sovereign-military-hospitaller-order-of-saint-john-of-jerusalem-of-rhodes ( 2015 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-14251
________________________
D.C. Docket No. 9:09-cv-81008-KLR
SOVEREIGN MILITARY HOSPITALLER ORDER OF SAINT JOHN OF
JERUSALEM OF RHODES AND OF MALTA,
Plaintiff–Counter Defendant–Appellant,
versus
THE FLORIDA PRIORY OF THE KNIGHTS HOSPITALLERS OF THE
SOVEREIGN ORDER OF SAINT JOHN OF JERUSALEM, KNIGHTS OF
MALTA, THE ECUMENICAL ORDER,
Defendant–Counter Claimant–Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_______________________
(October 15, 2015)
Before MARCUS, WILLIAM PRYOR, and JILL PRYOR, Circuit Judges.
WILLIAM PRYOR, Circuit Judge:
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This appeal is the second in a long-running intellectual property dispute
between two religious organizations. The Sovereign Military Hospitaller Order of
Saint John of Jerusalem of Rhodes and of Malta alleges that the Florida Priory of
the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem,
Knights of Malta, the Ecumenical Order is infringing its registered service marks
in violation of the Lanham Act, 15 U.S.C. § 1114, and Florida law. After a bench
trial, the district court entered judgment for the Florida Priory. See Sovereign
Military Hospitaller Order of Saint John of Jerusalem of Rhodes & of Malta v.
Fla. Priory of the Knights Hospitallers of the Sovereign Order of Saint John of
Jerusalem, Knights of Malta, the Ecumenical Order (SMOM I), 816 F. Supp. 2d
1290, 1307–08 (S.D. Fla. 2011). In the first appeal, we reversed in part and
remanded for the district court to reconsider whether the parties’ marks are likely
to be confused. See Sovereign Military Hospitaller Order of Saint John of
Jerusalem of Rhodes & of Malta v. Fla. Priory of the Knights Hospitallers of the
Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical
Order (SMOM II), 702 F.3d 1279, 1297–98 (11th Cir. 2012). We were also critical
of disparaging comments that the district judge made about the parties. On
remand, the district court misapplied several factors in its analysis of likely
confusion, incorrectly assessed the Florida Priory’s defense of prior use, relied on
historical testimony that we previously deemed inadmissible, and misinterpreted
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our instructions about consulting facts outside the record. Because the district
court erred again, we reverse again. But we deny the Sovereign Order’s request to
reassign the case to a different district judge.
I. BACKGROUND
For purposes of background, we identify the parties to this litigation and the
marks in dispute. We also review the relevant procedural history. For an even
fuller account, see our previous opinion, SMOM II, 702 F.3d at 1283–89.
A. The Parties
The plaintiff is the Sovereign Military Hospitaller Order of Saint John of
Jerusalem of Rhodes and of Malta. It is a religious order of the Roman Catholic
Church. The Sovereign Order is headquartered in Rome, Italy, and it performs
charitable works across the globe. For example, the Sovereign Order supports the
operation of the Holy Family Hospital in Bethlehem and several medical clinics in
Haiti.
The defendant is the Florida Priory of the Knights Hospitallers of the
Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical
Order. It too is a religious charitable organization. The Florida Priory is
associated with a parent organization, the Knights Hospitallers of the Sovereign
Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical Order. The
Ecumenical Order is not associated with any one church or branch of Christianity.
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B. The Marks
This litigation involves five of the Sovereign Order’s registered service
marks: one design mark and four word marks. The Sovereign Order’s design mark
is an eight-pointed Maltese cross on a shield:
The Sovereign Order’s word marks are:
Sovereign Military Hospitaller Order of St. John of Jerusalem of
Rhodes and of Malta
Knights of Malta
Hospitallers of St. John of Jerusalem
Order of St. John of Jerusalem
The Sovereign Order’s design mark and its first two word marks became
“incontestable” in 2008 and 2009. That is, the Sovereign Order filed an affidavit
with the United States Patent and Trademark Office attesting that it used the marks
continuously for five years and satisfied the other statutory criteria for
incontestability. See 15 U.S.C. § 1065.
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The Sovereign Order alleges that the Florida Priory’s name and symbol
infringe its five registered service marks. The Florida Priory’s name—“Knights
Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta,
the Ecumenical Order”—is unregistered. The Florida Priory’s symbol is a white
cross on a red shield, centered on a white Maltese cross with a red crown above it:
Its registration is pending.
C. Procedural History
This litigation spans six years and consists of a bench-trial judgment, an
appeal, a remand decision, and now a second appeal. We review the relevant
procedural history below.
1. First District Court Decision
The Sovereign Order initiated this suit in 2009. It sued the Florida Priory for
infringement and false advertising under the Lanham Act, unfair competition under
Florida common law, and violations of the Florida Deceptive and Unfair Trade
Practices Act. The Florida Priory disputed those claims. It also filed several
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counterclaims, seeking cancellation of the Sovereign Order’s four word marks.
The Florida Priory alleged that the Sovereign Order defrauded the Patent and
Trademark Office by applying for registration without disclosing that a Delaware
organization was already using similar marks.
After a bench trial in 2011, the district court ruled against the Sovereign
Order and for the Florida Priory on their respective claims and counterclaims. The
district court rejected the Sovereign Order’s claim of false advertising. It found
that the Florida Priory did not misrepresent the “nature, characteristics, qualities, or
geographic origin” of its services, 15 U.S.C. § 1125(a)(1)(B), because the
Sovereign Order and the Florida Priory “shared a history prior to 1798” and
because the Florida Priory “expressly associates itself with the Ecumenical Order,
a non-Catholic organization.” SMOM I, 816 F. Supp. 2d at 1302. In reaching its
historical finding, the district court relied on the testimony of Nicholas F.S.
Papanicolaou, the Prince Grand Master of the Ecumenical Order. With respect to
the Florida Priory’s counterclaims, the district court cancelled the Sovereign
Order’s word marks. It found that the Sovereign Order defrauded the Patent and
Trademark Office because, at the time of registration, the Sovereign Order was
“willfully blind” to the fact that the Delaware organization was already using
similar marks. Id. at 1300. Because the Sovereign Order’s word marks were
cancelled, the district court concluded that its infringement claims for those marks
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failed as well. As for the design mark, the district court rejected the Sovereign
Order’s claim of infringement because it found the parties’ marks visually
distinguishable, “thus removing any possibility for consumer confusion.” Id. at
1301. Finally, the district court rejected the Sovereign Order’s claims under state
law for the same reasons it rejected the Sovereign Order’s claims of infringement.
It added that the parties’ word marks are not likely to be confused because “[t]he
Court’s own [Internet] research indicates that there are numerous Orders that use
this type of terminology in their names.” Id. at 1303 & n.14.
2. First Appeal
In the first appeal, we affirmed in part and reversed in part. We affirmed the
judgment for the Florida Priory on the Sovereign Order’s claim of false
advertising. We ruled that “the district court erred when it permitted Papanicolaou,
a lay witness, to testify about historical matters.” SMOM II, 702 F.3d at 1295.
Papanicolaou was never “qualified as an expert witness” and could only testify
about matters within his “‘personal knowledge,’” id. (quoting Fed. R. Evid. 602),
which meant that the finding of the district court that the Sovereign Order and the
Florida Priory “shared a history prior to 1798” was unsupported. Id. But we
concluded that this error was harmless because the district court gave an
“alternative ground” to support its decision—namely, that the Florida Priory is
non-Catholic. Id.
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We reversed with respect to the remaining claims and counterclaims. We
reversed the cancellation of the Sovereign Order’s word marks because the district
court applied the wrong legal standard and because the Florida Priory failed to
prove that the Sovereign Order had the requisite mental state for fraud. We also
explained that the Patent and Trademark Office was not misled because, at the time
of registration, the Sovereign Order successfully distinguished its marks by
explaining they were service marks, unlike the Delaware organization’s collective
membership mark. We then reversed the judgment for the Florida Priory on the
Sovereign Order’s claims of infringement. The district court failed to apply the
seven-factor balancing test required by our precedent. We remanded “so the
district court [could] conduct the proper, multi-factor infringement analysis for the
design marks . . . [and] word marks.” Id. at 1294 (footnote omitted). Because the
Sovereign Order’s state-law claims were tied to its infringement claims, we
remanded those claims as well. We instructed the district court “to limit its
analysis to facts in the record and to refrain from consulting outside sources on the
Internet that have not been cited, submitted, or recognized by the parties.” Id. at
1296.
The Sovereign Order requested that we reassign the case to a different
district judge on remand. The Sovereign Order complained about several
comments that the district judge made about the parties and their motives. For
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example, in his published opinion, the district judge wrote the following
disparaging comment:
The parties present themselves as Christian charities. The Court
struggles with the parties’ characterizing themselves in that manner,
however. The amounts of money each party has raised for charitable
purposes are unimpressive, which leads the Court to believe that the
members of both [the Sovereign Order] and the [Florida Priory] are
more interested in dressing up in costumes, conferring titles on each
other and playing in a “weird world of princes and knights” than in
performing charitable acts.
816 F. Supp. 2d at 1294 n.2 (quoting his own comments from trial). The district
judge also stated, “It just baffles me that two charitable groups are spending their
charitable money suing one another and wasting all . . . these funds on litigation.”
Trial Tr. 34. On appeal, we deemed these comments “offensive,” “unnecessar[ily]
belittling,” and “wholly inappropriate.” SMOM II, 702 F.3d at 1297.
Nevertheless, we found that the district judge exhibited no “actual bias in favor of,
or against, one party over the other” and explained that reassignment would require
“duplication of resources” in this “fact-intensive” case. Id. We denied the
Sovereign Order’s request for reassignment and expressed our expectation that “on
remand, both parties will be treated with the respect they deserve and that the
district court will be able to freshly consider the remanded claims.” Id.
3. Second District Court Decision
On remand, the district court again entered judgment for the Florida Priory
on all of the Sovereign Order’s claims. With respect to the claims of infringement,
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the district court identified and applied the seven-factor balancing test for
confusion: “(1) the type of mark; (2) the similarity of the marks; (3) the similarity
of the services the marks represent; (4) the similarity of the parties’ service outlets
and customers; (5) the nature and similarity of the parties’ advertising media;
(6) the defendant’s intent; and (7) any actual confusion.” Sovereign Military
Hospitaller Order of Saint John of Jerusalem of Rhodes & of Malta v. Fla. Priory
of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem,
Knights of Malta, the Ecumenical Order (SMOM III), No. 09-81008-CIV, slip op.
at 3 (S.D. Fla. Aug. 19, 2014) (citing SMOM II, 702 F.3d at 1293). It also
considered the Florida Priory’s defenses of prior use with respect to the Sovereign
Order’s incontestable marks. Ultimately, the district court entered judgment for
the Florida Priory on the Sovereign Order’s claims of infringement and its claims
under state law.
The district court found that a few factors in the balancing test weigh in
favor of the Sovereign Order. The first factor favors the Sovereign Order, the
district court found, with respect to its incontestable marks—i.e., the design mark,
“Sovereign Military Hospitaller Order of St. John of Jerusalem of Rhodes and of
Malta,” and “Knights of Malta.” The district court recognized that, under Dieter v.
B&H Industries of Southwest Florida, Inc., 880 F.2d 322, 329 (11th Cir. 1989), an
incontestable mark is presumptively strong. The district court also found that the
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similarity of the marks favors the Sovereign Order with respect to its word marks.
The district court found “unmistakable” similarities between the parties’ word
marks, explaining that the Florida Priory’s name includes nearly all of the
Sovereign Order’s marks. SMOM III, No. 09-81008-CIV, slip op. at 8. The
addition of “Florida Priory” and “Ecumenical Order,” according to the district
court, “is insufficient to render the [Priory’s name] dissimilar.” Id. The district
court also found that the similarity of services favors the Sovereign Order with
respect to all of its marks. It recognized that both parties “are engaged in
charitable activities.” Id. at 9. But it attributed little weight to this factor because
“[t]here is nothing unique in charitable services” and “[c]ountless charitable
organizations exist throughout the world.” Id.
The district court found that the remaining factors—and the overall
balance—favor the Florida Priory. With respect to the first factor, the district court
found that the Sovereign Order’s contestable word marks—“Hospitallers of St.
John of Jerusalem” and “Order of St. John of Jerusalem”—are weak. It found that
the contestable word marks employ “commonly used generic words” like “Saint
John” and “hospitaller.” Id. at 7. It also found that the marks are used extensively
by third parties. The district court cited testimony that “[a]t least 20 charitable
organizations can be found on the Internet that use the terms ‘Saint John,’
‘Knights,’ ‘Hospitallers,’ and ‘Knights of Malta’ in the names.” Id. And many
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“Orders of St. John” and “Orders of the Knights of Malta,” foreign and domestic,
are featured in tourism publications for the island of Malta. Id. Moreover, several
groups “share the non-exclusive license to use [the Sovereign Order’s] name.” Id.
As for the similarity of the marks, the district court found that it favors the
Florida Priory with respect to the Sovereign Order’s design mark. Citing its earlier
decision, the district court reiterated that the parties’ “two symbols are easily
distinguishable.” Id. at 8. The Florida Priory’s design “contains two crosses” to
the Sovereign Order’s one. SMOM I, 816 F. Supp. 2d at 1301. And the Florida
Priory’s shield has an ordinary cross on it, but the Sovereign Order’s has a Maltese
cross. Moreover, only the Florida Priory’s mark features a crown.
The district court found that the fourth and fifth factors favor the Florida
Priory. The district court found “both similarities and differences between the
parties’ methods for fundraising.” SMOM III, No. 09-81008-CIV, slip op. at 9–10.
Both parties use newsletters, the Internet, and email to reach Christian donors of all
denominations. But, unlike the Florida Priory, the Sovereign Order also obtains
funds from the federal government and some Catholic organizations. Moreover,
only the Ecumenical Order has advertised on television. Based on these “minor
differences” in fundraising and the Sovereign Order’s failure to prove that “the
parties’ advertising reached the same individuals,” id. at 11–12, the district court
found that the fourth and fifth factors favor the Florida Priory.
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The district court also found that the defendant’s intent favors the Florida
Priory. It found that the Florida Priory’s parent, the Ecumenical Order, has used
the marks at issue since 1911, well before the Sovereign Order began using them.
To trace this history, the district court relied on Papanicolaou’s testimony about
several documents: minutes from a 1908 meeting of the “Knights of Malta”;
incorporation documents from 1911 for a New Jersey organization, “Knights of
Malta”; incorporation documents from 1956 for a Delaware organization,
“Sovereign Order of Saint John of Jerusalem, Inc.”; and registration documents
filed by the Delaware organization in 1958 for the collective membership mark
“Sovereign Order of Saint John of Jerusalem, Knights of Malta,” dating the mark’s
first use in commerce as 1911. The district court credited Papanicolaou’s
testimony that the Ecumenical Order shares an unbroken lineage with the Delaware
and New Jersey organizations. Furthermore, the district court credited
Papanicolaou’s testimony that his organization added “Ecumenical Order” to its
name in 2002 to distinguish itself from the Sovereign Order. It ultimately found no
evidence of bad faith, “especially considering that [the Florida Priory’s] parent’s
use of the mark in commerce predated [the Sovereign Order’s] use.” Id. at 12.
The district court found that the seventh and final factor—actual
confusion—favors the Florida Priory. The district court first found that the
Sovereign Order itself has admitted that the parties’ marks are not likely to be
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confused. When applying for registration in 2002, the Sovereign Order attested
that its word marks were not likely to cause confusion with any preexisting marks.
Yet, the district court found that the Ecumenical Order was already using the mark
“Sovereign Order of Saint John of Jerusalem, Knights of Malta.” Id. at 13.
Accordingly, the Sovereign Order was either “aware that [the Florida Priory’s]
parent existed but did not believe that the marks were confusingly similar, or [the
Sovereign Order] was unaware that [the Florida Priory’s] parent existed.” Id. at
14. “Either scenario,” the district court reasoned, “leads to a finding of absence of
actual confusion.” Id. The district court also found lacking the evidence of actual
confusion that the Sovereign Order presented at trial. For example, the Sovereign
Order introduced an email from Gail Quigley, the cousin of the president of the
Sovereign Order’s American Association. Quigley had received an email from the
Florida Priory soliciting donations and forwarded it to her cousin, adding, “I don’t
know how I got on this distribution list. I’m confused about this group and your
Order of Malta. I think you have your origins with them. They seem much more
military.” The district court did not find this email exchange useful because
Quigley was not a donor and because her emails suggest she understood the
difference between the Sovereign Order and the Florida Priory. Finally, the district
court denied the Sovereign Order’s motion to supplement the record with evidence
of actual confusion since the bench trial in 2011. The proposed evidence included
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an article in the New York Times discussing the prevalence of copycat orders, a
press release about the Florida Priory that mistakenly directs readers to the
Sovereign Order’s website, and evidence that the Florida Priory falsely claims to
be recognized by the Vatican. The district court denied the motion in a footnote,
reasoning that it “was instructed [by the Court of Appeals] to evaluate the
likelihood of confusion with regard to the marks at issue based on the evidence
presented at trial.” Id. at 14 n.1.
After considering the seven factors, the district court ruled in favor of the
Florida Priory. It found that the balance of factors weighed in favor of the Florida
Priory with respect to the Sovereign Order’s contestable marks. As for the
incontestable marks, the district court found that the Sovereign Order’s claims
failed “on account of the prior use defense.” Id. at 17. Specifically, the Florida
Priory challenged the Sovereign Order’s incontestable marks under sections
1115(b)(5) and (b)(6) of the Lanham Act, 15 U.S.C. § 1115(b)(5)–(6). The district
court considered those provisions and, without specifying which one it was
applying, found that the Florida Priory had proved prior use. Again relying on
Papanicolaou’s testimony about the early–twentieth century documents, the district
court found that the Ecumenical Order had used the marks before the Sovereign
Order used them. SMOM III, No. 09-81008-CIV, slip op. at 15–16.
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In this second appeal, the Sovereign Order complains about several
comments that the district judge made on remand. For instance, the Sovereign
Order complains that the district judge again impugned its motives, speculating
that “it’s obvious what’s going on here, that [the Sovereign Order] waited five
years until [its marks] became [i]ncontestable where [it] knew all along [that] the
defendant was using this name.” Tr. 3. Additionally, the district judge told the
parties, “[A]s I looked over what the other senior judges are doing, a number of
them say we don’t want any trademark cases, and I thought, you know, that’s
probably a good idea.” Id. at 4.
II. STANDARDS OF REVIEW
“After a bench trial, we review the district court’s conclusions of law de
novo and the district court’s factual findings for clear error,” Tartell v. S. Fla. Sinus
& Allergy Ctr., Inc., 790 F.3d 1253, 1257 (11th Cir. 2015) (quoting Proudfoot
Consulting Co. v. Gordon, 576 F.3d 1223, 1230 (11th Cir. 2009)), including its
finding that “two marks are not likely to be confused,” SMOM II, 702 F.3d at 1289.
“A finding is ‘clearly erroneous’ when although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm conviction
that a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S.
364, 395, 68 S. Ct. 525, 542 (1948). We review the denial of a motion to
supplement the record for abuse of discretion. Elston v. Talladega Cty. Bd. of
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Educ., 997 F.2d 1394, 1405 (11th Cir. 1993). Finally, we can reassign a case to a
different district judge on remand, but it is an “extraordinary” measure that “we do
not order . . . lightly.” United States v. Shaygan, 652 F.3d 1297, 1318 (11th Cir.
2011) (internal quotation marks omitted).
III. DISCUSSION
In this second appeal, the Sovereign Order challenges the judgment for the
Florida Priory on its claims of infringement under the Lanham Act and its related
claims under state law. In the event of a remand, the Sovereign Order renews its
request to reassign the case to a different district judge. The Florida Priory, for its
part, largely defends the district court and its various findings and rulings.
The district court committed reversible errors. With respect to infringement,
the district court erred in considering several of the factors for likely confusion,
incorrectly assessed the Florida Priory’s defenses of prior use, and misinterpreted
our decision in the first appeal when it denied the Sovereign Order’s motion to
supplement the record. For the same reasons, the district court erred in considering
the Sovereign Order’s claims under state law. Although we are concerned about
the district judge’s inappropriate comments throughout this litigation and his
failures to adhere to our previous decision, we conclude that reassignment on
remand is not warranted.
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A. Lanham Act Infringement
The Sovereign Order’s primary claims against the Florida Priory are for
infringement under the Lanham Act. A person is liable for infringement if he uses
a mark in commerce that is confusingly similar to a registered mark. See 15 U.S.C.
§ 1114(1)(a). A plaintiff bringing an infringement action must prove “first, that its
mark is valid and, second, that the defendant’s use of the contested mark is likely
to cause confusion.” Dieter, 880 F.2d at 326. The second element—confusion—
requires the district court to balance seven factors:
(1) strength of the mark alleged to have been infringed; (2) similarity
of the infringed and infringing marks; (3) similarity between the
goods and services offered under the two marks; (4) similarity of the
actual sales methods used by the holders of the marks, such as their
sales outlets and customer base; (5) similarity of advertising methods;
(6) intent of the alleged infringer to misappropriate the proprietor’s
good will; and (7) the existence and extent of actual confusion in the
consuming public.
Tana v. Dantanna’s, 611 F.3d 767, 774–75 (11th Cir. 2010). The district court
“does not have to consider all of these factors in every case and in some cases,
‘new’ factors may merit consideration.” Swatch Watch, S.A. v. Taxor, Inc., 785
F.2d 956, 958 (11th Cir. 1986). “The real question is whether the court’s ultimate
determination about the ‘likelihood of confusion’ was correct.” Univ. of Ga.
Athletic Ass’n v. Laite, 756 F.2d 1535, 1543 (11th Cir. 1985).
The Sovereign Order challenges the judgment for the Florida Priory on its
claims of infringement. With respect to all of its marks, the Sovereign Order
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contests the application of several factors in the balancing test for likelihood of
confusion. With respect to its incontestable marks, the Sovereign Order contends
that the district court erred when it considered the Florida Priory’s defenses of
prior use.
The district court misapplied several factors when it assessed the likelihood
of confusion, and it erred by treating the defenses of prior use in sections
1115(b)(5) and (b)(6) of the Lanham Act as defenses on the merits. We first
discuss the application of the balancing test for confusion and then discuss the
defenses of prior use.
1. Balancing Test
The Sovereign Order challenges all of the factors that the district court found
in favor of the Florida Priory. That is, the Sovereign Order challenges the findings
about the first factor with respect to its contestable marks, the second factor with
respect to its design mark, and the fourth through seventh factors with respect to all
of its marks. With regard to the seventh factor, the Sovereign Order also
challenges the denial of its motion to supplement the record.
The district court erred with respect to the first, second, fourth, fifth, sixth,
and seventh factors. It also erred by denying the Sovereign Order’s motion to
supplement the record. We address the seven factors, in turn, below.
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a. Strength of the Plaintiff’s Marks
The first factor assesses the strength of the plaintiff’s marks. See John H.
Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 973 (11th Cir. 1983). “The
stronger the mark, the greater the scope of protection accorded it, the weaker the
mark, the less trademark protection it receives.” Frehling Enters., Inc. v. Int’l
Select Grp., Inc., 192 F.3d 1330, 1335 (11th Cir. 1999). We have described this
factor as the “second most important factor” in the seven-factor balancing test for
confusion. Caliber Auto. Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC,
605 F.3d 931, 938 (11th Cir. 2010).
A factfinder assesses the strength of a mark in two ways. It first classifies
the mark as “generic, descriptive, suggestive, or arbitrary.” Custom Mfg. & Eng’g,
Inc. v. Midway Servs., Inc., 508 F.3d 641, 648 (11th Cir. 2007). Arbitrary marks
are the strongest, and generic marks are the weakest. See Aronowitz v. Health-
Chem Corp., 513 F.3d 1229, 1239 (11th Cir. 2008). It then considers “the degree
to which third parties make use of the mark.” Frehling Enters., 192 F.3d at 1336.
“The less that third parties use the mark, the stronger it is, and the more protection
it deserves.” Id.
The district court found that the strength of the mark favors the Sovereign
Order with respect to the incontestable marks—the design mark, “Sovereign
Military Hospitaller Order of St. John of Jerusalem of Rhodes and of Malta,” and
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“Knights of Malta”—but favors the Florida Priory with respect to the contestable
marks—“Hospitallers of St. John of Jerusalem” and “Order of St. John of
Jerusalem.” The Florida Priory challenges the former finding, and the Sovereign
Order challenges the latter. We review both findings and conclude that the district
court did not err in assessing the strength of the incontestable marks but erred in
assessing the strength of the contestable marks.
i. The Incontestable Marks
The Florida Priory challenges the finding that the Sovereign Order’s
incontestable marks are presumptively strong. The Florida Priory disagrees with
our decision in Dieter, which recognized this presumption, but concedes that
Circuit law required the district court to apply it. The Florida Priory nevertheless
contends that its defenses of prior use should defeat this presumption. The district
court treated the Florida Priory’s defenses as complete defenses on the merits—an
error we discuss later in the opinion. But, setting that issue aside, the Florida
Priory contends that its defenses of prior use at least rebut the incontestable status
of the Sovereign Order’s marks and the presumption that they are strong.
Although we largely agree with the Florida Priory’s criticisms of Dieter, we
conclude that the district court correctly treated the Sovereign Order’s
incontestable marks as presumptively strong. We also conclude that the Florida
Priory’s defenses of prior use do not rebut this presumption. Under the plain
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language of the Lanham Act, those defenses are not relevant to the likelihood of
confusion. They defeat only the conclusive presumption that incontestable marks
are valid, not the presumption that incontestable marks are strong for purposes of
confusion. Other statutory defenses may defeat the latter presumption, see, e.g., 15
U.S.C. § 1065, but the Florida Priory did not raise them. To put the Florida
Priory’s arguments in context, we must first explore the role that incontestability
plays under the Lanham Act.
Incontestability offers two key benefits for plaintiffs complaining about an
infringement. With respect to the first element of infringement—validity—
incontestability provides “conclusive evidence of the validity of the registered
mark and of the registration of the mark, of the registrant’s ownership of the mark,
and of the registrant’s exclusive right to use the registered mark in commerce.”
Id. § 1115(b) (emphasis added). Registration alone, by contrast, provides only
“prima facie evidence of . . . validity.” Id. § 1115(a) (emphasis added).
In this Circuit, incontestability also benefits plaintiffs with respect to the
second element of infringement—confusion. We held in Dieter that
incontestability gives plaintiffs an advantage with respect to the first factor in the
seven-factor balancing test for likelihood of confusion. See 880 F.2d at 328–29;
see also Caliber Auto. Liquidators, 605 F.3d at 939; Frehling Enters., 192 F.3d at
1336. An incontestable mark is “presumed to be at least descriptive with
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secondary meaning, and therefore a relatively strong mark.” Dieter, 880 F.2d at
329.
On this point, our precedent in Dieter is an outlier. The majority of circuits
to consider the question have held that incontestability does not affect the strength
of a mark for purposes of confusion. See Lone Star Steakhouse & Saloon, Inc. v.
Alpha of Va., Inc., 43 F.3d 922, 935 (4th Cir. 1995); Oreck Corp. v. U.S. Floor
Sys., Inc., 803 F.2d 166, 171 (5th Cir. 1986); Munters Corp. v. Matsui Am., Inc.,
909 F.2d 250, 252 (7th Cir. 1990); Miss World (UK) Ltd. v. Mrs. Am. Pageants,
Inc., 856 F.2d 1445, 1449 (9th Cir. 1988), abrogated in part on other grounds by
Eclipse Assocs. Ltd. v. Data Gen. Corp., 894 F.2d 1114, 1116 n.1 (9th Cir. 1990);
Hornady Mfg. Co. v. Doubletap, Inc., 746 F.3d 995, 1008 n.13 (10th Cir. 2014).
But see Wynn Oil Co. v. Am. Way Serv. Corp., 943 F.2d 595, 600 (6th Cir. 1991)
(agreeing with our Circuit). The Trademark Trial and Appeal Board agrees with
the majority view. See Safer, Inc. v. OMS Invs., Inc., 94 U.S.P.Q.2d 1031, 1036
(T.T.A.B. 2010). As do the leading treatises. See, e.g., 6 J. Thomas McCarthy,
McCarthy on Trademarks and Unfair Competition § 32:155 (4th ed.); Restatement
(Third) of Unfair Competition § 21, reporter’s note (1995).
The law in this Circuit is almost certainly incorrect. The incontestability of
a mark, by itself, says nothing about its strength. A mark becomes incontestable
when the owner uses it in commerce for five consecutive years and files an
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affidavit with the Patent and Trademark Office attesting that the mark is not
generic, not subject to a prior adverse judgment, and not currently subject to
litigation. See 15 U.S.C. § 1065. Yet, “the test for likelihood of confusion is based
on the perceptions of consumers in the marketplace, which are ordinarily
unaffected by the status of a mark’s registration.” Restatement § 21, reporter’s
note. Furthermore, “trademark rights are not static and . . . the strength of a mark
may change over time.” Safer, 94 U.S.P.Q.2d at 1036. That a mark enjoyed
incontestable status in the past says very little about its current strength in the
marketplace. See 6 McCarthy § 32:155 (criticizing Dieter because “it focuses
solely on the inherent distinctiveness of a mark and ignores the acquired
distinctiveness and strength of the mark in the real world marketplace”).
Moreover, the Lanham Act was amended after Dieter addressed the
relationship between incontestability and confusion. The Trademark Law Revision
Act of 1988 added the following proviso to section 1115 of the Lanham Act:
“[The] conclusive evidence of the right to use [a] registered [incontestable] mark
shall be subject to proof of infringement as defined in section [1114].” Pub. L. No.
100-667, § 128(b)(1), 102 Stat. 3935, 3945 (emphasis added). With this
amendment, Congress decoupled the questions of incontestability and validity
from the questions of infringement and confusion. See Petro Shopping Ctrs. L.P.
v. James River Petrol., Inc., 130 F.3d 88, 92 (4th Cir. 1997); cf. KP Permanent
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Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 118, 125 S. Ct. 542, 548
(2004) (“Section 1115(b) places a burden of proving likelihood of confusion (that
is, infringement) on the party charging infringement even when relying on an
incontestable registration.”). The Dieter Court had no occasion to consider this
statutory change because the amendment became effective in November 1989,
three months after Dieter was decided. See Pub. L. No. 100-667, § 136, 102 Stat.
at 3948. But our later decisions followed Dieter without questioning its reasoning
or acknowledging the change in statutory language. See Caliber Auto. Liquidators,
605 F.3d at 939; Frehling Enters., 192 F.3d at 1336.
Nevertheless, “one panel of this Court cannot disregard the precedent set by
a prior panel, even though it conceives error in the precedent.” United States v.
Romeo, 122 F.3d 941, 942 n.1 (11th Cir. 1997) (quoting Davis v. Estelle, 529 F.2d
437, 441 (5th Cir. 1976)). Although this principle gives way when “the prior
panel’s decision was based on legislation that ha[s] been changed,” United States
v. Woodard, 938 F.2d 1255, 1258 n.4 (11th Cir. 1991), our Court has followed
Dieter even after the 1988 amendments to the Lanham Act, see, e.g., Caliber Auto.
Liquidators, 605 F.3d at 939. And it does not matter, for purposes of law of the
Circuit, that our later decisions failed to consider the change in statutory language.
See DeYoung v. Owens, 646 F.3d 1319, 1325 (11th Cir. 2011) (“[T]he mere act of
proffering additional reasons not expressly considered previously will not open the
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door to reconsideration of the question by a second panel.” (quoting Smith v. GTE
Corp., 236 F.3d 1292, 1302 (11th Cir. 2001)). Dieter remains the law of the
Circuit, and we must continue to follow it. Accordingly, the district court correctly
determined that the Sovereign Order’s incontestable marks are presumptively
strong.
Accepting that incontestable marks are presumptively strong in this Circuit,
the Florida Priory contends that its defenses of prior use should nevertheless defeat
the presumption we recognized in Dieter. In the district court, the Florida Priory
argued that it satisfied the criteria for the defenses in sections 1115(b)(5) and (b)(6)
of the Lanham Act. Under section 1115(b)(5), a defendant must prove that “[its]
mark . . . was adopted without knowledge of the [plaintiff’s] prior use and has been
continuously used by [the defendant] or those in privity with him from a date prior
to [the plaintiff’s registration].” 15 U.S.C. § 1115(b)(5). Under section
1115(b)(6), a defendant must prove that “[its] mark . . . was registered and used
prior to the registration . . . or publication . . . of the registered mark of the
[plaintiff], and not abandoned.” Id. § 1115(b)(6). The Florida Priory’s argument
presents a question of first impression: do the statutory defenses in section 1115(b)
of the Lanham Act defeat the presumption of strength we identified in Dieter?
Based on the text of the statute, we reject the Florida Priory’s argument.
According to the Lanham Act, the “defenses or defects” in section 1115(b) rebut
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“[s]uch conclusive evidence of the right to use the registered mark.” Id. § 1115(b).
In other words, they go to the first factor of infringement—validity. The
presumption we recognized in Dieter, by contrast, goes to second element of
infringement—confusion. We cannot treat the defenses in section 1115(b) as
defenses to the presumption we recognized in Dieter without overriding the plain
language of the Lanham Act. Although Dieter itself is in conflict with the statute,
we decline to extend its error any further than necessary.
Of course, defendants can invoke other statutory defenses that would
potentially defeat the presumption from Dieter. For example, section 1065 of the
Lanham Act—the provision that defines incontestability—also contains a defense
of prior use. Under that defense, a defendant can challenge incontestability “to the
extent” that the plaintiff’s registered mark “infringes a valid right acquired [by the
defendant] under the law of any State or Territory by use of a mark or trade name
continuing from a date prior to the date of registration . . . of such registered
mark.” Id. § 1065. This defense could be relevant to the Dieter presumption
because—unlike section 1115(b)—it defeats the “incontestable” status of a mark,
not the conclusive presumption of validity that comes with incontestability.
Compare id., with id. § 1115(b).
But the Florida Priory never invoked any such defense. The defense of prior
use in section 1065 turns on state law. See id. § 1065; accord Dorpan, S.L. v.
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Hotel Melia, Inc., 728 F.3d 55, 63 & n.10 (1st Cir. 2013); Watec Co. v. Liu, 403
F.3d 645, 652 (9th Cir. 2005); Advance Stores Co. v. Refinishing Specialties, Inc.,
188 F.3d 408, 412–13 (6th Cir. 1999). The Florida Priory has never explained how
it obtained rights to the Sovereign Order’s marks under state law and satisfied the
other conditions in section 1065. Any such defense is, therefore, forfeited. See
Maradiaga v. United States, 679 F.3d 1286, 1294 (11th Cir. 2012).
In sum, the district court correctly determined that the Sovereign Order’s
incontestable marks are presumptively strong. Although this presumption is
legally dubious, it remains the binding law of the Circuit. The Florida Priory’s
defenses of prior use under sections 1115(b)(5) and (b)(6) do not defeat this
presumption because the Lanham Act expressly limits the effect of those defenses.
The Florida Priory failed to raise any other defense that could defeat the
presumption we recognized in Dieter.
ii. The Contestable Marks
The Sovereign Order challenges the finding that its contestable marks are
weak. The district court stated that the marks are “generic” because they employ
“commonly used” words. SMOM III, No. 09-81008-CIV, slip op. at 7. It also
found that the marks are used extensively by third parties. The Sovereign Order
contends that the district court erred by underestimating the uniqueness of its
marks.
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We agree with the Sovereign Order that the district court erred in two
respects. First, the strength of a mark does not turn on its component words in a
vacuum, but instead “the relationship between the name and the service or good it
describes.” Frehling Enters., 192 F.3d at 1335 (emphasis added). For example,
“apple” is a common word, but it is a strong mark when used in connection with
personal computers. See 2 McCarthy § 11:11. And “sun” is a common word, but
it is a strong mark when used in connection with banking. See Frehling Enters.,
192 F.3d at 1335. The correct standard is whether the Sovereign Order’s marks are
strong when used in connection with the Sovereign Order’s services. The district
court erred by evaluating the uniqueness of the individual words that comprise the
Sovereign Order’s marks—e.g., “hospitaller” and “Saint John”—instead of
evaluating the relationship between the marks and the services that the Sovereign
Order provides. Second, the district court misunderstood what matters when
considering third-party use. With respect to licensees, their use does not weaken
the Sovereign Order’s marks. See Univ. of Ga. Athletic Ass’n, 756 F.2d at 1545
(“[W]idespread use of a mark by licensees would tend to support, rather than rebut,
the proposition that [the] mark is a strong one.”). And, with respect to foreign
groups using the Sovereign Order’s marks in other countries, their use is irrelevant
to the strength of the marks in the United States. See E. Remy Martin & Co. v.
Shaw-Ross Int’l Imports, Inc., 756 F.2d 1525, 1531, 1533 (11th Cir. 1985). As for
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the remaining examples, “the significance of third-party use” depends on “the
entire name a third party uses.” Safeway Stores, Inc. v. Safeway Discount Drugs,
Inc., 675 F.2d 1160, 1165 (11th Cir. 1982) (emphasis added). That other
organizations use parts of the Sovereign Order’s word marks is not persuasive
evidence of third-party use. See id. Moreover, the district court identified only
twenty examples of third-party use—a number “substantially less than in other
cases in which we have found significant third-party use.” Id.
b. Similarity of the Parties’ Marks
The second factor for confusion—the similarity of marks—requires the
factfinder to compare the plaintiff’s marks with the defendant’s marks and measure
their similarity. “[T]he greater the similarity . . . , the greater the likelihood of
confusion.” Exxon Corp. v. Tex. Motor Exch. of Hous., Inc., 628 F.2d 500, 505
(5th Cir. 1980). Similarity must be determined “by considering the overall
impression created by the mark as a whole rather than simply comparing individual
features of the marks.” Id. Relevant points of comparison include “the
appearance, sound and meaning of the marks, as well as the manner in which the
marks are used.” John H. Harland, 711 F.2d at 975.
Neither party challenges the finding of the district court that the similarity of
the word marks favors the Sovereign Order, but the Sovereign Order challenges the
finding that the design marks are dissimilar. It argues that the parties’ design
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marks are strikingly similar. It highlights the common design elements—a shield
and a Maltese cross—that are featured in both marks and the overall impression
that the marks convey.
We conclude that the truth is somewhere in the middle: the district court did
not clearly err by finding this factor favors the Florida Priory, but it clearly erred to
the extent it attributed significant weight to this factor. See Frehling Enters., 192
F.3d at 1338. The parties’ design marks are similar:
Both marks feature a shield and a Maltese cross. Both marks invoke impressions
of Malta, Christianity, and the military, and they are used in the same way—as the
symbol for a religious charitable organization. See AmBrit, Inc. v. Kraft, Inc., 812
F.2d 1531, 1541 (11th Cir. 1986) (finding confusing similarity in trade dress when,
“[a]lthough a close examination of the two wrappers reveals significant
differences,” “each is the same size, each has a textured silver foil background,
each is printed primarily with blue and white inks, each includes the product name
in large block letters and the company name in smaller script, and each features a
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polar bear”); Exxon Corp., 628 F.2d at 505 (finding confusing similarity between
two marks that were used similarly and were both “printed in red with all block
letters on a white background” with blue underneath); John H. Harland, 711 F.2d
at 976 (“Although the similarities in appearance, sound and meaning between the
marks . . . are far from overwhelming, these similarities are accentuated by the
manner in which the marks are used.”). The overall designs of the marks are
different, however, and they are visually distinguishable. Because there are “both
similarities and differences,” we “cannot say flatly that either the marks are or are
not visually similar.” 4 McCarthy § 23:25. Instead, we conclude that this factor
does not meaningfully tip the scales one way or the other. See John H. Harland,
711 F.2d at 976; see also In re Coors Brewing Co., 343 F.3d 1340, 1344 (Fed. Cir.
2003) (“Although we uphold the . . . finding that the two marks are generally
similar, . . . we note that similarity is not a binary factor but is a matter of degree.
Because there are significant differences in the design of the two marks, the
finding of similarity is a less important factor . . . .”).
c. Similarity of Services
Neither party challenges the finding of the district court that this factor
favors the Sovereign Order.
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d–e. Similarity of Sales and Advertising Methods
The fourth factor—similarity of the parties’ sales methods—and the fifth
factor—similarity of the parties’ advertising methods—merge in this case. The
former focuses on “where, how, and [with] whom” the parties do business.
Frehling Enters., 192 F.3d at 1339. “Dissimilarities between the retail outlets for
and the predominant consumers of plaintiff’s and defendants’ goods lessen the
possibility of confusion . . . .” Amstar Corp. v. Domino’s Pizza, Inc., 615 F.2d
252, 262 (5th Cir. 1980). The latter compares the parties’ advertisements and the
audiences they reach. See AmBrit, 812 F.2d at 1542; Amstar Corp., 615 F.2d at
262. “The greater the similarity . . . , the greater the likelihood of confusion.”
Exxon Corp., 628 F.2d at 506. The Sovereign Order and the Florida Priory
identify their “customers” as their donors, not the recipients of their charitable
services. Accordingly, both their “sales” and their “advertising” methods are their
fundraising methods.
The Sovereign Order contests the finding that these two factors favor the
Florida Priory. The district court found that, unlike the Florida Priory, the
Sovereign Order obtains funding from Catholic organizations and the federal
government. The Sovereign Order does not disagree with this finding, but it
argues that the district court applied an overly stringent standard in assessing the
similarity of the parties’ potential donors.
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We again agree that the district court erred. By its own findings, the
fundraising methods and target donors of the Sovereign Order and the Florida
Priory overlap significantly. The district court found that both parties use “print
publications, the Internet and email to reach donors.” SMOM III, No. 09-81008-
CIV, slip op. at 11. More importantly, it found that the parties accept donations
from individuals “notwithstanding [their] relationship, if any, with the Catholic
Church.” Id. Although the district court found differences between the parties’
fundraising methods, it labeled those differences as “minor.” Id. Our cases do not
require an “[i]dentity” of sales or advertising methods; “the standard is whether
there is likely to be significant enough overlap . . . that a possibility of confusion
could result.” Frehling Enters., 192 F.3d at 1340; see also Freedom Sav. & Loan
Ass’n v. Way, 757 F.2d 1176, 1185 n.7 (11th Cir. 1985) (“It would overburden a
plaintiff to ask that he or she prove through direct evidence that a large number of
customers actually use the services of both parties: hence, it should be enough to
show that the same customers are likely to use both services.”). The parties here
use many of the same fundraising methods and “cater to the same general kinds of
individuals,” “even if the particular individuals [sending donations] differ.”
Safeway Stores, 675 F.2d at 1166.
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f. Defendant’s Intent
The sixth factor asks whether the defendant adopted its mark “with the intent
of deriving benefit from the reputation of the plaintiff.” Exxon Corp., 628 F.2d at
506. “Bad faith in the adoption and use of a trademark normally involves . . .
efforts by a party to ‘pass off’ its product as that of another.” Amstar Corp., 615
F.2d at 263. Intent can be proven with direct or circumstantial evidence. See
Jellibeans, Inc. v. Skating Clubs of Ga., Inc., 716 F.2d 833, 843 (11th Cir. 1983).
When intent is present, it can “justify the inference that there is confusing
similarity.” Frehling Enters., 192 F.3d at 1340. But “it is neither a necessary nor
sufficient condition for determining the ultimate legal fact of the ‘likelihood of
confusion.’” Jellibeans, 716 F.2d at 843 n.23.
The Sovereign Order challenges the finding that the Florida Priory did not
adopt its marks with the intent to benefit from the Sovereign Order’s reputation. It
contends that the district court impermissibly relied on Papanicolaou’s testimony
when it found that the Ecumenical Order used the marks prior to the Sovereign
Order. We agree.
The district court erred. In our earlier decision, we held that the district
court erroneously “permitted Papanicolaou, a lay witness, to testify about historical
matters.” SMOM II, 702 F.3d at 1295. Papanicolaou was never qualified as an
expert witness and could not testify about matters beyond his personal knowledge.
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On remand, the district court relied on Papanicolaou’s testimony to explain the
relationship between several documents from the early twentieth century, including
minutes from a meeting in 1908, incorporation documents from 1911 and 1956,
and registration documents from 1958. Papanicolaou was not present when these
documents were created, and he has no more personal knowledge about the events
they describe than he had about “late-eighteenth-to-early-nineteenth century
history.” Id. at 1294. Moreover, the documents, on their face, do not prove that
the Florida Priory has used the marks in question since 1911. The documents say
nothing about the relationship between the Ecumenical Order and the Delaware or
New Jersey organizations. Indeed, the district court cited Papanicolaou’s
testimony, not the documents, because only his testimony described a relationship
between the Ecumenical Order and the Delaware and New Jersey organizations.
Granted, the district court also relied on testimony about matters within
Papanicolaou’s personal knowledge, but that testimony does not render its other
error harmless. Specifically, the district court credited Papanicolaou’s testimony
that, in 2002, he added “Ecumenical Order” to the name of his organization to
avoid the accusation that his organization was taking advantage of the Sovereign
Order’s reputation. The primary basis for its finding of no intent, however, was its
finding of prior use—a finding that was based on Papanicolaou’s inadmissible
testimony. See SMOM III, No. 09-81008-CIV, slip op. at 12. Accordingly, we
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cannot say that the district court “was not ‘substantially swayed’ by Papanicolaou’s
inadmissible testimony” when it found that this factor favors the Florida Priory.
SMOM II, 702 F.3d at 1295 (quoting Aetna Cas. & Sur. Co. v. Gosdin, 803 F.2d
1153, 1160 (11th Cir. 1986)).
g. Evidence of Actual Confusion
The “best evidence” that the parties’ marks are likely to be confused is
evidence that the marks actually have been confused. Amstar Corp., 615 F.2d at
263. Evidence of actual confusion is “not necessary” for the plaintiff to prevail on
a claim of infringement, id., but even a “very little” amount of it is highly
probative, World Carpets, Inc. v. Dick Littrell’s New World Carpets, 438 F.2d 482,
489 (5th Cir. 1971). The strength of such evidence depends on “the number of
instances of confusion,” “the kinds of persons confused,” and the “degree of
confusion.” Safeway Stores, 675 F.2d at 1167.
The Sovereign Order makes three arguments to challenge the finding of the
district court that no actual confusion exists. First, it challenges the treatment of
the email from Gail Quigley that it introduced at trial. Second, it contends that the
district court erred by relying on representations that the Sovereign Order made to
the Patent and Trademark Office in 2002. Third, it challenges the denial of its
motion to supplement the record with evidence of actual confusion that surfaced
after the bench trial in 2011.
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We agree with the Sovereign Order with respect to its last two arguments.
We disagree that the district court clearly erred by discounting the email from
Quigley. But the district court erred by considering the representations that the
Sovereign Order made in 2002 and by denying the Sovereign Order’s motion to
supplement based on its misreading of our previous decision on appeal.
i. The District Court Did Not Clearly Err in Weighing the Quigley Email.
The district court did not clearly err when it considered Quigley’s email.
The district court discounted Quigley’s supposed confusion because she is not a
donor to either the Sovereign Order or the Florida Priory. We have held that
“confusion of individuals casually acquainted with a business is worthy of little
weight.” Id. The district court was entitled to discount Quigley’s confusion. See
Sun Banks of Fla., Inc. v. Sun Fed. Sav. & Loan Ass’n, 651 F.2d 311, 319 (5th Cir.
July 1981) (discounting an inquiry about whether Sun Banks and Sun Federal were
related because “there is no indication that the inquiry was made by a potential
customer concerning the transaction of business”). Moreover, although Quigley
wrote, “I’m confused about [the Florida Priory] and your Order of Malta,” the
district court found that the remainder of her email suggests she understood the
difference between the Sovereign Order and the Florida Priory. Because the
district court articulated one of “two permissible views of the evidence,” we defer
to its reading. Anderson v. City of Bessemer City, 470 U.S. 564, 574, 105 S. Ct.
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1504, 1511 (1985). At most, Quigley’s email raises “an inference of actual
confusion . . . [that] is not sufficiently dispositive so as to favor either side in an
appreciable fashion.” Frehling Enters., 192 F.3d at 1341.
ii. The District Court Erred by Considering the Representations that the
Sovereign Order Made to the Patent and Trademark Office in 2002.
The district court erred when it treated the representations that the Sovereign
Order made to the Patent and Trademark Office in 2002 as relevant evidence.
According to the district court, the Sovereign Order conceded that its marks are not
likely to be confused with the Florida Priory’s marks by registering its marks
despite the Delaware organization’s prior use. Its reasoning largely rehashes its
earlier finding that the Sovereign Order defrauded the Patent and Trademark
Office—a finding we reversed in the first appeal. As we explained, the Patent and
Trademark Office notified the Sovereign Order about the preexisting mark at the
time of registration. But the Sovereign Order successfully distinguished its marks
by explaining that they are service marks, as opposed to the Delaware
organization’s collective membership marks. See SMOM II, 702 F.3d at 1292 n.14.
In this litigation, the Sovereign Order sues the Florida Priory for its use of
allegedly infringing service marks. The Sovereign Order’s attestations in 2002
about the Delaware organization’s collective membership marks are irrelevant.
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iii. The District Court Erred in Denying the Sovereign Order’s Motion to
Supplement the Record.
Finally, the district court erred when it denied the Sovereign Order’s motion
to supplement the record. The district court denied the motion for one reason: it
thought we had “instructed” it to evaluate confusion “based on the evidence
presented at trial.” SMOM III, No. 09-81008-CIV, slip op. at 14 n.1 (emphasis
added). We gave no such instruction. In our earlier decision, we held that the
district court should “limit its analysis to facts in the record and . . . refrain from
consulting outside sources on the Internet that have not been cited, submitted, or
recognized by the parties.” SMOM II, 702 F.3d at 1296. But this instruction to
rely on the record created by the parties and to refrain from conducting self-
directed Internet research did not address whether the district court should permit
the parties to supplement the record with post-trial evidence.
Although we review the denial of a motion to supplement the record for
abuse of discretion, Elston, 997 F.2d at 1405, the district court never actually
exercised its discretion because it misinterpreted our earlier decision. Accordingly,
we cannot defer to its decision. See Renico v. Lett, 559 U.S. 766, 775, 130 S. Ct.
1855, 1863 (2010) (“[I]f the record reveals that the trial judge has failed to exercise
the ‘sound discretion’ entrusted to him, the reason for such deference by an
appellate court disappears.” (quoting Arizona v. Washington, 434 U.S. 497, 510
n.28, 98 S. Ct. 824, 832 (1978))); Lykins v. Pointer, Inc., 725 F.2d 645, 649 (11th
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Cir. 1984) (“The court . . . must in fact exercise its discretion.”). On remand, the
district court should determine in the first instance whether and how the parties can
supplement the record with post-trial evidence. See generally Chudasama v.
Mazda Motor Corp., 123 F.3d 1353, 1366 (11th Cir. 1997) (“[D]istrict courts enjoy
broad discretion in deciding how best to manage the cases before them.”).
2. Prior-Use Defenses
The Sovereign Order challenges the holding that its incontestable marks
were not infringed on account of the Florida Priory’s prior use. The Sovereign
Order contends that the district court erroneously treated the defenses of prior use
in sections 1115(b)(5) and (b)(6) as complete defenses on the merits. It also argues
that prior use was outside the scope of our appellate mandate and that the district
court erred by relying on Papanicolaou’s testimony to support its finding of prior
use.
The district court misinterpreted sections 1115(b)(5) and (b)(6) as providing
complete defenses on the merits. The defenses in section 1115(b) rebut the
conclusive presumption of validity that comes with incontestability. See 15 U.S.C.
§ 1115(b). When that presumption is rebutted, however, the defendant does not
automatically prevail. Rebuttal reduces the conclusive presumption of validity to a
prima facie presumption of validity. See Park ‘N Fly, Inc. v. Dollar Park & Fly,
Inc., 469 U.S. 189, 199 n.6, 105 S. Ct. 658, 664 (1985) (“If one of the defenses [in
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section 1115(b)] is established, registration constitutes only prima facie and not
conclusive evidence of the owner’s right to exclusive use of the mark.”). The
defendant must still identify some additional reason why the plaintiff’s marks are
invalid. See 15 U.S.C. § 1115(a). Here, whether or not sections 1115(b)(5) and
(b)(6) apply, the Sovereign Order’s marks are presumptively valid because they are
registered. See id. The district court erred by treating sections 1115(b)(5) and
(b)(6) as complete defenses to infringement. See 6 McCarthy § 32:153; see also
id. at § 32:157 (treating the defenses in section 1115(b) as defenses on the merits
leads to the “absurdity of a challenger finding it easier to prove a defense to an
incontestable registration than to an unregistered, common-law mark”).
Of course, prior use can be a defense on the merits, but we agree with the
Sovereign Order that any such defense would go beyond our mandate. Under the
common law, prior use can defeat the validity of a plaintiff’s mark. See generally
United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S. Ct. 48 (1918);
Hanover Star Milling Co. v. Metcalf (Tea Rose), 240 U.S. 403, 36 S. Ct. 357
(1916). In the first appeal, however, we remanded for the district court “to
consider, under the correct legal standard, confusion with respect to all of [the
Sovereign] Order’s marks.” SMOM II, 702 F.3d at 1298 (emphasis added). Under
the “mandate rule,” a district court can only “settle so much as has been
remanded.” Litman v. Mass. Mut. Life Ins. Co., 825 F.2d 1506, 1511 (11th Cir.
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1987) (en banc) (quoting In re Sanford Fork & Tool Co., 160 U.S. 247, 255, 16
S. Ct. 291, 293 (1895) (internal quotation mark omitted)). Because our earlier
decision remanded for the district court to consider the second element of
infringement—confusion—it could not consider challenges to the first element—
validity. See Barber v. Int’l Bhd. of Boilermakers, 841 F.2d 1067, 1070–71 (11th
Cir. 1988). Prior use was relevant only insofar as it informed the likelihood of
confusion. As explained earlier, the defenses of prior use in sections 1115(b)(5)
and (b)(6) do not do so.
Furthermore, the district court erred by grounding its finding of prior use in
the inadmissible testimony of Papanicolaou. The district court based its finding of
prior use on the same evidence that it cited for its finding of no intent—i.e.,
Papanicolaou’s testimony about the twentieth century documents. As we have
explained, that finding was unsupported because Papanicolaou was not qualified to
testify about matters beyond his personal knowledge. Accordingly, even if prior
use had been within the scope of our mandate, the district court could not have
relied on Papanicolaou’s testimony to find that the Florida Priory has continuously
used the marks in question “since 1911.” SMOM III, No. 09-81008-CIV, slip op.
at 15.
In short, the district court erred when it held that the Florida Priory’s
defenses of prior use defeat the Sovereign Order’s claims of infringement for its
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incontestable marks. The defenses in sections 1115(b)(5) and (b)(6) of the Lanham
Act are not complete defenses on the merits. Those defenses, when they apply,
only lower the presumption of validity afforded to incontestable marks. The
Florida Priory no longer challenges the validity of the Sovereign Order’s marks,
and any such challenge would be outside the scope of our appellate mandate. Even
if it were relevant at this stage, the finding of prior use by the district court was
unsupported because it was based on Papanicolaou’s inadmissible testimony.
3. Conclusion
We conclude that the district court erred when it entered judgment for the
Florida Priory on the Sovereign Order’s claims of infringement. The district court
erred with respect to every factor challenged by the Sovereign Order. Specifically,
the district court clearly erred in attributing significant weight to its finding that the
similarity of the design marks favors the Florida Priory. And it committed legal
errors when it assessed the strength of the Sovereign Order’s contestable word
marks, the similarity of sales and advertising methods, the presence of intent, and
the evidence of actual confusion. It also erred with respect to prior use because
sections 1115(b)(5) and (b)(6) are neither defenses on the merits nor defenses to
the presumption that the Sovereign Order’s incontestable marks are strong.
Due to these errors, we reverse the judgment against the Sovereign Order on
its claims of infringement under the Lanham Act. On remand, the district court
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should reconsider the strength of the Sovereign Order’s contestable marks, the
similarity of the parties’ sales methods and advertising methods, the Florida
Priory’s intent, and the evidence of actual confusion. It should also decide whether
or how to supplement the record. Then, the district court should reweigh the
balance of factors and make a finding as to whether the Florida Priory’s marks are
likely to be confused with the Sovereign Order’s marks.
B. State-Law Claims
The parties agree that the Sovereign Order’s claims under Florida law rise
and fall with its claims of infringement under the Lanham Act. See SMOM II, 702
F.3d at 1296 (citing Nat. Answers, Inc. v. Smithkline Beecham Corp., 529 F.3d
1325, 1333 (11th Cir. 2008)). Because we vacate the judgment on the claims of
infringement, we must also vacate the judgment on the claims under state law and
remand for further proceedings.
C. Reassignment
Renewing its request from the first appeal, the Sovereign Order again asks
us to reassign the case on remand to a different district judge. The Sovereign
Order cites the district judge’s continued reliance on Papanicolaou’s inadmissible
testimony, his continued reliance on the rejected finding of fraud, and his negative
comments about the parties and their motives. The Florida Priory, for its part,
downplays the district judge’s rulings and comments and relies on our earlier
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refusal to reassign the case. Although we acknowledge the force of the Sovereign
Order’s arguments, we agree with the Florida Priory that reassignment is not
warranted.
We can order reassignment “as part of our supervisory authority over the
district courts in this Circuit.” United States v. Torkington, 874 F.2d 1441, 1446
(11th Cir. 1989); see 28 U.S.C. § 2106 (“[A] court of appellate jurisdiction . . . may
remand the cause and . . . require such further proceedings to be had as may be just
under the circumstances.”). In the absence of actual bias, we consider at least three
factors in determining whether to reassign a case: “(1) whether the original judge
would have difficulty putting his previous views and findings aside; (2) whether
reassignment is appropriate to preserve the appearance of justice; (3) whether
reassignment would entail waste and duplication out of proportion to gains realized
from reassignment.” Torkington, 874 F.2d at 1447. Reassignment can become
warranted on the second or third appeal, even though it was not warranted on the
first or second appeal. See Shaygan, 652 F.3d at 1318–19 (citing United States v.
Martin, 455 F.3d 1227, 1242 (11th Cir.2006); United States v. Gupta, 572 F.3d
878, 892 (11th Cir. 2009)).
The balance of the three factors identified in Torkington counsels against
reassignment, although the balance is closer than it was on the first appeal. First,
we agree with the Sovereign Order that the district judge’s adherence to his
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previous finding of fraud and his continued reliance on Papanicolaou’s historical
testimony suggest he may have “difficulty putting his previous views and findings
aside.” Torkington, 874 F.2d at 1447. Nevertheless, his most recent missteps
seem more akin to garden-variety errors of law than the kind of direct defiance or
“stalemated posture” that requires reassignment. Brooks v. Cent. Bank of
Birmingham, 717 F.2d 1340, 1343 (11th Cir. 1983); cf., e.g., United States v.
Remillong, 55 F.3d 572, 577 (11th Cir. 1995) (reassigning a case when the district
judge “stubbornly persisted in his questioned decision without reasonable
explanation or justification”); United States v. White, 846 F.2d 678, 696 (11th Cir.
1988) (reassigning the case because the district judge “entered a holding that had
been explicitly reversed by this Court previously”). The district court could have
read our earlier decision—mistakenly, but reasonably—as not totally foreclosing
his reliance on Papanicolaou’s testimony or his previous finding of fraud because
we addressed those issues in the context of different legal claims. Second, we also
agree with the Sovereign Order that the district judge’s repeated impugning of the
parties’ motives in written opinions and public hearings is cause for concern. The
same is true for his expressed disinterest in trademark disputes in general and this
case in particular. Cf. Torkington, 874 F.2d at 1447 (reassigning a case in which
“the judge stated at various times that he felt the taxpayer had little interest in this
type of suit, that this prosecution was ‘silly,’ and that it was a waste of the
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taxpayers’ money” and “questioned the wisdom of the substantive law he had to
apply”). But the district judge’s latest remarks, like his earlier ones, “do not rise to
the level of conduct that warrants assignment to a different judge on remand.”
SMOM II, 702 F.3d at 1297. And we see no evidence that his remarks played any
role in his ultimate decision. Third, we are still convinced that reassignment will
“entail waste and duplication out of proportion to [the] gains.” Id. (quoting
Torkington, 874 F.2d at 1447). This district judge has a unique familiarity with
this complex, “fact-intensive” case. Id. He conducted the trial, heard the
witnesses, and is familiar with the record and the parties. Reassignment would
“require duplication of resources expended by the parties and the court” and would
offset any corresponding gains. Id.; see, e.g., CSX Transp., Inc. v. State Bd. of
Equalization, 521 F.3d 1300, 1301 (11th Cir. 2008) (denying reassignment when
“[t]he judge presided over an eight-day trial that concerned a complicated subject
and drafted a thorough 27-page opinion”); Stargel v. SunTrust Banks, Inc., 791
F.3d 1309, 1312 (11th Cir. 2015) (denying reassignment when “the district judge
ha[d] been assigned to [the] case for over four years and . . . expended significant
effort on the not-so-simple issues”). Accordingly, we conclude that reassignment
is not warranted at this time.
“Reassignment is an extraordinary order, and we ‘do not order [it] lightly.’”
Gupta, 572 F.3d at 891 (alteration in original) (quoting Torkington, 874 F.2d at
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1447); see also Shaygan, 652 F.3d at 1318. We again express our expectation that,
“on remand, both parties will be treated with the respect they deserve and that the
district court will be able to freshly consider the remanded claims notwithstanding
its previously expressed views.” SMOM II, 702 F.3d at 1297.
IV. CONCLUSION
We VACATE the judgment against the Sovereign Order’s claims of
infringement under the Lanham Act, VACATE the judgment against the
Sovereign Order’s claims under Florida law, and REMAND for proceedings
consistent with this opinion.
49