Friday, January 05, 2024

where cross-examination exposes lack of TM confusion, out-of-court confusion "evidence" becomes less credible

Florida Virtual School v. K12, Inc., 2024 WL 22039, No: 6:20-cv-2354-GAP-EJK (M.D. Fla. Jan. 2, 2024)

Some interesting comments on when individual instances of “confusion” don’t count, as well as their relevance to evaluating out-of-court social media etc. statements as evidence of confusion.

In 2011, Plaintiff sued defendants for using the marks “Florida Virtual Academy/Program” and the associated acronyms, “FLVA/P.” The parties settled in 2015; defendants agreed to cease their use of those marks and to avoid the words “Florida” and “Virtual” together in a mark. The agreement listed four examples of prohibited marks as well as acceptable marks, but did not require defendants to use the acceptable examples. In 2019, defendants launched the “Florida Online School,” abbreviated “FLOS.” About a year later, plaintiff demanded that defendants stop using that too, which they did, but plaintiff sued anyway, seeking (by the time of trial) an injunction and disgorgement.

Plaintiff has seven registered trademarks involving Florida Virtual School or FLVS; two of the registrations are incontestable.

registrations with graphical elements

The “Florida Online School” mark included an image of a Florida panther.

blurry panther mark

Strength: Plaintiff’s marks at issue were all highly descriptive. Acknowledging that the Eleventh Circuit has said that circuit precedent is probably wrong about this, the court accorded artificial strength to the incontestable ones, in the form of secondary meaning, but then—also following circuit precedent—suggested that this presumption of strength was easily rebutted with real marketplace evidence. And defendants did rebut it—all the marks were commercially weak. (Also, the incontestability was procured under “dubious circumstances”; although defendants’ cancellation counterclaim was precluded by the prior settlement agreement, the plaintiff admitted that it made at least one material misrepresentation to the PTO in its registration application, and there was evidence of further misrepresentations “in its effort to establish secondary meaning and overcome the initial rejection of its application for these marks.”)

The evidence of weakness was substantial:

Apart from the geographic, descriptive nature of its marks, Plaintiff’s own internal materials tend to illustrate their inherent weaknesses. While multiple witnesses testified as to Plaintiff’s significant marketing and advertising efforts, that alone is not indicative of strength. Plaintiff’s Director of Marketing … testified that changing a logo and using it in different ways “can dilute a brand” in the same breath as she acknowledged that, in only twenty-five years of existence, Plaintiff has changed its logo six times. [Another witness] discussed a nearly $5 million effort to rebrand Plaintiff’s global operations as recently as 2020.

… Plaintiff argues that “Florida consumers consistently recognize FLVS significantly more than they recognize K12 and other[s].” However, upon review, the survey Plaintiff cites shows that its superiority is marginal—often within ten percentage points ….

In a 2018 survey of parents with school-aged children that Plaintiff commissioned while researching its brand effectiveness, its mark had only 15% more awareness than Defendants’ mark and, moreover, only 30% of respondents recognized Plaintiff’s brand, even when prompted. Similarly, in a 2020 commissioned survey, without prompting, only 1% of respondents could name Plaintiff as an online education provider. While Plaintiff’s full-name marks garnered around 36% awareness among prospective families, the acronym marks had less than 15% awareness among prospective and current families. Indeed, in an internal marketing presentation from January 4, 2022, Plaintiff itself used words like, “plain…bored…uninspired…nondescript…[and] sterile” to describe the brand identity of its acronyms. This is strong evidence of the commercial weakness of these marks.

Also, Florida county school districts often incorporate the phrase “VIRTUAL SCHOOL” into the brand for their online educational offerings, in partnership with both plaintiff and defendant. A plaintiff witness testified that these school districts are “using their county name[s] to distinguish [themselves] from us or anyone else,” e.g., the Broward Virtual School, which weakened the mark. “Though use of a mark by licensees supports its strength, the use of Plaintiff’s hybrid marks throughout Florida’s 67 counties to cover services that are actually provided by both Plaintiff and Defendants weakens Plaintiff’s marks significantly.” The court thought it was ridiculous to argue that “Virtual” & “School” together were not infringing, while “Florida” & “School” together were. “Though some of these third-party users operate as Plaintiff’s franchise partners, the fact that these franchise relationships also allow Defendants to provide substantial services (e.g. an entire elementary school program) under the same marks significantly undercuts the strength of Plaintiff’s marks.”

Plaintiff also failed to provide evidence of actual confusion. There’s a lot of general confusion about online education, and about the fact that, in order to provide their services, plaintiffs have to associate with public school districts, which are overseen by the Florida DOE, of which defendant is a subagency.

But trademark confusion? No. The only live evidence of actual confusion was the testimony of two parents who mistakenly enrolled their children with Defendants’ Florida Online School. But the initial testimony that the names were confusing “readily disintegrated under live cross examination.” One witness “testified on multiple occasions that her confusion stemmed from her misconception that there was only one online education provider available to her.” And it was plaintiff’s own delay in assigning a teacher that led her to switch back to a brick and mortar school. The other, who was vision-impaired, testified that she enrolled one of her sons with defendants’ Florida Online School, “not realizing the schedule, and then immediately realized that wasn’t the right thing for us as a family and put him into [Plaintiff’s school].” Her “repetitive emphasis on her son’s need for a flexible schedule as the reason for unenrolling him undercut[] the relevance of that guided testimony.”

Given how the supposed evidence of confusion deteriorated under cross-examination, the court also mostly rejected twenty-one emails from the parties’ employees, parents, students, and other third parties. (Portions were likely admissible as party statements.) For purposes of trial, the emails were not trustworthy evidence of confusion, even as state of mind: “Was the author really confused? What was the nature of the confusion? Who caused the confusion? Was Plaintiff harmed by the confusion? The answers to these questions require cross-examination.” The court pointed to the fact that the two live witnesses’ emails could support an inference of confusion, but upon cross-examination, “it became clear that the source of confusion was not Defendants’ name.” Thus, these out-of-court statements weren’t reliable.  “[I]f anything, they support the fact that online educational service providers exist in a muddled marketplace replete with generically and descriptively named participants.”

In this context—seeking millions of dollars of disgorgement—the absence of confusion evidence, including survey evidence, weighed heavily against finding likely confusion, especially given that potentially millions of consumers were exposed to the alleged infringement over two years, which was plenty of time for any such evidence to emerge.

Intent: The Eleventh Circuit says: “If it can be shown that a defendant adopted a plaintiff’s mark with the intention of deriving a benefit from the plaintiff’s business reputation, this fact alone may be enough to justify the inference that there is confusing similarity.” This requires a “conscious intent to capitalize on [its] business reputation, w[ere] intentionally blind, or otherwise manifested improper intent in adopting [the Florida Online School] name and acronym.”

Plaintiff’s “strongest evidence” of intent was that defendants continue to use the words, “Florida online school,” on their website — “contending, incredibly, that any use of those words in any context constitutes trademark usage. It was not enough that Defendants completely rebranded their entire online school; Plaintiff now insists that Defendants—who operate an online school in Florida—must not use those words anywhere on their websites.” No. Although defendants did change some website language during trial, the court’s review found that this just reflected “ill- informed, non-attorney employees scrambling to avoid the swinging arms of a bully rather than any kind of concerted effort to alter evidence.” Non-trademark usage of the words “Florida online school” was ultimately irrelevant to the analysis.

“The complete dearth of evidence of any ill intent on behalf of Defendants is enhanced by their testimony that the Florida Online School name was never of particular importance …—they simply chose a descriptive name that was not on the list of marks prohibited by the Settlement Agreement.” And, when plaintiff complained in August of 2020—one year after the school had begun operations as Florida Online School—defendants began “instantly” working with its contracted school district to change the name. “The fact that it took in excess of one year to accomplish a complete rebranding of a school name, including updating email addresses and all school literature, is not unreasonable.”

Ultimately, there was no evidence of intent to trade on plaintiff’s good will, weighing strongly against infringement.

Mark similarity: Textual similarity in a crowded field with a limited number of descriptive terms wasn’t probative, and the visual elements were very distinct.

Consumer sophistication: “Though the expense associated with a college education is largely absent from these providers, the nature and importance of a parent’s choice of where to educate their child is comparable to that decision. The fact that Plaintiff presented two individuals who experienced confusion with this marketplace—one of whom freely admitted that she undertook no research while the other plainly changed her mind based on scheduling concerns unrelated to any mark confusion—does not suggest that the thousands of other customers of these parties are not sophisticated.”

Similarity of services slightly favored plaintiff; the trade channels were similar, but defendants’ customers weren’t individual parents and students, but rather a school district. And they targeted school districts in their marketing. Plaintiff focuses on parents and students. Defendants market only their K12 brand nationally. “Indeed, any parent who stumbles onto the Florida Online School website would be unable to enroll and would be directed to the main K12 website if they were interested in enrollment.”

Balancing: Defendants win.


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