JL Beverage Co. v. Jim Beam Brands Co. ( 2016 )


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  •                 FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    JL BEVERAGE COMPANY, LLC,                 No. 13-17382
    Plaintiff-Counter-Defendant-
    Appellant,       D.C. No.
    2:11-cv-00417-
    v.                      MMD-CWH
    JIM BEAM BRANDS CO.; BEAM
    SUNTORY INC.,                              OPINION
    Defendants-Counter-Plaintiffs-
    Appellees.
    Appeal from the United States District Court
    for the District of Nevada
    Miranda M. Du, District Judge, Presiding
    Argued and Submitted January 8, 2016
    San Francisco, California
    Filed July 14, 2016
    Before: J. Clifford Wallace, John T. Noonan,
    and Marsha S. Berzon, Circuit Judges.
    Opinion by Judge Wallace
    2             JL BEVERAGE V. JIM BEAM BRANDS
    SUMMARY*
    Trademark
    The panel reversed the district court’s summary judgment
    in favor of Jim Beam Brands Co. on claims of trademark
    infringement, false designation of origin, and unfair
    competition brought under the Lanham Act and Nevada state
    law by JL Beverage Co., which sells a competing line of
    flavored vodkas.
    The panel held that the district court erred in failing to
    place the burden of proof on Jim Beam Brands, the moving
    party; failing to view the evidence in the light most favorable
    to JL Beverage; and never analyzing whether a genuine
    dispute of material fact existed.
    The panel held that genuine issues of material fact
    remained as to the likelihood of consumer confusion between
    plaintiff’s registered “Johnny Love Vodka” and “JL Lips”
    marks and defendant’s “Pucker Vodka” logo. A reasonable
    fact-finder could conclude that plaintiffs’ marks had
    conceptual strength and either did or did not have commercial
    strength, that the parties’ products were related flavored-
    liquor products sold to the same customers and distributors,
    that the products were similar, that consumers purchasing the
    products were not likely to exercise a high degree of care in
    distinguishing between the two, and that Jim Beam was aware
    of JL Beverage’s trademarks prior to rolling out its Pucker
    *
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    JL BEVERAGE V. JIM BEAM BRANDS               3
    Vodka line. The panel therefore reversed and remanded for
    further proceedings consistent with its opinion.
    COUNSEL
    Colin Christopher Holley (argued), Jeremy T. Katz, and
    George L. Hampton, Hampton Holley, Corona Del Mar,
    California; Ryan R. Gile, Weide & Miller, Las Vegas,
    Nevada; for Plaintiff-Counter-Defendant-Appellant.
    Mark J. Liss (argued), Claudia Stangle, and Angela Baylin,
    Leydig, Voit & Mayer, Chicago, Illinois; Jonathan Fountain
    and Michael McCue, Lewis Roca Rothgerber, Las Vegas,
    Nevada; for Defendant-Counter-Plaintiff-Appellee.
    OPINION
    WALLACE, Senior Circuit Judge:
    JL Beverage Company, LLC (JL Beverage) appeals from
    the district court’s summary judgment in favor of Jim Beam
    Brands Company (Jim Beam) on JL Beverage’s trademark
    infringement, false designation of origin, and unfair
    competition claims. We have jurisdiction pursuant to
    28 U.S.C. § 1291. Because genuine issues of material fact
    remain, we reverse and remand for further proceedings
    consistent with this opinion.
    I.
    This dispute centers on two alcoholic beverage
    manufacturers, JL Beverage and Jim Beam, which sell
    4           JL BEVERAGE V. JIM BEAM BRANDS
    competing lines of flavored vodkas. JL Beverage
    manufactures, sells, and promotes a line of flavored and
    unflavored vodka called “Johnny Love Vodka.” Restaurant
    owner and bartender Johnny Metheny created the Johnny
    Love line of vodkas around 2003–2004. To promote the new
    line, Metheny enlisted a friend to design a unique logo, and
    Metheny quickly adopted the proposed lips image. He
    believed the lips were “definitely sexy” and could “impart the
    flavor” of the vodka if colored to denote the flavor in the
    bottle of vodka. The lips were colored red for unflavored,
    purple for passionfruit, yellow for aloha, orange for tangerine,
    and green for apple. In 2005, Metheny sold the Johnny Love
    Vodka line to JL Beverage.
    Since July 2005, JL Beverage has used the following two
    trademarks in connection with its sale of the Johnny Love
    Vodka products:
    The first mark, called “Johnny Love Vodka” or the “JLV
    mark,” was registered on August 16, 2005, with the United
    States Patent and Trademark Office (USPTO) as Registration
    No. 2, 986,519 in International Class 33-Vodka. JL Beverage
    registered the second mark, called the “JL Lips Mark,” with
    JL BEVERAGE V. JIM BEAM BRANDS                 5
    USPTO on October 25, 2011 under Registration No.
    4,044,182 in International Class 33-Distilled Spirits. Both
    images appear on the Johnny Love line of vodkas and
    flavored vodkas:
    The JL Lips Mark is imprinted on the top of the bottle and on
    the back label, and is incorporated into the JLV Mark as the
    “o” in “Love.” The mark color on the back label also
    corresponds to the flavor in the bottle:
    The Johnny Love Vodka bottles come in four different sizes.
    6           JL BEVERAGE V. JIM BEAM BRANDS
    After acquiring Johnny Love Vodka and the two
    trademarks, JL Beverage expended substantial resources
    developing, advertising, and marketing Johnny Love Vodkas
    throughout the United States. JL Beverage at one point had
    distributors in twenty states, and it holds a Federal Basic
    Alcohol Permit for national use. JL Beverage’s nationwide
    marketing campaign included print-media advertisements,
    third-party publications, and the development of its own
    website. Although in recent years its sales have been
    substantially reduced, its overall marketing efforts resulted in
    millions of dollars in sales of Johnny Love products
    throughout the country.
    In 2010, Jim Beam entered the flavored vodka market
    with a new line of flavored vodkas called “Pucker Vodka.”
    Jim Beam purchased the Pucker brand from Koninklijke De
    Kuyper, B.V. (KDK). KDK had marketed a line of liqueurs
    and cordials under the “Pucker” brand, and, in its original
    design, used lips images in connection with its labeling and
    logos. After Jim Beam purchased KDK’s flavored vodka line,
    it decided to redesign and rebrand Pucker to “expand on the
    equity of the Pucker brand and lips” into flavored vodka.” To
    that end, Jim Beam hired the design firm of Libby, Perszyk,
    Kathman, Inc. (LPK) to independently “develop a new and
    unique look and feel” for its Pucker vodka product that would
    communicate “[i]ntense flavor and [i]ntense fun” in
    connection with the brand.
    The redesigned Pucker Vodka bottle contains a prominent
    lips image on the center of its label. Like the Johnny Love
    Vodka labels, the lips image varies in color depending on the
    vodka flavor in the bottle:
    JL BEVERAGE V. JIM BEAM BRANDS                   7
    Jim Beam instructed LPK to use both the Pucker name and
    lips as part of any design it developed for Pucker’s new label.
    After LPK provided Jim Beam with several possible design
    options, Jim Beam’s project team made final selections of the
    proposed Pucker Vodka products and sent their choices to the
    company’s legal department for clearance. Jim Beam
    instructed its legal counsel to perform a clearance search for
    lips designs. The legal department found 40 references to lips
    for alcohol-related products. JL Beverage’s JLV Mark was in
    the search report. Although JL Beverage’s Lips Mark is
    incorporated into the JLV Mark, it did not separately appear
    in the search report because JL Beverage had not yet filed its
    registration application for the standalone lips mark. Based on
    its research, Jim Beam’s legal department approved the
    Pucker brand’s bottle shape and label.
    Emily Johnson, a former Jim Beam employee, worked for
    Jim Beam as a financial and business analyst during the
    development of the Pucker Vodka product. Prior to her
    employment at Jim Beam, Johnson met JL Beverage’s
    8           JL BEVERAGE V. JIM BEAM BRANDS
    president, T.J. Diab, and learned about JL Beverage’s
    products. In March 2010, during her employment at Jim
    Beam, she sent an email to Diab from her home account,
    which stated “I was reading through some reporting on vodka
    flavors and saw Aloha on the list!”
    Jim Beam attempted to register the Pucker lips design
    around March 2011, filing applications for trademarks in the
    bottle and cap, the stylized Pucker wording, and the lips
    design. After the registration process began, an official in Jim
    Beam’s legal department discovered that the lips mark that
    LPK had selected to be featured in the center of the Pucker
    Vodka label was “stock art” from iStockphoto LP. Because
    Jim Beam could not claim ownership in the lips image, it
    withdrew its USPTO application for the lips design.
    Prior to withdrawal, Jim Beam also received notice from
    the USPTO that it had rejected Jim Beam’s registration
    application. In the rejection letter, the USPTO cites JL
    Beverage’s Lips Mark as a basis for refusing the registration.
    Jim Beam officially relaunched its newly-designed Pucker
    Vodka products in March and April 2011. Jim Beam
    advertises Pucker Vodka products nationally through
    television and cable commercials, digital advertising, print
    advertisements in national magazines, and in-store and on-
    premise promotions at restaurants and bars.
    Shortly after the Pucker Vodka launch, Shaun Robertson,
    a JL Beverage broker for Johnny Love Vodka, began
    receiving phone calls and messages concerning the
    similarities between the two vodkas. Robertson provided, in
    a declaration to the court, a summary of in-person
    conversations, text messages, and phone calls he had with
    JL BEVERAGE V. JIM BEAM BRANDS                     9
    friends and acquaintances in which those individuals
    confused a different flavored vodka product for Johnny Love.
    JL Beverage delivered a cease and desist letter to Jim
    Beam on March 18, 2011. Jim Beam responded that it did not
    believe its Pucker Vodka logo infringed JL Beverage’s mark.
    JL Beverage filed a complaint in the United States District
    Court for the District of Nevada in July 2011, alleging
    trademark infringement, false designation of origin, and
    unfair competition. JL Beverage moved for preliminary
    injunction, which the district court denied. JL Beverage and
    Jim Beam then filed cross-motions for summary judgment.
    The district court denied JL Beverage’s motion and granted
    Jim Beam’s motion. The district court subsequently denied JL
    Beverage’s motion for reconsideration.
    II.
    We review the district court’s summary judgment de
    novo, including its decision on cross-motions for summary
    judgment. Szajer v. City of L.A., 
    632 F.3d 607
    , 610 (9th Cir.
    2011); Guatay Christian Fellowship v. Cty. of San Diego,
    
    670 F.3d 957
    , 970 (9th Cir. 2011). Viewing the evidence in
    the light most favorable to the nonmoving party, we
    determine whether there are any genuine issues of material
    fact. Olsen v. Idaho State Bd. of Med., 
    363 F.3d 916
    , 922 (9th
    Cir. 2004). We review the district court’s conclusions of law
    de novo, and its factual findings for clear error. Id.; Lahoti v.
    VeriCheck, Inc., 
    586 F.3d 1190
    , 1195–96 (9th Cir. 2009).
    “[W]here it is unclear whether the district court relied on
    proper law, we may vacate the judgment and remand with
    instructions to apply the correct legal standard.” 
    Lahoti, 586 F.3d at 1196
    (citing United States v. Pintado-Isiordia,
    
    448 F.3d 1155
    , 1158 (9th Cir. 2009)).
    10          JL BEVERAGE V. JIM BEAM BRANDS
    This appeal turns in large part on whether the district
    court correctly applied the standard for deciding a motion for
    summary judgment. The success of each of JL Beverage’s
    claims turns on the same issue: whether there was a genuine
    dispute of material fact as to the likelihood of consumer
    confusion. JL Beverage asserts the following claims:
    (1) federal trademark infringement under the Lanham Act,
    15 U.S.C. § 1114; (2) false designation of origin and unfair
    competition under the Lanham Act, 15 U.S.C. § 1125(a); and
    (3) Nevada common law trademark infringement and unfair
    competition. The likelihood of consumer confusion is central
    to each claim. See 15 U.S.C. § 1114(1)(a) (providing that a
    person is liable for trademark infringement where he or she
    “use[s] in commerce any reproduction, counterfeit, copy, or
    colorable imitation of a registered mark in connection with
    the sale, offering for sale, distribution, or advertising of any
    goods or services on or in connection with which such use is
    likely to cause confusion, or to cause mistake, or to deceive”)
    (emphasis added); A.L.M.N. v. Rosoff, 
    104 Nev. 274
    , 277, 281
    (1988) (holding that Nevada’s common law trademark
    infringement and unfair competition claims mirror their
    federal counterparts, and plaintiffs need only prove that
    (1) they own a protectable right in the marks, and (2) the
    defendant’s use of the mark is likely to “confuse, cause
    mistake, or deceive an ‘appreciable number’ of reasonable
    customers” with respect to the marks).
    In its summary judgment ruling, the district court used the
    standard applicable to preliminary injunctions instead of the
    standard for summary judgment rulings. The district court,
    having already ruled on JL Beverage’s motion for preliminary
    injunction, continued to apply the standard it used at that
    stage when it ruled on the parties’ cross-motions for summary
    judgment. In its summary judgment order, the district court
    JL BEVERAGE V. JIM BEAM BRANDS                   11
    concluded: “[f]or reasons articulated in the Order denying the
    Preliminary Injunction, the Court determines that no issues of
    material fact remain which could provide Plaintiff a basis for
    success on any of its claims. Defendant’s Motion for
    Summary Judgment is accordingly granted.”
    The district court’s failure to apply the correct standard is
    significant: on motion for preliminary injunction, the
    plaintiff–as the moving party–bears the burden of establishing
    the merits of its claims. See Winter v. Nat. Res. Def. Council,
    Inc., 
    555 U.S. 7
    , 20 (2008). In contrast, on a defendant’s
    motion for summary judgment, not only does the movant
    carry the burden of establishing that no genuine dispute of
    material fact exists, but the court also views the evidence in
    the light most favorable to the non-moving party. See, e.g.,
    
    Olsen, 363 F.3d at 922
    . The defendant-movant must
    demonstrate that, even viewing the evidence in the light most
    favorable to the plaintiff, the plaintiff cannot satisfy its
    burden to prove its claims. See Celotex Corp. v. Catrett,
    
    477 U.S. 317
    , 322–23 (1986).
    But in its summary judgment order, the district court
    ignored the important distinctions between the two standards,
    and, when ruling on the defendant’s motion for summary
    judgment, ultimately placed the burden on JL Beverage, the
    plaintiff, to prove the merits of its claims. Moreover, it failed
    to view the evidence in the light most favorable to JL
    Beverage, and never analyzed whether a genuine dispute of
    material fact existed.
    While the district court must apply the correct standard in
    any case, the necessity to do so is heightened in cases turning
    on the likelihood of consumer confusion. Because the
    determination is based on a non-exhaustive, multi-factor,
    12          JL BEVERAGE V. JIM BEAM BRANDS
    fact-intensive inquiry, we have cautioned against granting
    summary judgment in these cases. Rearden LLC v. Rearden
    Commerce, Inc., 
    683 F.3d 1190
    , 1210 (9th Cir. 2012) (“Given
    the open-ended nature of this multi-prong inquiry, it is not
    surprising that summary judgment on ‘likelihood of
    confusion’ grounds is generally disfavored”); Au-Tomotive
    Gold, Inc. v. Volkswagen of Am., Inc., 
    457 F.3d 1062
    , 1075
    (9th Cir. 2006) (“Because the likelihood of confusion is often
    a fact-intensive inquiry, courts are generally reluctant to
    decide this issue at the summary judgment stage”); Thane
    Int’l, Inc. v. Trek Bicycle Corp., 
    305 F.3d 894
    , 901–02 (9th
    Cir.2002) (“We have cautioned that district courts should
    grant summary judgment motions regarding the likelihood of
    confusion sparingly, as careful assessment of the pertinent
    factors that go into determining likelihood of confusion
    usually requires a full record”), superseded by statute on
    other grounds, 15 U.S.C. § 1125. Where, as here, conflicting
    facts render it unclear whether there was a likelihood of
    consumer confusion, summary judgment is inappropriate.
    III.
    To determine whether a likelihood of consumer confusion
    exists, our court relies on the eight-factor Sleekcraft test,
    which reviews: (1) the strength of the mark; (2) proximity or
    relatedness of the goods; (3) similarity of the marks;
    (4) evidence of actual confusion; (5) marketing channels
    used; (6) type of goods and the degree of care likely to be
    exercised by the purchaser; (7) the defendant’s intent in
    selecting the mark; and (8) the likelihood of expansion of the
    product lines. AMF Inc. v. Sleekcraft Boats, 
    599 F.2d 341
    ,
    348–49 (9th Cir. 1979), abrogated in part on other grounds
    by Mattel, Inc. v. Walking Mountain Prods., 
    353 F.3d 792
    ,
    810 (9th Cir. 2003). The factors are non-exhaustive and
    JL BEVERAGE V. JIM BEAM BRANDS                  13
    applied flexibly; the Sleekcraft factors are not intended to be
    a “rote checklist.” 
    Rearden, 683 F.3d at 1209
    . “A
    determination may rest on only those factors that are most
    pertinent to the particular case before the court, and other
    variables besides the enumerated factors should also be taken
    into account based on the particular circumstances.” 
    Id. Utilizing the
    eight-factor test, plaintiffs may establish a
    likelihood of consumer confusion as a result of either
    (1) forward confusion, or (2) reverse confusion. Surfvivor
    Media, Inc. v. Survivor Prods., 
    406 F.3d 625
    , 630 (9th Cir.
    2005). JL Beverage alleges both forward and reverse
    trademark confusion. “Forward confusion occurs when
    consumers believe that goods bearing the junior mark came
    from, or were sponsored by, the senior mark holder.” 
    Id. Reverse confusion,
    on the other hand, “occurs when
    consumers dealing with the senior mark holder believe that
    they are doing business with the junior one.” 
    Id. In its
    order denying a preliminary injunction, the district
    court determined that factors two, five, and six of the
    Sleekcraft test favor JL Beverage and a finding of a likelihood
    of confusion. Jim Beam does not dispute that these factors
    favor JL Beverage. Rather, Jim Beam contends that there is
    no genuine dispute of material fact concerning factors one,
    three, four, and seven, and, accordingly, no genuine dispute
    of material fact concerning a likelihood of confusion. So the
    issue before us is whether, viewing the evidence in the light
    most favorable to JL Beverage, there is a genuine dispute of
    material fact concerning whether factors one, three, four, and
    seven favor JL Beverage, and, accordingly, a genuine dispute
    of material fact as to the likelihood of consumer confusion.
    14          JL BEVERAGE V. JIM BEAM BRANDS
    A.
    JL Beverage contends that there is a factual dispute as to
    the strength of its standalone lips logo (Lips Mark) and
    composite mark consisting of the lips logo and the words
    “Johnny Love Vodka” (JLV Mark). We examine the strength
    of JL Beverage’s mark to determine the scope of trademark
    protection to which the mark is entitled. 
    Surfvivor, 406 F.3d at 631
    (citing Entrepreneur Media, Inc. v. Smith, 
    279 F.3d 1135
    , 1141 (9th Cir. 2002)). As the uniqueness of the mark
    increases, so too does the degree of protection. 
    Id. A mark’s
    strength is “evaluated in terms of its conceptual strength and
    commercial strength.” GoTo.com, Inc. v. Walt Disney Co.,
    
    202 F.3d 1199
    , 1207 (9th Cir. 2000).
    A mark’s conceptual strength “depends largely on the
    obviousness of its connection to the good or service to which
    it refers.” Fortune Dynamic, Inc. v. Victoria’s Secret Stores
    Brand Mgmt., Inc., 
    618 F.3d 1025
    , 1032–33 (9th Cir. 2010).
    To determine a mark’s conceptual strength, we classify a
    mark along a spectrum of five categories ranging from
    strongest to weakest: arbitrary, fanciful, suggestive,
    descriptive, and generic. Network Automation, Inc. v.
    Advanced Sys. Concepts, Inc., 
    638 F.3d 1137
    , 1149 (9th Cir.
    2011). Arbitrary and fanciful marks, which employ words and
    phrases with no commonly understood connection to the
    product, are the two strongest categories, and “trigger the
    highest degree of trademark protection.” 
    Surfvivor, 406 F.3d at 631
    . In the middle of the spectrum are suggestive marks,
    which suggest a product’s features and require consumers to
    exercise some imagination to associate the suggestive mark
    with the product. Fortune 
    Dynamic, 618 F.3d at 1033
    , (citing
    Zobmondo Entm’t, LLC v. Falls Media, LLC, 
    602 F.3d 1108
    ,
    1114 (9th Cir. 2010)). Descriptive and generic marks, at the
    JL BEVERAGE V. JIM BEAM BRANDS                 15
    other end of the spectrum, are the two weakest categories.
    Descriptive marks define a particular characteristic of the
    product in a way that does not require any imagination, while
    generic marks describe the product in its entirety and are not
    entitled to trademark protection. 
    Surfvivor, 406 F.3d at 632
    .
    After identifying whether a mark is generic, descriptive,
    suggestive, arbitrary, or fanciful, the court determines the
    mark’s commercial strength. 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).
    Commercial strength “is based on actual marketplace
    recognition.” Network 
    Automation, 638 F.3d at 1149
    (citation
    omitted). As a result, advertising expenditures, which
    increase marketplace recognition, offer evidence of
    commercial strength and “can transform a suggestive mark
    into a strong mark.” 
    Id. (citation omitted).
    JL Beverage has alleged both forward and reverse
    confusion claims. The JLV and Lips Marks’ conceptual and
    commercial strength plays a different role in each type of
    claim. “In the usual [forward] infringement case,” the court
    “determine[s] whether the junior user is palming off its
    products as those of the senior user.” Dreamwerks Prod.
    Grp., Inc. v. SKG Studio, 
    142 F.3d 1127
    , 1129–30 (9th Cir.
    1998). Consequently, for JL Beverage’s claim of forward
    confusion, we evaluate the conceptual and commercial
    strength of the JLV and Lips Marks to determine whether a
    customer interested in purchasing vodka would be confused
    into thinking that JL Beverage produces Jim Beam’s Pucker
    Vodka, or that Johnny Love Vodka is the same product as
    Pucker Vodka. In contrast, in claims of reverse confusion, the
    question is “whether consumers doing business with the
    16          JL BEVERAGE V. JIM BEAM BRANDS
    senior user might mistakenly believe that they are dealing
    with the junior user.” 
    Id. at 1130.
    As a result, the court
    evaluates the conceptual strength of JL Beverage’s marks and
    compares it to the commercial strength of Jim Beam’s mark.
    
    Id. at 1130
    n.5.
    1.
    We turn first to analyzing the JLV and JL Lips Marks’
    conceptual strength. Jim Beam contends the JLV Mark is
    descriptive because it contains the word “vodka,” and
    therefore describes the product. Jim Beam, however, ignores
    the color-coordinated feature of the JLV Mark. Instead of just
    labeling the bottle “vodka,” the JLV Mark has color-
    coordinated lips that match a particular flavor. Reasonable
    jurors, viewing the Mark in its entirety, could conclude that
    the Mark is suggestive because they must use their
    imaginations to connect the color of the lips to the vodka
    flavor.
    Jim Beam also contends that the Lips Mark has weak
    conceptual strength. Jim Beam overlooks that the salient
    feature of the Lips Mark–the lips–have no commonly
    understood connection with the alcohol product it represents.
    As a result, a fact-finder could reasonably conclude that the
    Lips Mark is arbitrary, garnering the highest degree of
    trademark protection.
    Jim Beam counters that the Lips Mark is part of a
    “crowded field” of similar lips logos, and thus there is less
    likelihood of consumer confusion. Jim Beam argues that JL
    Beverage waived its right to contest this issue on appeal
    because it failed to raise it before the district court. However,
    because the district court considered this issue, it is not
    JL BEVERAGE V. JIM BEAM BRANDS                   17
    waived on appeal. Cmty. House, Inc. v. City of Boise,
    
    490 F.3d 1041
    , 1054 (9th Cir. 2007) (“[E]ven if a party fails
    to raise an issue in the district court, we generally will not
    deem the issue waived if the district court actually considered
    it”). Returning to the issue, when “the marketplace is replete
    with products using a particular trademarked” symbol, it
    “indicates not only the difficulty in avoiding its use but also,
    and directly, the likelihood that consumers will not be
    confused by its use.” Entrepreneur Media, Inc. v. Smith,
    
    279 F.3d 1135
    , 1144 (9th Cir. 2002). Jim Beam has provided
    several examples of lips marks used on product labels for
    different types of alcohol. The lips logos Jim Beam presents,
    however, lack the crucial feature of the Lips Mark: unlike the
    Lips Mark, they are not color-coordinated by flavor for an
    entire line of flavored vodkas.
    In addition, the vast majority of the products on which
    lips are used are not liquor products, but rather beer, wine, or
    non-alcoholic beverages. In that regard, the parties dispute
    how broadly the relevant market should be characterized for
    the purposes of evaluating whether the field is crowded with
    lips uses. In other words, there are genuine disputes of
    material fact as to what constitutes the relevant “field,”
    whether the field is “crowded,” and the effect of the
    foregoing on the likelihood of confusion analysis. See also
    Maker’s Mark Distillery, Inc. v. Diageo N. Am., Inc.,
    
    679 F.3d 410
    , 420–21 (6th Cir. 2012) (agreeing with the
    district court that, in a trademark dispute between a bourbon
    maker and a tequila maker, the relevant market was not “all
    distilled spirits,” but rather a narrower field); Fleischmann
    Distilling Corp. v. Maier Brewing Co., 
    314 F.2d 149
    , 159–60
    (9th Cir. 1963) (calling, in a pre-Sleekcraft case, scotch
    whiskey and beer “related” for purposes of the likelihood of
    confusion). Perhaps most importantly, the impact of a
    18          JL BEVERAGE V. JIM BEAM BRANDS
    “crowded field” of lips logos is not dispositive in determining
    a mark’s conceptual strength; rather, it is but one factor a
    court considers in evaluating the overall strength of the mark.
    See Entrepreneur 
    Media, 279 F.3d at 1143
    –44.
    Here, the district court failed to construe the evidence
    concerning the JLV and Lips Marks’ conceptual strength in
    the light most favorable to JL Beverage to determine whether
    a genuine dispute of material fact exists. Had the district court
    applied the correct standard, it may well have concluded that
    the Marks’ conceptual strength placed the Marks in a
    category that warranted a higher degree of protection.
    2.
    We now turn to the second step of our inquiry: the Marks’
    commercial strength. Jim Beam argues that JL Beverage has
    a “relatively weak” market presence, while it maintains a
    “relatively strong” market presence.
    JL Beverage concedes that Jim Beam has a strong market
    presence. JL Beverage correctly points out, however, that this
    finding supports its reverse confusion claim: evidence that
    Jim Beam’s junior mark, the Pucker Vodka lips, is well-
    known suggests a greater likelihood that consumers will
    confuse JL Beverage’s senior mark for the Pucker Vodka
    line. See Walter v. Mattel, Inc., 
    210 F.3d 1108
    , 1111 n. 2 (9th
    Cir. 2000) (“In a reverse confusion case . . . the inquiry
    focuses on the strength of the junior mark because the issue
    is whether the junior mark is so strong as to overtake the
    senior mark”). The national recognition of the Jim Beam
    mark increases the likelihood that consumers will believe
    they are doing business with Jim Beam, not JL Beverage,
    when they purchase Johnny Love Vodka. See Cohn v.
    JL BEVERAGE V. JIM BEAM BRANDS                  19
    Petsmart, Inc., 
    281 F.3d 837
    , 842 (9th Cir. 2002) (explaining
    that, in reverse confusion cases, the junior mark holder’s
    commercial strength “creates a potential that consumers will
    assume that” the senior holder’s mark refers to the junior
    holder’s mark, “and thus perceive that the businesses are
    somehow associated”).
    To support its forward confusion claim, JL Beverage
    argues in the alternative that it too has a strong market
    presence. JL Beverage submitted evidence that it sold its
    products nationally, and that it spent considerable resources
    on marketing through print media, third-party publications,
    and internet advertising.
    Viewing the evidence in the light most favorable to JL
    Beverage, there is a genuine dispute of material fact as to the
    commercial strength of JL Beverage’s Johnny Love Vodka in
    the marketplace. Moreover, the determination as to whether
    the evidence demonstrates that JL Beverage has robust
    commercial strength will lend support to JL Beverage
    whatever the fact-finder decides, as JL Beverage has raised
    both forward and reverse confusion claims.
    B.
    We now address factor three of the Sleekcraft test, the
    similarity of the marks. JL Beverage contends that the
    similarity of shape and color in the competing lips designs
    renders the marks similar.
    Similarity of the marks “has always been considered a
    critical question in the likelihood-of-confusion analysis.”
    
    GoTo.com, 202 F.3d at 1205
    . Three principles guide a court
    in determining whether marks are similar. Fortune Dynamic,
    20          JL BEVERAGE V. JIM BEAM 
    BRANDS 618 F.3d at 1032
    . First, “similarity is best adjudged by
    appearance, sound, and meaning.” 
    Id. (citation and
    alteration
    omitted). “Second, the marks must be considered in their
    entirety and as they appear in the marketplace.” 
    Id. (citation omitted).
    “Third, similarities are weighed more heavily than
    differences.” 
    Id. (quoting GoTo.com,
    202 F.3d at 1206).
    In viewing the competing JL Beverage and Jim Beam
    marks in their entirety, there are numerous similarities in their
    appearance: both have puckered, human lips as the focal point
    of their design; the lips have a similar angle and shape; and
    the lips are color-coordinated with the flavor of the vodka. In
    addition to the photos of the marks, which suggest a similar
    appearance, JL Beverage offered evidence from officials who
    concluded that the marks are similar. First, JL Beverage relies
    upon the Chief Administrator of the North Carolina Alcoholic
    Beverage Control Commission’s (NCABCC) statement that
    the Jim Beam mark “looks a lot like” JL Beverage’s design.
    Second, it provided evidence that a USPTO Examiner stated,
    in his initial review of Jim Beam’s application to register its
    lips, that the Jim Beam and JL Beverage “marks are highly
    similar lip designs oriented at a similar angle. Consequently,
    the marks create an overall similar commercial impression.”
    The entirety of the marks’ appearances, coupled with
    documented statements stating that the marks appear similar,
    establishes a genuine dispute of material fact concerning their
    similarity.
    In response, Jim Beam first argues that the marks are
    “dramatically different” because the bottle shapes are distinct,
    the product labeling is not similar, and both products
    prominently feature their house marks. While a fact-finder
    may ultimately conclude that these factors render the marks
    dissimilar, Jim Beam’s competing factual analysis does
    JL BEVERAGE V. JIM BEAM BRANDS                   21
    nothing to alleviate the existence of a dispute of material fact
    concerning the marks’ similarity.
    Jim Beam next contends that the USPTO Examiner’s
    statement is unpersuasive as it was only a preliminary
    assessment for determining whether its lips design would be
    trademarked. Regardless of whether the statement was the
    result of a preliminary assessment, it suggests that others
    found the marks similar.
    C.
    The fourth factor of the Sleekcraft test looks to evidence
    of actual consumer confusion. 
    Surfvivor, 406 F.3d at 633
    . JL
    Beverage contends that there is evidence of actual consumer
    confusion through Shaun Robertson, a manager of one of JL
    Beverage’s product brokers, who submitted a declaration with
    an attached email in which he lists instances of confusion
    about which individuals informed him. The district court,
    although it did not ultimately rule on the admissibility of the
    statements in Robertson’s declaration, concluded in its
    preliminary injunction order that factor four favored neither
    party because the evidence was hearsay, and unreliable, and
    because many of the cited instances actually showed a lack of
    consumer confusion.
    Robertson’s declaration presents a smattering of
    statements that JL Beverage alleges serve as evidence of
    actual consumer confusion. For instance, Robertson reported
    that a woman named Missy Giblin contacted Robertson
    stating that she saw JL Beverage’s new commercial for
    Johnny Love Vodka, when in fact JL Beverage was not
    running commercials at that time; a man named Sam Mills
    told Robertson that he mistakenly purchased Pucker Vodka,
    22           JL BEVERAGE V. JIM BEAM BRANDS
    having thought it was Johnny Love Vodka; and Micheal C.
    Herring, the Chief Administrator of the NCABCC, sent
    Robertson an email that stated “see attached. This is Jim
    Beam’s new line of vodka. Looks a lot like Johnny Love.”
    Jim Beam argues, and the district court correctly
    concluded, that the statements contained in Robertson’s
    declaration and email are hearsay. See Japan Telecom., Inc.
    v. Japan Telecom, Am. Inc., 
    287 F.3d 866
    , 874 n.1 (9th Cir.
    2002) (concluding that statements made by the declarant that
    the declarant knows of others who were confused by similar
    trademarks are inadmissible hearsay). Almost all of the
    instances that Robertson recounts are statements that he
    gathered from others via email, telephone calls, or text
    messages. At times, Robertson even fails to specify where or
    how some of the alleged conversations took place.
    We note, however, that at summary judgment a district
    court may consider hearsay evidence submitted in an
    inadmissible form, so long as the underlying evidence could
    be provided in an admissible form at trial, such as by live
    testimony. See Fraser v. Goodale, 
    342 F.3d 1032
    , 1036–37
    (9th Cir. 2003). But here, JL Beverage has not argued that the
    hearsay declarants would be available to testify at trial, or that
    its hearsay evidence would be admissible at trial in some
    other form. We address, therefore, only the district court’s
    conclusion that the statements discussed in Robertson’s
    declaration are hearsay, not subject to an exception.
    In addition to being hearsay, some of the reported
    statements were provided to Robertson by friends and
    acquaintances. For example, Diab testified that while he
    personally did not know Missy Giblin, he believed that she
    was a friend of Robertson and his co-worker. In addition, text
    JL BEVERAGE V. JIM BEAM BRANDS                  23
    messages Robertson received on his personal cell phone,
    which suggested consumer confusion, showed that Robertson
    and the sender had a high level of familiarity, as the messages
    contained phrases such as “hey babes,” “dude,” and “call me
    back hun.” Evidence from such “partial source[s] possesses
    very limited probative value.” Filipino Yellow Pages v. Asian
    Journal Publ’ns, Inc., 
    198 F.3d 1143
    , 1152 (9th Cir. 1999).
    JL Beverage acknowledges that the statements submitted
    in Robertson’s declaration are hearsay, but alleges that at
    least some of the statements are admissible under the “state
    of mind” exception to the hearsay rule. Federal Rule of
    Evidence 803(3) allows admission of “[a] statement of the
    declarant’s then-existing state of mind . . . or emotional,
    sensory, or physical condition.”
    To support its argument, JL Beverage relies heavily on
    Lahoti v. Vericheck, Inc., 
    636 F.3d 501
    , 509 (9th Cir. 2011)
    (Lahoti II), which admitted hearsay statements regarding
    consumer confusion under the state of mind exception. In
    Lahoti II, the court admitted testimony from Vericheck
    company representatives who received telephone calls from
    confused customers who could not find information about
    Vericheck on the website www.Vericheck.com, which the
    defendant had created. 
    Id. The statements
    in Robertson’s
    declaration differ from the testimony in Lahoti II in two
    important ways. First, many of the alleged conversations
    Robertson had were not with customers calling because they
    were currently confused and seeking information about JL
    Beverage; rather, the individuals were reporting, after the
    fact, that they had mistaken two products. Second, unlike the
    spontaneous calls of confusion that company representatives
    received in Lahoti II, Robertson received some of the reports
    of confusion from possible biased sources: his friends and
    24          JL BEVERAGE V. JIM BEAM BRANDS
    acquaintances. Accordingly, JL Beverage’s reliance on Lahoti
    II is of little help.
    Finally, some of the statements included in the
    declaration, including Herring’s, state only that the Johnny
    Love Vodka and Pucker Vodka products “look alike.”
    Statements that the products look alike do not necessarily
    demonstrate consumer confusion: consumers who identify
    products as “looking alike” recognize the products’
    similarities, but the question is whether they have mistaken
    one product for another.
    Whether JL Beverage may be able to supplement its
    evidence of actual consumer confusion through further
    discovery is not known. However, as it now stands, this
    evidence of actual consumer confusion does not weigh in JL
    Beverage’s favor. Nevertheless, as we have previously held,
    “[b]ecause of the difficulty in garnering” evidence of actual
    confusion, “the failure to prove instances of actual confusion
    is not dispositive.” 
    Sleekcraft, 599 F.2d at 353
    .
    D.
    We turn last to factor seven of the Sleekcraft test, which
    assesses the defendant’s intent in selecting the mark. JL
    Beverage contends that Jim Beam knew of the registered JLV
    and Lips Marks, yet proceeded to use a colored lips logo on
    its Pucker Vodka bottles.
    Factor seven favors the plaintiff “where the alleged
    infringer adopted his mark with knowledge, actual or
    constructive, that it was another’s trademark.” Brookfield
    Comnc’ns, Inc. v. W. Coast Entm’t Corp., 
    174 F.3d 1036
    ,
    1059 (9th Cir. 1999). When “an alleged infringer knowingly
    JL BEVERAGE V. JIM BEAM BRANDS                  25
    adopts a mark similar to another’s, courts will presume an
    intent to deceive the public.” Official Airline Guides, Inc. v.
    Goss, 
    6 F.3d 1385
    , 1394 (9th Cir. 1993).
    JL Beverage has set forth evidence to create a genuine
    dispute of material fact as to whether Jim Beam knew of JL
    Beverage’s registered trademarks, yet proceeded to use its
    colored-lips logo anyway. JL Beverage provided the
    following: (1) as a result of a trademark search that Jim
    Beam’s legal team performed, Jim Beam was aware of JL
    Beverage’s JLV trademark; (2) Jim Beam employee Emily
    Johnson, who worked with a Pucker flavored-vodka team,
    was aware of Johnny Love Vodka prior to joining Jim Beam;
    and (3) Jim Beam continued its nationwide rollout of Pucker
    Vodka even after the USPTO denied its trademark
    application; as a basis for that denial, the USPTO identified
    the similarity of Jim Beam’s proposed marks to JL
    Beverage’s.
    Jim Beam contends that we should nonetheless conclude
    that factor seven weighs in its favor because there is no
    evidence that Jim Beam intended to infringe JL Beverage’s
    trademarks. Unfortunately for Jim Beam, “[a]bsence of
    malice is no defense to trademark infringement.”
    
    Dreamwerks, 142 F.3d at 1132
    n.12. The relevant inquiry is
    not Jim Beam’s intent, but rather whether it adopted the
    colored lips logo with the knowledge that the mark already
    belonged to JL Beverage. Viewing the evidence in the light
    most favorable to JL Beverage, there is a dispute of material
    fact concerning what Jim Beam knew when it launched the
    Pucker Vodka line.
    26          JL BEVERAGE V. JIM BEAM BRANDS
    IV.
    In ruling on the parties’ cross-motions for summary
    judgment, the district court does not appear to have viewed
    the evidence in the light most favorable to JL Beverage and
    to determine whether a genuine dispute of material fact
    existed. Balancing the Sleekcraft factors as a whole, we
    conclude there is a genuine dispute of material fact as to the
    likelihood of consumer confusion. A reasonable fact-finder
    could conclude that: the JLV Mark has conceptual strength
    because the Mark’s salient feature, the color-coordinated lips,
    requires consumers to use their imagination to connect the
    color to the vodka flavor; the Lips Mark has conceptual
    strength because the lips have no commonly understood
    connection to the vodka product; Johnny Love Vodka does or
    does not have commercial strength (because a finding of
    either would support one of JL Beverage’s theories of
    confusion–reverse or forward); Johnny Love and Pucker
    Vodka are related flavored-liquor products sold to the same
    customers and distributors; the products are similar given
    their use of color-coordinated, puckered human lips as the
    focal point of their bottle designs; consumers purchasing the
    vodka products are not likely to exercise a high degree of care
    in distinguishing between the two; and Jim Beam was aware
    of JL Beverage’s trademarks prior to rolling out its Pucker
    Vodka line. Accordingly, we reverse and remand for further
    proceedings consistent with this opinion.
    REVERSED and REMANDED.
    

Document Info

Docket Number: 13-17382

Judges: Wallace, Noonan, Berzon

Filed Date: 7/14/2016

Precedential Status: Precedential

Modified Date: 10/19/2024

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