Doctrinal evolution
is so fascinating! Here, I think we might be starting to see what a post-Abitron,
post-JDI world could look like: courts may begin to reestablish distinctions
between registered trademarks and unregistered matter protected by unfair
competition law, based this time on statutory interpretation rather than
conceptual categories. Because the plaintiff doesn’t own the relevant
registration, its §32 claims fail, but the court allows §43(a) claims to
proceed, partially reversing the district court’s grant of summary judgment—but
read on for more on what that might look like.
Plaintiff Rex Real
Estate sued Rex Real Estate Exchange for trademark infringement.
Plaintiff
is a real estate company founded by Rex and Sherese Glendenning that
“specializes in the acquisition and sale of commercial, investment and
development properties, both large and small, in the North Texas growth
corridor.” Plaintiff only brokers real estate in the state of Texas, but it has
clients throughout the United States and in other countries.
The Glendennings
started in Texas real estate in 1987. Its marks: “REX,” “REX Real Estate,” and
a logo showing a crown alongside the words “REX Real Estate.” In 2015, the
crown mark was registered. Plaintiff mostly works with retail, office,
industrial, and mixed-use properties; it’s brokered some single-family home
sales, but almost all involving individuals related to it or its employees.
Meanwhile, Rex Exchange,
founded in 2015, offers an online platform for homeowners and homebuyers to
transact the sale of single-family homes. It first expanded into Austin in
2018. Rex Exchange purchased a “REX” trademark with a 2002 priority from a
company called Azavea that had registered the mark for the following use:
“computer software for use in search and displaying real estate information on
a global computer network.”
At the close of
plaintiff’s evidence at trial, the court granted a directed verdict.
Only an owner or a
true assignee has statutory standing to bring a claim under §32.
Section 43(a) reaches more broadly; the court here applies Lexmark to
both false advertising and trademark claims.
Section 32 did not
apply because Mr. Glendenning became the original owner of the marks when he
first used them in commerce as a sole proprietor many years before the
plaintiff Rex was formed. Although “an applicant seeking to register a
trademark may benefit from its use by a related company,” “this does not
displace the requirement that only the owner can seek registration.”
Assignments of registered marks must be in writing. Assignments before
registration need not be in writing, but the evidence must be clear. “[R]equiring strong evidence to establish an
assignment is appropriate both to prevent parties from using self-serving
testimony to gain ownership of trademarks and to give parties incentives to
identify expressly the ownership of the marks they employ.” There was no
evidence at trial that there had been an assignment by Glendenning to
plaintiff. Thus, the §32 claim failed as a matter of law.
However,
§43(a)(1)(A) was available, and a reasonable jury could find that the marks
were inherently distinctive, not merely personal names. The relevant evidence
on plaintiff’s side, which the court thought went to public perception, was that
Mrs. Glendenning testified that she “came up with the crown because Rex means
king and that was that” and the mark is often accompanied by a crown, “reinforcing
the translation of Rex as a king in Latin.” On the other side Mr. Glendenning
testified that the name Rex has become synonymous with him as a person and
founder of the company to consumers in the real estate industry, and plaintiff didn’t
submit any evidence showing that the relevant consuming public associates the
Rex marks with their purported Latin meaning. Still, the court of appeals found
a fact issue because defendant
views
its marks by their Latin translation. While Defendant is not necessarily a
member of the “purchasing public,” the fact that some party outside of
Plaintiff recognizes the Latin translation support its claims that the marks
could be inherently distinctive. While there was strong evidence that the marks
are perceived by the public as primarily a personal name, the record does not
compel that conclusion.
This then meant
that likely confusion was at issue. Although the mark was at most suggestive,
and although many other entities in Texas have “Rex” names, and some of those
businesses might be involved in real estate, there was not enough evidence of “Rex”
in real estate. The jury saw evidence that only the parties appear in the first
page of results in a Google search for “Rex Real Estate Texas.” Plaintiff also pointed
to numerous calls it received from confused consumers as evidence that the
callers assumed that it was the sole source of the advertising. “This is a
plausible inference for a jury to make.”
Despite different
fonts, colors, and design elements, a reasonable jury could find enough
similarity to confuse.
Product/purchaser
similarity: The court framed this as an issue of sponsorship, affiliation, or
connection. “If consumers believe, even though falsely, that the natural
tendency of producers of the type of goods marketed by the prior user is to
expand into the market for the type of goods marketed by the subsequent user,
confusion may be likely.” Although the parties operate in different corners of
the real estate market and cater to different sets of prospective customers,
plaintiff’s lack of actual intent to expand into the single-family sales market
was not particularly probative of what a reasonable jury could find.
No reasonable jury
could find the parties’ advertising to be similar: plaintiff’s was “high touch,”
involving mainly a corporate suite at AT&T stadium and a dove hunt, and no
digital marketing, whereas defendant was focused on digital marketing. Intent
was neutral.
Plaintiff offered
anecdotal instances of confusion. Addressing variation in the case law, the
court found that the older precedent—which didn’t require any consumer purchases
to have been swayed by confusion—had to control. (The other way to read those
cases is that they (1) didn’t reach the issue or (2) were specific to bait-and-switch
theories of initial interest confusion, in which the confusion is still a
but-for cause of a sale.)
But the later cases
weren’t irrelevant. Instead, the court reasoned, “very little proof is required
when customer purchases were actually swayed. However, … more is required when
the confusion did not or cannot sway purchases.” In particular:
isolated
instances of confusion about the affiliation of two companies that do not
result in redirected business are not enough to sustain a finding of actual
confusion. Additionally, proof of actual confusion not involving swayed
customer purchases should be weighed against the parties’ total volume of
sales.
Also, courts should
“look to the volume of each company’s advertising” and give actual confusion “more
weight if it is a potential customer considering whether to transact business
with one or the other.” Circuit “precedents give varying weight to evidence of
actual confusion, depending on whether it is short-lived confusion by
individuals casually acquainted with a business or lasting confusion by actual
customers.”
With that
background: Plaintiff identified two people who inadvertently contacted
defendant while seeking plaintiff. Unlike initial interest confusion, “this
confusion did not present the possibility of garnering the Defendant business
before or after it was dissipated.” And there were three phone calls to
plaintiff from people who’d seen or heard defendant’s ads, and one of defendant’s
customers sent a letter to plaintiff complaining about defendant. “[P]roof that
the plaintiff is receiving calls from people who are trying to do business with
the other party can still be relevant even where there is no realistic
possibility that business can be diverted.” Finally, there were two instances
of third parties confusing the companies or their locations. “[T]hose anecdotes
are relevant because proof of actual confusion is not limited to actual or
potential customers.”
Although this wasn’t
much, it was some relevant evidence of actual confusion, and a reasonable jury
could weigh it in plaintiff’s favor. (How does this play into the statement above that isolated instances that don't result in sales "aren't enough"?) Question: what does a good instruction
look like in light of this discussion? Another question: Given Lexmark,
which does require a showing of likely harm for §43(a) cases, how should evidence
of nonpurchaser confusion go to show likely harm?
Degree of care: No reasonable jury could weigh this in
plaintiff’s favor.
Nonetheless, because a reasonable jury could conclude that
some of these factors, including the important factor of actual confusion,
weigh in plaintiff’s favor, a reasonable jury could also find a “probability of
confusion.”
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