination to be understood. Descriptive words must acquire distinctiveness or secondary meaning to be protectable as a trademark. In other words, the consumers must come to recognize the mark as designating a single source.

As the Ninth Circuit’s jury instructions state: “Descriptive marks are entitled to protection only as broad as the secondary meaning they have acquired, if any. If they have acquired no secondary meaning, they are entitled to no protection and cannot be considered a valid mark.” Ninth Circuit Manual of Model Civil Jury Instructions, 15.11(last modified September 2017).

These twelve parties litigated before the TTAB for more than a year and a half, and participated in discovery.

On October 31, 2017, the Applicant’s representative, Candace L. Moon, filed an Express Abandonment of Application Serial No. 86504533, seeking to withdraw the application and end the dispute over the name. As a result of the Applicant’s abandonment, judgment was entered against applicant. In a November 7, 2017 Board decision sustaining the oppositions filed by the eleven law firms, the TTAB held that oppositions were sustained and registration to applicant was refused.

Now, all of these attorneys can get back to work representing their craft beer clients and describing themselves as CRAFT BEER ATTORNEYS without the potential threat of a lawsuit.

For more information about Gordon Rees Scully Mansukhani LLP’s Intellectual Property Practice Group, including the firm’s specialization in the craft beer industry, please visit www.grsm.com/practices/food-beverage/craft-breweries intellectual property law. Mr. Kanach is a Partner in the firm’s Intellectual Property and Food & Beverage practice groups, and a frequent speaker and writer on craft beer trademark law.

Fox’s Empire Secures First-Amendment Win against Trademark Infringement Claims

Last month, in Twentieth Century Fox Television v. Empire Distribution, Inc., 2016 U.S. Dist. LEXIS 13013 (C.D. Cal. Feb. 1, 2016), the United States District Court for the Central District of California ruled that Twentieth Century Fox Television’s use of the word “Empire” in connection with its hit television series of the same name is protected by the First Amendment. In a rebuke of similarly-named Empire Distribution, Inc.’s claim that the Fox series infringed upon and diluted the company’s trademarks, the court found that the show’s title deserved protection as an artistic expression.

Empire, the Fox television series that premiered in 2015, tells the story of Lucious Lyon and his family, all of whom fight for control over Lyon’s music and entertainment company, “Empire Enterprises,” upon learning that the mogul has been diagnosed with a fatal disease. Empire Distribution, meanwhile, is a record label, music distributor and publishing company founded in 2010. Similar to the fictional Empire Enterprises, Empire Distribution is a large producer and distributor of urban, hip hop, rap and R&B music. Empire Distribution also uses the trademark “Empire.”

In response to a cease and desist letter from Empire Distribution claiming it had rights to the Empire name and that the debut of the Empire series caused confusion over the affiliation between Empire Distribution and Fox’s Empire series, Fox filed suit to “protect its intellectual property rights” in the show. Empire Distribution counterclaimed for trademark infringement, trademark dilution, unfair competition and false advertising.

U.S. District Judge Perce Anderson analyzed Empire Distribution’s claims under the two-part test for balancing Lanham Act claims with First Amendment rights first established by the Second Circuit in Rogers v. Grimaldi, 875 F.2d 994 (2nd Cir. 1989) (the “Rogers test”), later adopted by the Ninth Circuit in Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002). Under the Rogers test, which is reserved for expressive works, an artistic work’s use of a trademark that would otherwise violate the Lanham Act is not actionable unless the mark has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless it explicitly misleads as to the source or the content of the work.

The first prong of the Rogers test requires showing that the use of a mark has artistic relevance to the underlying work. The court held that the word “Empire” was “clearly relevant to Fox’s work,” as the Empire series “tells the story of characters struggling for literal control over an entertainment company called ‘Empire Enterprises’ and figurative control over the vast ‘empire’ that Lucious Lyon has built. Additionally, the Empire series is set in New York, the Empire State.” Because the word “Empire” had genuine relevance to the Empire series and was not arbitrarily chosen to exploit Empire Distribution’s fame, the court held that the mark satisfied the first Rogers prong.

The second prong of the Rogers test requires a “junior user” – such as Fox – to show that its work does not explicitly mislead as to the source or content of the work. Here, again, the court sided with Fox, stating that it found no evidence of an “explicit indication, overt claim, or explicit misstatement” as to the source of the work. In reaching this determination, the court noted that “consumer confusion” as to the source of the work was irrelevant.

Accordingly, the court granted summary judgment in favor of Fox and ruled that Empire Distribution take nothing by way of its claims. The court’s ruling highlights the importance of First Amendment protections in the United States, particularly as Judge Anderson refused to consider ample evidence of consumer confusion in making his ruling. For example, when Empire Distribution recording artist Shaggy tweeted the record company’s logo, numerous fans immediately mistakenly interpreted it as a reference to the Empire series, retweeting the logo along with the hashtag “#teamcookie” (a reference to a character on the television series). The court’s focus on the behavior of the user, as opposed to the impact of the use, can serve as an important defense in many trademark infringement cases to come.

9th Circuit Reverses Itself: Clear Labeling and Proper Design of a Website May Avoid Initial Interest Confusion

On October 21, 2015, on a granted petition for panel rehearing, an opinion was filed in the case of Multi-Time Machine, Inc. v. Amazon.com, Inc., et al., No. 13-55575, D.C. No. 2:11-cv-09076-DDP-MAN. The panel granted a petition for rehearing, withdrew its prior July 6, 2015 opinion and filed a superseding opinion in an appeal from the lower court’s summary judgment in a trademark infringement action under the Lanham Act against the defendant, Amazon.com (“Amazon”).

On Amazon’s motion for summary judgment, the District Court granted summary judgment in favor of Amazon on the grounds that Multi-Time Machine, Inc. (“Multi-Time”) did not put forth sufficient evidence from which a jury could determine that there was a likelihood of confusion. Multi-Time appealed. The Ninth Circuit reversed the District Court’s grant of summary judgment, holding that Multi-Time presented sufficient evidence for a jury to determine that Amazon’s search function causes a likelihood of confusion under the “initial interest confusion” test.

Military-style watch manufacturer Multi-Time owns the trademark “MTM Special Ops” and does not sell watches on Amazon.com. When Amazon consumers searched for “MTM Special Ops” on Amazon.com, the search results included several of Multi-Time’s  competitors’ watches bearing the competitors’ labels and marks but without an explicit warning that Amazon does not sell Multi-Time watches.

The District Court focused on particular factors in Sleekcraft to reach its conclusion and up on appeal, the Ninth Circuit seemed to as well. The Ninth Circuit determined that Multi-Time’s trademark, “MTM Special Ops,” is suggestive and conceptually strong because it does not merely describe its military-style watches, but is potentially suggestive of them. Additionally, the Court determined that the “similarity of the goods” factor weighs in favor of infringement because Amazon sells military-style watches and even displays them in response to a search for Multi-Time’s trademark. The Court held that a jury could infer that the search results page, coupled with Amazon’s failure to warn the customer that it does not carry Multi-Time products, gives rise to an initial interest confusion. Therefore, because there was sufficient evidence to demonstrate likelihood of confusion, the Court reversed the District Court’s grant of summary judgment and remanded the case for a jury trial.

On rehearing, the panel of the Ninth Circuit reversed itself and held that the District Court was correct in ruling that there is no likelihood of confusion, but did so for different reasons. In so holding, the Ninth Circuit seemed to dispense with the Sleekcraft factors or a vast majority of the Sleekcraft factors, stating that it “is not particularly apt,” because it was developed for a different problem, “i.e., for analyzing whether two competing brands’ marks are sufficiently similar to cause consumer confusion.”

Here, Multi-Time argued that the design of Amazon’s search results page created a likelihood of initial interest confusion; that is, the issue focuses on a different type of confusion, not caused by a competitor’s mark, but by the design of a webpage that is displaying the competing marks and offering the competing products for sale. Setting aside the multifactor confusion test, the Ninth Circuit focused on the conduct of Amazon.com, as a non-competitor, clear labeling, and the arrangement and design of its webpage stating “the confusion is not caused by the design of the competitor’s mark, but by the design of the webpage that is displaying the competing mark and offering the competing products for sale.”

The panel went on to indicate that this “case can be resolved simply by an evaluation of the webpage at issue and the relevant consumer,” that is “(1) who is the relevant reasonable consumer?; and (2) what would he reasonably believe based on what he saw on the screen?”

First, the Ninth Circuit found that the goods in this case are expensive and that the relevant consumer is a reasonably prudent consumer accustomed to shopping online. In turning to the second question, the panel focused on labeling, stating that “clear labeling can eliminate the likelihood of initial interest confusion in cases involving Internet search terms,” however, instead of focusing on labeling that Amazon did not sell Multi-Time products in the prior appeal, the panel focused on the products themselves and whether they were clearly labeled.

Here, the panel stated, “the products at issue are clearly labeled by Amazon to avoid any likelihood of initial interest confusion by a reasonably prudent consumer accustomed to online shopping.” The Court further stated that products are labeled in bright, bold letters and includes a photograph of the item. Multi-Time argued that the use of “MTM special ops” three times within the page (produced as a result of the customer’s search term) could confuse customers, but the panel found that it would be unlikely, stating, “none of the watches produced are labeled with “MTM” or the phrase, “Special Ops.” Thus, the Court reasoned, the undisputed facts show that it is highly unlikely that a reasonably prudent consumer accustomed to shopping online would be confused as to the source of the goods offered for sale on Amazon’s web page.