pool party: lawsuit raises survey and TM priority issues

Solar Sun Rings, Inc. v. Secard Pools, 2016 WL 6138294, No. EDCV14-2417 (C.D. Cal. Jan. 20, 2016)

Illustrating the principle that those who sue competitors should be sure to have their own house (or in this case, pool) in order: The parties compete in the market for heated pool covers. SSR sued Secard for trademark infringement, leading to false advertising/unfair competition counterclaims based on SSR’s allegedly false statements about the effect of “mini magnets” used on its products and the water and chemical savings caused by its products. The “coverage calculator” on SSR’s website also allegedly deceived consumers into thinking that choosing SSR’s products would be cost-effective because it falsely advised consumers to purchase less product than they would eventually need to heat their pools.

The court found that, even assuming falsity, there were disputed issues about materiality and harm. Secard’s expert report opined that 3.33% of SSR customers were deceived by SSR’s allegedly false statements and would have purchased Secard’s competing product had the false statements not been made. Although Downey, the expert, had 35 years’ experience in the swimming pool industry, he had no other expertise about consumer behavior and related fields. Still, that was okay because he had relevant experience catering to the preferences of pool product consumers. He conducted discussions with “swimming pool industry leaders” and estimated that roughly twelve percent of consumers are familiar with SSR’s product, while roughly one percent of consumers were familiar with Secard’s product. He then conducted phone and personal conversations with “leaders in the swimming pool industry, people who work in swimming pool stores, mass distributors and manufacturers, industry legal counsel, pool service technicians, pool builders, buying groups and pool remodeling companies.” He estimated that roughly 40% of consumers who bought from SSR had been diverted from competing products, such as Secard’s, yielding 3.3% diversion. Survey evidence “should ordinarily be found sufficiently reliable under Daubert” because “unlike novel scientific theories, a jury should be able to determine whether asserted technical deficiencies undermine a survey’s probative value.” This survey might be “technically lacking,” given that “his sample size is limited and it is not entirely clear how he derives his estimates from the data he provides,” but the court declined to exclude it.

Solar Sun Rings, Inc. v. Secard Pools, No. EDCV14-2417, 2016 WL 6139615 (C.D. Cal. Jan. 13, 2016)

This is a trademark ruling in the same case. SSR began selling passive solar heating products for pools and spas under the name “Solar Sun Rings” in 2003. Secard has been selling pool products since 1958. In 2011, Secard’s CEO created Solar Sun Squares, which he designed to compete with Solar Sun Rings, and registered solarsunsquares.com. In 2013, SSR caught wind of Secard’s intent and attempted to register a trademark for “Solar Sun Square,” then sent Secard a C&D that prompted Secard to change the name of Solar Sun Squares to “Solar Heat Squares.” SSR then began selling Solar Sun Squares the month after Solar Heat Squares launched in 2014.

Solar Sun Rings

Solar Heat Squares

Solar Sun Squares

Secard argued that, as the senior user of Solar Heat Squares, it couldn’t infringe on Solar Sun Squares. However, SSR argued that it should be able to tack its rights and claim priority. This is usually a matter for a jury. Given that Solar Sun Rings and Solar Sun Squares were written in the same font and the same color, on the same sized package, over the same four images encased in the shape described in the mark, and that the products were identical except for shape, a jury could find that the marks had the same connotation. Plus, a jury could find that the “aural appearance” of the marks – “three short, alliterative words (two of which are the same word) – evoke the same mental reaction.” (Of course, to the extent that tacking occurs on the basis of visual elements of the mark, the similarity inquiry will also have to take visual elements into account.)

There was also enough evidence to go to the jury on likely confusion, given the similarity of the products and the purchasers. The court gave a very broad reading to the intent factor, ruling that “[a] jury could reasonably infer that Secard intended to confuse consumers by improving upon Plaintiff’s pre-existing product with a similarly-named product.”

However, Secard got out of the trade dress infringement claim. SSR argued that its infringed trade dress was its color scheme, characterized by “a sequence of several colors (red, yellow and orange) depicted against the distinct blue backdrop of SSR’s products, and displayed in a highly distinct dot-matrix style of color printing and color shading.” SSR alleged that Secard’s use of a sun design bolstered its infringement claim. But “Secard was already using the allegedly infringing color scheme along with an image of a sun in 1993, well before Plaintiff went into business in 2003.” Without priority of use, SSR couldn’t win. “To hold otherwise would allow a junior user to employ litigation as a means of forcing a senior user to abandon a trade dress which predates the junior user’s existence.” [Interesting conceptual question: if the trade dress was in use but hadn’t developed secondary meaning, and the junior user then came along and developed secondary meaning, what then? Of course, the junior user’s ability to develop secondary meaning would itself suggest lack of confusion with the existing trade dress, whether or not that prior trade dress could be the foundation of any affirmative rights.]