Dawn Donut inapplicable to reverse confusion

Boldface Licensing + Branding v. By Lee Tillett, Inc., No. CV 12-10269 (C.D. Cal. Mar. 11, 2013)  

Boldface began the nationwide rollout of a cosmetics line under the mark KHROMA BEAUTY BY KOURTNEY, KIM AND KHLOE (the celebrity Kardashian sisters).  Tillett sought to enjoin the use of the mark because of its registered KROMA mark for cosmetics, and provided evidence of confusion (or at least evidence of uncertainty—Tillett solicited these statements, but the court accepted them as evidence of likely confusion).  The court granted an injunction; I’ll leave aside most of the likelihood of success analysis because I think the most interesting parts of the opinion discuss injunctive relief.

The court explained that it was well aware that granting an injunction mid-rollout could cause millions of dollars in losses.  But it was also convinced that withholding an injunction would destroy Tillett’s business, about which Boldface knew before it began the rollout, through reverse confusion. Because Tillett’s rights were superior, the balance of hardships favored Tillett.

According to the court, “Boldface moved forward with its multi-million-dollar product rollout using a trademark it knew was similar to Tillett’s registered mark based upon the thinnest of reeds: as few as 13 days of silence from Tillett after receipt of Boldface’s July 18 email.” It admitted that it could have changed the KHROMA BEAUTY marks then without serious harm, but forced ahead even when the PTO agreed, by refusing to register KHROMA BEAUTY, that the marks were too similar.  Boldface thus brought the injury on itself.

Boldface then argued that Dawn Donut should limit the scope of the injunction to markets in which Tillett presently does business. But Dawn Donut only applies when the junior and senior user are in geographically separate areas, with no present likelihood that the federal registrant would expand into the junior user’s market.  Here, Tillett sold cosmetics online and across the country, had promoted them in nationwide media, and had explored a deal with a UK retailer in the hope of using that deal to get further US retail deals.  This demonstrated a present likelihood of expansion into areas occupied by Boldface.

“Perhaps more important,” applying Dawn Donut to this reverse confusion case would do significant harm to Tillett’s nationwide rights arising from its federal registration.  Dawn Donut makes sense in forward confusion cases, but not with a nationwide junior user who will cause the senior user to lose the value of its mark and control over its reputation.  If the junior user was free to occupy the entire rest of the country, that presence “could be significant enough to eliminate the registrant’s identity, goodwill, and reputation even in those areas the registrant occupies,” and even if the registrant persisted, it would have no incentive to expand into territories already occupied by the junior user. While it would be entitled to an injunction on entry into each market, “it would likely have to expend significant time and money to dispel the confusion created by the junior user’s prior presence.  And by that point, it may be too late.”  Preventing reverse confusion by a nationwide junior user required a nationwide injunction.