Thursday, January 02, 2014

possible profit recovery means TM case continues

It’s a 10, Inc. v. Beauty Elite Group, Inc., 2013 WL 6834804, No. 13–60154 (S.D. Fla. Dec. 23, 2013)

Previous discussion.  Plaintiff sells It’s a 10 Miracle Leave in Product for hair:

Defendant’s directly competing product was allegedly confusingly similar in coloring and layout: 

It changed the bottle and represented that it would no longer use the old trade dress:

Defendant moved for summary judgment on the infringement, dilution, and related common-law claims (federal dilution! Where is Rule 11 when you need it?).

The court first ruled that the infringement claim didn’t require a showing of actual damages, because a prevailing plaintiff can recover the defendant’s profits and the costs of the action.  (The defendant’s admission that it sold old bottles was enough evidence that there’d been recoverable profits to proceed.)  There was sufficient evidence to create an issue of fact on confusion with the old bottle.  But the court granted summary judgment as to the new bottle, given the dissimilarity in marks.

The “It’s a 10” mark was suggestive, while the “Miracle Leave In Products” mark was weaker, tending towards descriptive—it described product characteristics, and common self-laudatory epithets don’t tend towards strength.  But given that the two marks appeared prominently and in tandem, “Miracle Leave in Products” was also sufficiently distinctive to warrant protection.  (What?  If anything, a descriptive term appearing in tandem with an inherently distinctive mark is probably more likely to be ignored as an indicator of source, since it’s not enhancing distinctiveness.)  With respect to the old bottle, similarity weighed in favor of confusion.  Defendant’s “10 PL US” and “Miracle Leave In Treatment” marks on the old bottle were very similar to plaintiff’s marks. The connotations were similar, and they shared similar orientations “on similarly colored, irregularly shaped bottles,” using approximately the same color schemes.  Product relatedness also favored confusion.

Defendant argued that it sold to the mass market, including large retailers such as Target, while plaintiff sold to the premium market in salons only.  Plaintiff offered evidence that its products were also for sale by large retailers, including Target.  This made similarity of sales channels a disputed issue.

On intent, the striking similarity of the old bottle to plaintiff’s product suggested intentional copying, as did an invoice from a design firm indicating that defendant retained the firm for a project containing “It’s a Ten” in the project title.  This was circumstantial evidence of intent to capitalize on the plaintiff’s goodwill.  Taken together, the evidence precluded summary judgment for defendant as to the old bottle.

The new bottle was a different matter.  The color scheme changed to conform with defendant’s other product lines; the word “Miracle” was gone; and the orientation and placement of “10 PL US” changed.  The change made the bottles sufficiently dissimilar; for the same reasons, there was no reason to infer an intent to copy as opposed to an intent to differentiate.  The plaintiff didn’t provide any evidence of actual confusion.  In total, no reasonable jury could find likely confusion.

This reasoning on the old and new bottles also applied to the overall trade dress claim, where the plaintiff provided evidence of acquired distinctiveness—“substantial efforts and resources in developing its brand and trade dress, and cultivating consumer recognition of its trade dress,” plus defendant’s apparently intentional imitation.

The court granted summary judgment on the dilution claims in full.  Of course the plaintiff’s mark wasn’t famous. “The threshold for a showing of fame … is exceptionally high…. In other words, [a] party claiming dilution must establish that its mark is practically a household name, of the likes of such giants of branding as Exxon, Kodak, and Coca-Cola.” The plaintiff’s assertions that it had spent millions on ads over the past few years, that its product was one of the “nation’s top-selling leave-in conditioners,” that it has received numerous industry awards, and that its sales top $50 million per year were insufficient.  This showed “laudable recent successes” within its industry.  But it didn’t come close to showing “the cultural heft to transform them from mere trademarks—even strong ones—to a household name that is instantly recognizable among the general public of the United States.”

In an interesting wrinkle, the defendant argued that it didn’t “use” the old bottle in Florida and thus state law didn’t apply.  The plaintiff argued that shipment of samples to a handful of Florida distributors was sufficient.  “Use” under Florida law required that a mark be placed on goods sold or transported in Florida in the ordinary course of trade. Sending samples to potential clients was sufficient, at least to avoid summary judgment.

The plaintiff also alleged counterfeiting under 15 USC § 1114.  Counterfeits are marks “identical with, or substantially indistinguishable from, a registered mark.”  Although “substantially indistinguishable” is ill-defined by the cases, the test is more rigorous than the confusion test, and no reasonable jury could find the marks here “substantially indistinguishable.”  While potentially confusingly similar, “It’s a 10” and “Miracle Leave In Products” had different words, different colors, and different fonts than “10 PL US” and “Miracle Leave In Treatment.”  These differences were not trivial, so summary judgment was awarded to the defendant on this count.

However, the defendant didn’t establish with absolute clarity that all infringement ceased—there was some evidence showing sales of products referred to as “Miracle Leave In Treatm[ent]” even after defendant said it wasn’t using the old bottle.  (This might be recordkeeping trouble, since the new bottle was apparently the same product, but it was enough to keep injunctive relief alive.)

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