Wednesday, January 16, 2013

Infringing encroachment enjoined back to pre-encroachment state

Athleta, Inc. v. Pitbull Clothing Co., Inc., 2013 WL 142877 (C.D. Cal.)

Athleta sued Pitbull d/b/a, a competing sports apparel maker, for infringing the Athleta trademark.  The court granted a limited preliminary injunction.  Athleta’s been using its mark since 1998, while Pitbull and its predecessor in interest used Athletica as a service mark through since 2003.  Pitbull operates other websites selling its InTouch and SF City Lights brands.

Athleta argued that, as its brand grew in strength, the website changed to resemble the look and feel of Athleta’s website.  In September 2010, Athleta first contacted Pitbull about this, and Pitbull responded that, since it wasn’t selling any clothing under the Athletica brand name, there was no problem.  In early 2012, Pitbull contemplated expanding Athletica for use directly on women’s apparel, and according to its account innocently selected a design similar to Athleta’s stylized mark and pinwheel design. 
Late in 2012, Athleta discovered this use, and some other objectionable acts: Pitbull engaged in multiple sales using Groupon and Living Social, marketing its clothing as “Women's Yoga Leggings by Athletica,” “Athletica InTouch Organic Yoga Leggings,” “Athletica Set of Two Organic Yoga Leggings,” “InTouch Organic Yoga Leggings from Athletica,” or “Athletica Women's Organic Yoga Leggings.” 

Athleta provided evidence that numerous consumers contacted Athleta thinking that it had run those promotions.  It received complaints that consumers hadn’t received order status confirmation emails from Athleta, that ordered products hadn’t arrived, or that their purchased Living Social discount codes weren’t accepted by Athleta's website.

In addition, Pitbull apparently copied portions of Athleta’s website, including copying consumer reviews verbatim.  Athleta’s fabric trademarks VELOCITEK and PILAYO were listed on; a description of yoga pants on plaintiff's site also appeared verbatim on defendants' website; and Pitbull used a “free shipping” image to promote its shipping policy that was identical to one used on plaintiff's site until October 2012.  There were also other features that made the recent website more similar to Athleta’s than previous iterations, including the background/menu options, a large graphic in the center of the page, and “1–2–3” off to the left side.

Defendants’ counsel wisely represented that Pitbull had no remaining inventory with Athletica on it; that it would discontinue use of the spiral design; that it would remove all customer reviews from its website pending a thorough review, remove all references to Athleta’s proprietary fabrics, make “significant changes” to the site to avoid confusion, and remove the disputed “free shipping” image; and that it wouldn’t use the term Athletica in any promotions in a way that could be construed as a term for apparel.  Pitbull also offered to sell the domain name or partner with Athleta to make Athleta-brand clothes.

Despite these representations, a paralegal was able to order and get apparel from Pitbull bearing the Athletica mark and spiral design the next day.  Defendants’ counsel (who appear to have had a thankless task here) wrote that the order was fulfilled by a new CSR and that Pitbull had reviewed its website to eliminate any possible doubt about whether it sold Athletica brand apparel.   Pitbull offered to provide an accounting, a return of unused tags bearing the Athletica name and spiral design, and disgorgement of profits about the roughly 1900 items sold under the Athletica brand.  However, it refused to discontinue use of Athletica as a service mark for its online store or the use of for its website.

Unsurprisingly, the court granted a preliminary injunction; I’ll only mention a couple of points about the analysis.  The court began with the proposition that close cases should be resolved in favor of a senior user.  As for strength, the court rejected the argument that Athleta’s strength was limited because of its suggestion of “athletics.”  It was still a coined term, and Pitbull didn’t show that lots of other sellers are actually using Athlet- prefixed marks for athletic apparel or goods.  Even Lululemon Athletica wasn’t a problem because of the distinctive Lululemon.  Other marks identified by Pitbull were pending applications and even ITU applications.

The marks currently used by the parties were still highly similar, even if not as nearly identical as the spiral design ones. “The lettering of the marks differs only by inclusion of the ‘ic’ in defendants' mark, and the ‘c’ is partially obscured by the three-petal leaf design that defendants have adopted. This leaf design shares minimal elements of plaintiff's pinwheel design, including the use of a purple color with petal-shapes anchored at the center. Even viewing these marks in isolation, the marks bear significant similarity.” 

Also, the marks were only part of the inquiry: they were in the context of “a marketplace that has changed as a result of defendants' gradual encroachment on plaintiff's marks, culminating in defendants' use of the ATHLETICA mark with a spiral design on women's athletic clothing.”  The use of Athletica on the Groupon/Living Social promotions; copying of customer reviews, product descriptions, free shipping banner, and fabric names; and the general look and feel of the website were all part of the context.  Before 2010, the marks might have been able to coexist, but the gradual encroachment “greatly increased the similarity of the marks as they are encountered in the marketplace by consumers.”  The question of whether this confusion would persist was more difficult.  If Pitbull reverted to prior practices, then “presumably both websites could coexist without future instances of confusion. But hypothetical coexistence in the future is not the issue presented here.”

The court found many of Pitbull’s explanations lacking in credibility (especially as to the copying of customer reviews and use of Athleta’s fabric names, and the discontinuance of Athletica clothing).  “Whatever the motivations for their actions, the fact of the matter is that defendants did sell clothing bearing this confusingly similar design, both before and after they represented to plaintiff that they would cease doing so.”  Even recent screen captures shown at the PI hearing showed that Pitbull recently adopted a homepage picture similar to Athleta’s homepage picture. Intent thus favored Athleta and justified the granting of a preliminary injunction, because of the likelihood of repetition and continuing harm.

Given the likely success on the merits, Athleta was also able to show irreparable harm.  Even after eBay and Winter, courts have found that losing control of one’s reputation and goodwill counts as irreparable harm.  (I have less of a problem with this when there’s evidence that consumers are actually contacting the wrong party to ask/complain about the status of their orders.)  Confused consumers may blame Athleta for inferior Athletica products; also, Athleta was likely suffering from lost sales due to confusion. Defendants’s corrective actions couldn’t undo that confusion.

In addition, given the progressive encroachment, Athleta didn’t unreasonably delay, especially because Pitbull’s bad faith deprived it of a laches defense.

Interestingly, despite the fact that Pitbull has numerous other websites where it sells substantially the same merchandise, the court declined to order the transfer or discontinuance of the domain name.  Pitbull would “presumably” suffer some harm from an injunction against the website.  A preliminary injunction should preserve the status quo—the last uncontested status preceding the controversy.  That status quo was that both parties operated their respective websites.  It was the look and feel copying, the Groupon/Living Social promotions, etc. that went too far.  

Athleta argued that defendants “poisoned the well” for, but the court wasn’t willing to go that far.  Instead, defendants were enoined from “utilizing any graphic, textual, or other design elements on that are similar to plaintiff's website or likely to cause continued consumer confusion as to the source of defendants' goods.”  They could not “offer any goods that bear a strong resemblance to Athleta goods [not clear why this is justified if the goods themselves do not have a protectable trade dress, except as limited to a bar on using Athleta-type symbols/brands], … advertise or use trade dress on its website that looks like Athleta, nor do anything that suggests any affiliation with Athleta or that Athleta in any way sponsors defendants' products.”

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