Schneider Saddlery Co., Inc. v. Best Shot Pet Prods. Int’l, LLC, 2009 WL 864072 (N.D. Ohio) Sometimes a judge just decides to opine on the state of the law, as I fondly remember Judge Edward Becker doing: often enough, a Judge Becker opinion would tour both the basics and the intricacies of the area of the law at issue in a case, whether the tour was necessary to get to the final destination or not. So it is here, in a case about two parties who both wish to use the term ULTRA on equine grooming products.
In 1984, Schneider began selling ULTRA horse grooming products. It registered its marks in 1985. In 1990, unaware of Schneider, Best Shot began selling ULTRA grooming products targeted at a variety of animals, but not horses. In 2001, Best Shot expanded to horses, using ULTRA WASH, ULTRA PLENISH, and ULTRA VITALIZING MIST.
Before registering the marks for equine care, Best Shot had a trademark search done. The search turned up Schneider’s marks and the trademark attorney expressed some concern, though the attorney noted that there were a large number of ULTRA registrations and uses, making the mark likely weak. Best Shot applied for and received a registration, though it didn’t explain to the PTO that the marks were intended for use in the field of equine care, nor did it disclose the existence of the Schneider products. (The registrations are for “animal/pet grooming products”; from what I saw online, Best Shot sells the products for cats and dogs as well.)
Scheider hasn’t identified any customer confusion, though Schneider’s sales decreased in the only catalog known to carry both parties’ products.
Counterfeiting
Schneider alleged that Best Shot’s marks were counterfeit. The court granted Best Shot summary judgment on this issue. Counterfeiting requires a lot more than infringement; it requires that a mark be identical to, or substantially indistinguishable from, a registered mark.
Summary judgment is usually appropriate if word marks differ by two or more letters. Schneider argued that the marks were “identical” because they both use ULTRA, but the court thought that was in direct contravention of the statutory scheme, which reserves counterfeiting liability for the worst of the worst, not arguable cases of infringement. Reasonable consumers would not believe that the junior mark was the senior mark; there was no counterfeiting as a matter of law. The Best Shot marks include an entire word that the Schneider marks don’t, and the commercial appearance differs.
The court commented that some cases suggest that the inquiry is “not really whether the marks are substantially indistinguishable, but whether the marks are employed in such a way as to cause a consumer to believe that the product itself is counterfeit.” But the court thought that standard, whatever its practical merits given the lay meaning of “counterfeit,” clearly conflicted with the statutory language, which focuses on the mark.
Best Shot asked for attorneys’ fees on this claim; the court denied the request, even though Congress wanted to discourage plaintiffs from making frivolous allegations of counterfeiting in an average infringement case, so as not to raise the specter of treble damages where they’d be inappropriate. The court thought that interpreting “counterfeit” was a relatively new area of law involving a number of judicial glosses; Best Shot would be allowed to renew its motion at the conclusion of the case if appropriate.
Infringement
The court found material issues of fact on many of the relevant factors.
Strength: Schneider argued that its marks were strong because they were incontestable. The court took the (better) view that likelihood of confusion is a separate issue from validity. Some courts treat incontestability as creating a rebuttable presumption of strength, but the analysis should be separate: “there is no apparent reason that the incontestable status of a mark should automatically translate into a well-known mark.”
On to the evidence, then: Best Shot’s expert did a survey that allegedly proved ULTRA weak. The court found this consumer survey to be “strong and currently uncontroverted evidence” of weakness. Best Shot also argued that there was extensive third-party use of “ultra,” which may weaken the mark even if used on other goods, but Best Shot had the classic problem at this stage—it didn’t show that the “ultra” marks were actually used in the marketplace, as opposed to being registered at the PTO.
Schneider argued that its marks were strong because Schneider had used ultra for 23 years and spent considerable money on promotion. Schneider could use this evidence to persuade a jury, but a reasonable jury could consider the marks weak.
Relatedness of goods: They’re the same, which weighed heavily in favor of finding likely confusion. In a European context, or in an earlier period in American trademark law, same goods plus use of highly similar mark would be the end of the story. The court found that the “better” cases relying on a presumption of confusion in such circumstances require identical use plus a clear intention by the junior user to derive a benefit from the senior mark.
The court even went out of its way to identify a “misstatement” of law in AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979), which said: “When the goods produced by the alleged infringer compete for sales with those of the trademark owner, infringement usually will be found if the marks are sufficiently similar that confusion can be expected. When the goods are related, but not competitive, several other factors are added to the calculus.” This was not a misstatement at the time. It may be so now. As Mark McKenna has noted elsewhere, the multifactor confusion test now so dominates that it seems to have erased even judicial memory of the simpler tests once used for directly competing goods. The court rejected any “[rigid] rules” enabling a confusion finding, even a presumption of confusion where the marks are similar and the goods are the same, noting that this is one reason summary judgment in infringement cases is rare.
Nonetheless, identical goods substantially increase the likelihood of confusion where the marks are similar.
So, similarity: First, the court concluded that standing alone, Best Shot’s addition of a word or words did not render the marks dissimilar. Given the products at issue, “plenish,” “vitalizing mist,” and “wash” were not sufficiently distinctive in themselves to render the marks dissimilar. Similarity still exists when the marks have the same overall connotation. However, the use of “Best Shot” as a house mark would allow reasonable jurors to find less likelihood of confusion (or more, if they found that consumers would think Best Shot had been licensed to use the mark). The court commented that, were it the factfinder, it would be persuaded by the licensing argument because the products serve identical functions, but a reasonable jury could disagree. (And I hope it would, with a mark as inherently weak as ULTRA.)
The court concluded that the similarity of the logos gives Best Shot “an extremely steep challenge at trial on the question of similarity,” but the house mark plus the additional words still create a genuine issue of fact.
Actual confusion: No evidence of it, which a jury would weigh in Best Shot’s favor. The court commented that, were it not bound by precedent, it would conclude that the absence of substantial confusion could often by itself answer the question of whether there’s a likelihood of confusion. “If consumers are exposed to substantial marketing efforts from both companies, yet no evidence shows that any consumers have actually been confused, there is substantially less likelihood that consumers do or will find the marks confusing.” But binding precedent is to the contrary, and anyway even this conclusion wouldn’t entitle Best Shot to summary judgment, because both parties have a fairly small market share and there’s no evidence of extensive marketing to a unified customer population.
Some evidence supported the inference of likely confusion. Schneider argued that consumers generally don’t allow unauthorized products to be used on their horses. Thus, consumers “constantly” return products because someone mistakenly bought the wrong product for them. If consumers have been confused by the marks, then, some record of confusion ought to exist.
Marketing channels: both use the internet and catalogs, and the customer base overlaps. But there was only one catalog that carried both, and no evidence that the same websites carried both. The court quoted one case holding that when both parties use the internet, confusion is more likely—which means that the likelihood of confusion, or “confusion in the air,” if you will, has simply increased over the past ten years. A reasonable jury could conclude that this factor favors Schneider, or could accord it little weight.
Degree of purchaser care: Schneider’s sworn testimony was that customers of horse grooming products exercise little care. Horses are expensive, but consumers might still just use any old shampoo on them, just as the owner of an expensive car may use the same car wash as the owner of a cheap car. (Horse lovers, don’t come after me: not my analogy.) Best Shot argued that end users, though, do exercise substantial care. The court concluded that Schneider had the better argument. Purchasers can have big effects on trademark value even if they’re not users. End users might stop requesting a particular product if purchasers keep bringing back the wrong product; or end users might decide to try the new product and switch.
Anyway, where the marks are similar, purchaser care becomes less relevant—confusingly similar marks may lead a careful purchaser to nonetheless assume affiliation or other connection. Since the marks here are quite similar, the degree of purchaser care is less significant. (I think this does exactly what the court cautions against elsewhere: risks reducing infringement to circularity. If the marks weren’t similar, you wouldn’t be doing a confusion inquiry at all. If purchaser care is to be a meaningful factor, it must affect likelihood of confusion when the marks are similar enough to create a dispute.)
Intent: Good faith is rarely relevant, but bad faith is—it allows a factfinder to assume that a party’s intent to cause confusion was successful. Schneider argued that Best Shot’s knowledge of Schneider’s marks allowed an inference of intentional infringement. But Best Shot argued that it was just expanding its own marks from other animal care markets. A jury could agree with Best Shot, creating a material issue of fact.
The court commented that the current law of intent is messed-up, though “the ship has likely long-since left the port on this point.” Within the multifactor test, intent is circular: presume bad intent because the marks are similar and presume that the marks are similar enough to confuse because of the bad intent. It might be better to consider intent only when there’s direct proof of intentional infringement.
Ultimately, “Best Shot has an unquestionably difficult task before a jury,” and the court commented that as the finder of fact it might well find infringement, but that wasn’t the court’s job.
Finally, the court held that, though the issue was a close call, Schneider might be able to get an accounting of profits or damages if it prevailed. First, the court held that—given the 1999 amendments to the Lanham Act, and despite some older precedent—willfulness is not a prerequisite to an accounting of profits, and anyway Schneider had enough evidence of willfulness to go to a jury. Schneider could also get damages even if it couldn’t prove particular diverted sales, as long as it showed some damage. (Showing infringement alone wouldn’t be enough.) But there was testimony that Schneider saw a drop in sales in the one catalog where the parties competed. Schneider had enough to survive summary judgment on both profits and damages.
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