BBK Tobacco & Foods LLP v. Central Coast Agriculture Inc.,
No. CV-19-05216-PHX-MTL, 2026 WL 2445019 (D. Ariz. Aug. 20, 2026)
Previously.
Although BBK forced Central Coast to an (expensive) trial on its very weak
infringement claims over the use of “raw” on smoking-related products, it is
now subject to a fee award. “[W]hen a company pushes flimsy legal arguments
with scorched-earth, win-at-any-expense litigation to bully its competitors
into submission,” it harms consumers by raising prices. “In about two hours,
after a two-week trial, the jury returned a verdict fully in favor of Central
Coast,” finding no infringement based on the shared word “raw.” “The jury’s
verdict makes perfect sense, since the trademarks have nothing else in common
other than this three-letter combination. Tellingly, BBK could not introduce a
single instance of actual customer confusion.”
But it took over seven years, plus a trip to the Ninth
Circuit and the aforementioned jury trial, to get there.
Central Coast (CCA) was the prevailing party because it is now
free to use its RAW GARDEN mark without the threat of an infringement suit by
BBK. Even though BBK succeeded in voiding CCA’s pending intent-to-use
applications, both parties were free to use the marks just as before, and
defeating CCA’s cancellation counterclaims left BBK’s registrations just as
they already stood. By contrast, “[h]ad BBK prevailed on the infringement
claims, CCA would have faced damages and an injunction against its Raw Garden
brand, and the defense verdict removed that exposure.” BBK’s successful defense
of CCA’s counterclaims didn’t make it a prevailing party, because CCA succeeded
on the infringement claims that drove the litigation.
Octane Fitness provides that “[a]n ‘exceptional’ case
is simply one that stands out from others with respect to the substantive
strength of a party’s litigating position (considering both the governing law
and the facts of the case) or the unreasonable manner in which the case was
litigated.”
BBK argued that the court of appeals, in reversing the initial
grant of summary judgment already found the Sleekcraft factors “evenly
matched or tip[ped] only slightly in favor of either party” and remanded for
trial, foreclosing any finding that its position was weak. But that’s not what
the court of appeals did—it said that likely confusion “is a factual question
ordinarily reserved for the trier of fact.” (See Sepehr Shahshahani’s useful Fact-Law
Confusion for why this is a silly thing to say.) The Ninth Circuit’s “evenly
matched” observation “established only that the question could not be resolved
on summary judgment … and, in any event, it described a summary judgment record
rather than the proof ultimately presented at trial.” Nor was the panel even
unanimous on that point.
“And this Court, having presided over a two-week trial and
observed the evidence develop live before the jury, is well positioned to
assess the strength of the merits of BBK’s arguments.” The trial bore out all
the weaknesses in the central factors. For example, there was no evidence of actual
confusion, even though the RAW and Raw Garden brands had been sold in some of
the same California dispensaries together for more than five years. “The
absence of actual confusion over so lengthy a period of concurrent use in the
same market is itself powerful evidence that confusion is unlikely.”
Nor was this unclear to BBK until trial. At summary
judgment, the Court found the record “contain[ed] no evidence of actual
instances of confusion,” and that the relevant deposition testimony of BBK’s
founder was “uncorroborated and self-serving” and insufficient even to create a
triable issue, particularly because BBK’s own Rule 30(b)(6) witness was unaware
of any confusion. “That BBK could marshal no more than this, after years of
head-to-head sales in the same dispensaries, strongly indicates confusion was
not occurring.”
BBK’s affirmative confusion evidence came from a survey that
produced net confusion rates of roughly 11.9 percent. Rates in that range are
“not so high as to constitute persuasive evidence in favor of confusion,” and
“survey confusion numbers that go below 20% need to be carefully viewed against
the background of other evidence weighing for and against a conclusion of
likely confusion.” Weighed against the marks’ visual dissimilarity and the lack
of other evidence of confusion, the survey did not show that confusion was
“probable, not simply a possibility.”
Nor was BBK’s position on mark similarity justified. “Marks
must be compared as a whole and as they appear in the marketplace, rather than
by taking a deconstructionist view of the different components of the marks,
and across appearance, sound, and meaning.” Apart from the shared descriptive term
“raw,” the Court found the marks “visually...not similar” and possessed of
“significantly different commercial impressions,” such that “consumers could
readily distinguish between the parties’ products as they appear in the
marketplace”—a dissimilarity that “weigh[ed] strongly against a likelihood of
confusion.”
But this was not the sole reason to find exceptionality,
merely a factor weighing in favor of it. [Comment: if we’re almost never going to allow
TM cases to be rejected at summary judgment, then a fee shift for pressing
ahead with an expensive trial despite clear weakness in the case is one of the
few remaining constraints on abusive litigation, and should be available even
in the absence of litigation misconduct. But that’s a worse solution than just
actually applying the summary judgment standard.] “The manner in which BBK
litigated this case supplies the additional showing that, combined with the
weakness of its proof, makes this case exceptional.”
Most significantly, BBK relied on a photograph of a
purported Raw Garden product bearing RAW-branded cones, and the Court
sanctioned BBK’s counsel under Rule 11 for advancing allegations about that
photograph “that counsel must have known were false.” There was no evidence
that BBK itself fabricated the photograph, but counsel had been repeatedly
warned was not genuine, “and a party’s counsel’s conduct is properly considered
in the exceptional-case analysis. Knowingly pressing fabricated evidence to
defeat summary judgment is the sort of conduct that makes a case stand out from
others.”
That wasn’t the end of it.
BBK introduced, both before and
during trial, late-disclosed evidence of supposed actual confusion that it had
never produced in discovery, including an affidavit dated years after the close
of fact discovery and testimony that roughly fifty people had approached [its
principal] expressing confusion. That testimony was at odds with BBK’s own
verified discovery responses, in which it had repeatedly denied awareness of
any actual confusion. A litigant’s reliance on confusion evidence it withheld
through discovery and sprang at trial supports an exceptional-case finding.
This litigation conduct reinforced the court’s conclusion
that BBK “pursued scorched-earth tactics aimed at securing exclusive rights to
the ordinary word ‘raw.’” The court noted “BBK’s broader litigation practice of
strong-arming other companies out of using the term.” It repeatedly threatened
and sued businesses that incorporated “raw” into their marks. “Trademark law
does not exist to let a single company annex a common, descriptive word and
wield costly infringement suits to keep competitors from using it.” Octane
Fitness allows the court to consider anticompetitive motive. “The trial
record indicates that part of BBK’s aim was to position itself to claim the ‘raw’
name for its own use as the cannabis market moves toward national legalization.”
CCA got over $2.5 million in fees, less than half of what it
requested. So BBK was still able to impose a lot of costs on it.
Posts
No comments:
Post a Comment