Jada Toys Inc v. Mattel Inc ( 2007 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JADA TOYS, INC. a California 
corporation,
Plaintiff-Counterdefendant- No. 05-55627
Appellee, D.C. No.
v.  CV-04-02755-RGK
MATTEL, INC., a Delaware (FMO)
corporation, OPINION
Defendant-Counterclaimant-
Appellant.

Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted
April 12, 2007—Pasadena, California
Filed August 2, 2007
Before: Harry Pregerson and Johnnie B. Rawlinson,
Circuit Judges, and Brian E. Sandoval,* District Judge.
Opinion by Judge Sandoval
*The Honorable Brian E. Sandoval, United States District Judge for the
District of Nevada, sitting by designation.
9257
9260 JADA TOYS v. MATTEL
COUNSEL
Adam R. Fox, Esq., Los Angeles, California, for plaintiff-
counterdefendant-appellee Jada Toys, Inc.
Jill M. Pietrini, Esq., Los Angeles, California, for defendant-
counterclaimant-appellant Mattel, Inc.
JADA TOYS v. MATTEL 9261
OPINION
SANDOVAL, District Judge:
Defendant-Appellant Mattel, Inc. (“Mattel”) appeals the
grant of summary judgment in favor of Jada Toys, Inc.
(“Jada”) on Mattel’s federal and state trademark infringement
counterclaims. Mattel also challenges the district court’s entry
of summary judgment in favor of Jada as to its dilution and
copyright claims.
We hold that because the district court erred in its applica-
tion of the relevant infringement test, the district court’s entry
of summary judgment in Jada’s favor as to those claims is
reversed. We also hold that genuine issues of material fact
exist as to Mattel’s copyright and dilution claims and, there-
fore, the district court’s entry of summary judgment as to
those claims in favor of Jada is also reversed.
I. FACTUAL AND PROCEDURAL BACKGROUND
Jada Toys is a California corporation that specializes in the
distribution and sale of miniature diecast toy cars, trucks, and
other vehicles. Generally, these vehicles are scale model repli-
cas of actual vehicles. From 2001 to 2004, Jada produced a
line of toy trucks called HOT RIGZ.
In 2001, Jada filed an application for a trademark registra-
tion of the term HOT RIGZ with the United States Patent and
Trademark Office (“U.S. PTO”). The trademark was issued
by and registered with the U.S. PTO in 2002, though Jada
used its HOT RIGZ trademark in advertising material and on
its toys and their packaging from 2001 to 2004.
Mattel is also a toy company. Among its many lines of toys
is its familiar HOT WHEELS miniature vehicle brand, which
it has been marketing since 1968. The HOT WHEELS vehicle
line includes small scale versions of big rig trucks. Since
9262 JADA TOYS v. MATTEL
1968, Mattel has employed the use of a flame logo (“68
logo”) to identify the HOT WHEELS brand. In 1982 Mattel
developed a complementary version of the 68 logo, this one
incorporating the Mattel seal, to be used in conjunction with
the sale of its product. Mattel owns U.S. federal trademark
registrations for both of these flame logos.
On April 20, 2004, Jada filed an action against Mattel,
asserting claims for trademark infringement, false designation
of origin, and unfair competition. Jada’s allegations, however,
were not related to its HOT RIGZ mark; rather, Jada claimed
that Mattel’s advertising and sale of its OLD SCHOOL and
NEW SCHOOL lines infringed on Jada’s use of its registered
trademark OLD SKOOL. Mattel asserted various affirmative
defenses and counterclaims. Among the counterclaims were
allegations that Jada’s HOT RIGZ mark infringed on Mattel’s
HOT WHEELS mark.1 Mattel also counterclaimed for copy-
right infringement and dilution. Ultimately, each party sub-
mitted motions for summary judgment.
On March 15, 2005, the district court issued its ruling
regarding the parties’ motions for summary judgment. As to
Jada’s claims relating to Mattel’s OLD SCHOOL and NEW
SCHOOL marks, the court granted summary judgment in
Mattel’s favor. And as to Mattel’s counterclaims for infringe-
ment, copyright, and dilution, relating to Jada’s use of its
HOT RIGZ logo, the court granted summary judgment in
Jada’s favor. In granting summary judgment as to Mattel’s
infringement claims, the district court relied on the dissimilar-
ity of the marks alone to determine that no likelihood of con-
fusion existed. Mattel timely appealed the grant of summary
judgment as to its counterclaims.
1
Mattel alleged four separate infringement claims: (1) trademark
infringement under 15 U.S.C. § 1114; (2) false designation of origin under
15 U.S.C. § 1125(a); (3) common law unfair competition and unfair com-
petition under California Business and Professions Code section 17200;
and (4) common law passing off.
JADA TOYS v. MATTEL 9263
II. STANDARD OF REVIEW
The review of a grant of summary judgment as to an
infringement claim is de novo. Surfvivor Media, Inc. v. Survi-
vor Prods., 406 F.3d 625, 630 (9th Cir. 2005). As such, we
“must determine whether, ‘viewing the evidence in the light
most favorable to the nonmoving party, . . . there are any gen-
uine issues of material fact, and whether the district court cor-
rectly applied the relevant substantive law.’ ” Entrepreneur
Media, Inc. v. Smith, 279 F.3d 1135, 1140 (9th Cir. 2002)
(quoting Wendt v. Host Int’l, Inc., 125 F.3d 806, 809-10 (9th
Cir. 1997)). “Because of the intensely factual nature of trade-
mark disputes, summary judgment is generally disfavored in
the trademark arena.” Id. (quoting Interstellar Starship Servs.,
Ltd. v. Epix, Inc., 184 F.3d 1107, 1109 (9th Cir. 1999)). The
Court may affirm a judgment on any ground fairly supported
by the record. Narell v. Freeman, 872 F.2d 907, 910 (9th Cir.
1989) (citing DeNardo v. Murphy, 781 F.2d 1345, 1347 (9th
Cir. 1986), cert. denied, 476 U.S. 1111 (1986)).
III. ANALYSIS
A. MATTEL’S TRADEMARK CLAIMS
All of Mattel’s infringement claims are subject to the same
test. See Century 21 Real Estate Corp. v. Sandlin, 846 F.2d
1175, 1178 (9th Cir. 1988) (citing Rodeo Collection, Ltd. v.
W. Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987)); see also
Vuitton Et Fils S.A. v. J. Young Enter., 644 F.2d 769, 777 (9th
Cir. 1981) (noting that if a product is marketed in such a way
so as to cause a likelihood of confusion, the defendant might
be guilty of “palming off”). Therefore, the critical determina-
tion is “ ‘whether an alleged trademark infringer’s use of a
mark creates a likelihood that the consuming public will be
confused as to who makes what product.’ ” Brother Records,
Inc. v. Jardine, 318 F.3d 900, 908 (9th Cir. 2003) (quoting
Thane Int’l Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901 (9th
Cir. 2002)).
9264 JADA TOYS v. MATTEL
[1] We employ an eight factor test (“Sleekcraft factors”) in
determining the likelihood of confusion. Brookfield
Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036,
1053-54 (9th Cir. 1999). These factors include: (1) strength of
the mark; (2) proximity of the goods; (3) similarity of the
marks; (4) evidence of actual confusion; (5) marketing chan-
nels used; (6) type of goods and the degree of care likely to
be exercised by the purchaser; (7) defendant’s intent in select-
ing the mark; and (8) likelihood of expansion of the product
lines. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th
Cir. 1979) (citations omitted).
[2] We have previously noted that the test for likelihood of
confusion is “pliant,” and that “[s]ome factors are much more
important than others, . . . .” Brookfield, 174 F.3d at 1054.
Jada seizes on such language as an indication that the district
court’s consideration of the dissimilarity of the marks alone
was sufficient to support its conclusion. We disagree.
[3] Though the language we have used warns against “ex-
cessive rigidity” in applying the test, see id., we have never
countenanced a likelihood of confusion determination based
on a consideration of dissimilarity alone or, indeed, on the
consideration of any single factor. Instead, we have regularly
applied all the relevant factors, noting that a final likelihood
of confusion determination may rest on those factors that are
of the most relative importance in any particular case. See,
e.g. Surfvivor, 406 F.3d at 631-34 (applying all eight factors
and noting that “the test is a fluid one and the plaintiff need
not satisfy every factor, provided that strong showings are
made with respect to some of them.”). Thus, while a likeli-
hood of confusion determination may ultimately rest on a sub-
set of factors, evidence of relatively important factors must be
considered as part of that set. In the context of two subjec-
tively dissimilar marks, evidence of actual confusion and evi-
dence defining the context in which the goods are sold is
particularly relevant.
JADA TOYS v. MATTEL 9265
To hold otherwise would allow the possibility that persua-
sive evidence of a particular factor may be considered at the
expense of relevant evidence of others. This problem is partic-
ularly acute where, as here, a court relies on the dissimilarity
of the marks to conclude that no likelihood of confusion
exists. In such a case, the potential for a judge to elevate his
or her own subjective impressions of the relative dissimilarity
of the marks over evidence of, for example, actual confusion,
is great. And where the subjective impressions of a particular
judge are weighed at the expense of other relevant evidence,
the value of the multi-factor approach sanctioned by this
Court is undermined.
[4] Today’s holding is consistent with our prior decisions.
For while Jada accurately cites language from the case law of
this Circuit suggesting that dissimilarity alone may be a suffi-
cient basis upon which to judge the likelihood of confusion,
Brookfield, 174 F.3d at 1054; Sleeper Lounge Co. v. Bell Mfg
Co., 253 F.2d 720, 723 (9th Cir. 1958), we conclude that the
language employed in those cases constitutes dicta and, there-
fore, we are not bound by it. See Inlandboatmens Union of
Pac. v. Dutra Group, 279 F.3d 1075, 1081 (9th Cir. 2002)
(holding that a panel is not bound by dicta in prior decisions).
In Brookfield, for example, we stated that “[w]here the two
marks are entirely dissimilar, there is no likelihood of confu-
sion. ‘Pepsi’ does not infringe Coca-Cola’s ‘Coke.’ Nothing
further need be said.” Brookfield, 174 F.3d at 1054. In Brook-
field, however, we did not conclude that the marks in question
were so dissimilar that no likelihood of confusion could exist.
Id. at 1054-55. To the contrary, we found that the marks were
quite similar. Id. Moreover, there is no indication that in
Brookfield we ignored evidence of other important factors in
determining that dissimilarity could be determinative. See id.
at 1054-60. And, beyond that, there was no evidence of actual
confusion presented in the case. Id. at 1060. Thus, in Brook-
field we were not confronted with a situation where, as here,
strong evidence of other important factors existed to counter
9266 JADA TOYS v. MATTEL
the conclusion that dissimilarity alone could be dispositive.
Consequently, in Brookfield we were not afforded the oppor-
tunity to fully consider the ramifications of our comment.
The same is true of our decision in Sleeper Lounge. There,
we noted that “[similarity of the marks] is the one essential
feature, without which the others have no probative value.”
Sleeper Lounge, 253 F.2d at 723. But as was the case in
Brookfield, in Sleeper Lounge we expressly noted that no evi-
dence of actual confusion had been presented. Id. Thus, in
Sleeper Lounge we were no more able to fully consider the
impact of our statement than we were in Brookfield.
[5] While the Brookfield and Sleeper Lounge decisions
offer important insight into the persuasiveness of dissimilar-
ity, we must, nonetheless, conclude that though it may be true
that very dissimilar marks will rarely present a significant
likelihood of confusion, dissimilarity alone does not obviate
the need to inquire into evidence of other important factors.
Only upon such an inquiry may a court ensure that its judg-
ment as to the likelihood of confusion is fully informed and
without error. Therefore, because the district court considered
only the dissimilarity of the marks in question, we reverse its
grant of summary judgment in favor of Jada.
B. MATTEL’S DILUTION CLAIM
[6] Mattel brought dilution claims under both federal and
California state law.2 3 The analysis under each is the same.
2
Mattel’s federal claim falls under 15 U.S.C. § 1125(c)(1): “[t]he owner
of a famous mark shall be entitled . . . to an injunction against another per-
son’s commercial use in commerce of a mark or trade name, if such use
begins after the mark has become famous and causes dilution of the dis-
tinctive quality of the mark.” Because this action was filed in 2004, prior
to the 2006 amendment of § 1125, see Trademark Dilution Revision Act
of 2006, Pub. L. No. 109-312 § 2(1), 120 Stat. 1730, the previous version
of § 1125 applies, codified at 15 U.S.C. § 1125(c)(1) (2000).
3
Mattel’s state law claim falls under California Business and Profes-
JADA TOYS v. MATTEL 9267
Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1324 (9th
Cir. 1998). “In order to prove a violation . . . a plaintiff must
show that (1) the mark is famous; (2) the defendant is making
a commercial use of the mark in commerce; (3) the defen-
dant’s use began after the mark became famous; and (4) the
defendant’s use of the mark dilutes the quality of the mark by
diminishing the capacity of the mark to identify and distin-
guish goods and services.” Id. (citing 15 U.S.C. § 1125(c)).
[7] Neither federal law nor California state law requires a
showing of competition or likelihood of confusion to succeed
on a dilution claim. See Nissan Motor Co. v. Nissan Computer
Corp., 378 F.3d 1002, 1011 (9th Cir. 2004) (citing 15 U.S.C.
§ 1127); Cal. Bus. & Prof. Code § 14330. However, for a
plaintiff to establish that the mark is being used in commerce
(as per step two),“the mark used by the alleged diluter must
be identical, or nearly identical, to the protected mark.” Thane
Int’l, 305 F.3d at 905 (citation omitted). In order to be nearly
identical, two marks “must be ‘similar enough that a signifi-
cant segment of the target group of customers sees the two
marks as essentially the same’ ” Id. at 906 (quoting Playboy
Enters. Inc. v. Welles, 279 F.3d 796, 806 n.41 (9th Cir.
2002)).
Here, the district court granted summary judgment in favor
of Jada on Mattel’s dilution claims because the marks at issue
were not identical or nearly identical. Mattel claims that since
it has shown a likelihood of confusion, that finding was inap-
propriate.
Jada claims, on the other hand, that the district court’s
sions Code section 14330: “Likelihood of injury to business reputation or
of dilution of the distinctive quality of a mark registered under this chapter
. . . shall be a ground for injunctive relief notwithstanding the absence of
competition between the parties or the absence of confusion as to the
source of goods or services.”
9268 JADA TOYS v. MATTEL
determination that the marks were not identical is supported
by the record and therefore summary judgment was appropri-
ate. Jada also contends that Mattel has not made a showing of
actual dilution sufficient to support its claim under federal
law. And as to Mattel’s state law claim, Jada argues that Mat-
tel is barred from such a claim because Jada owns a valid fed-
eral registration mark, which acts as a complete bar to a
dilution claim under state law. 15 U.S.C. § 1125(c)(3).4
[8] Turning first to the district court’s determination that
the marks in question were not sufficiently identical, we con-
clude that a reasonable trier of fact could find that the HOT
WHEELS and HOT RIGZ marks are nearly identical. They
both contain the word “hot,” they both are accompanied by a
flame, and they use similar colors; they also convey a similar
meaning and connotation vis a vis their use of the modifier
“hot.” Cf. Thane Int’l, 305 F.3d at 907 (holding that a reason-
able trier of fact could conclude that the marks “OrbiTrek”
and “TREK” were nearly identical).
In determining the degree of fame a mark retains, 15 U.S.C.
§ 1125(c) lists eight factors that a Court may consider, though
no single factor is determinative. Thane Int’l, 305 F.3d at 907
(stating that the eight-factor test is “flexible”).5 In addition, to
4
Jada’s claim that its HOT RIGZ registration acts as a bar to Mattel’s
state law claim is misplaced because Mattel’s eighth counterclaim is for
cancellation of the HOT RIGZ registration under 15 U.S.C. § 1064. As
such, if Mattel can succeed in obtaining that cancellation, the bar to state
unfair competition actions found in 15 U.S.C. § 1125(c)(3) will be inappli-
cable.
5
These factors include: “the degree of inherent or acquired distinctive-
ness of the mark; the duration and extent of the use of the mark in connec-
tion with the goods and services with which the mark is used; the duration
and extent of advertising and publicity of the mark; the geographical
extent of the trading area in which the mark is used; the channels of trade
for the goods or services with which the mark is used; the degree of recog-
nition the mark in the trading areas and channels of trade used by the
marks’ owner and the person against whom the injunction is sought; the
nature and extent of the use of the same or similar marks by third parties;
and whether the mark was registered under the Act of March 3, 1881, or
the Act of February 20, 1905, or the principal register.” 15 U.S.C.
§ 1125(c)(1).
JADA TOYS v. MATTEL 9269
be considered famous the mark must be “truly prominent and
renowned.” Id. at 908 (citing Avery Dennison Corp. v. Sump-
ton, 189 F.3d 868, 875 (9th Cir. 1999)).
[9] Here, a reasonable trier of fact could conclude that the
HOT WHEELS mark is famous: it has been in use for over
thirty-seven years; $350 million has been expended in adver-
tising the mark; three billion HOT WHEELS units have been
sold since the inception of the mark; and HOT WHEELS are
sold in all fifty states and throughout the world.
[10] A reasonable trier of fact could also conclude that Jada
began using its mark after HOT WHEELS became famous.
The HOT WHEELS mark has been in use since 1968, but it
was only in 2001 that Jada began to employ the use of HOT
RIGZ. Thus, the HOT WHEELS mark had been acquiring
recognition for over thirty years before HOT RIGZ entered
the market.
[11] The federal dilution statute also requires a showing of
actual dilution. Moseley v. V Secret Catalogue, Inc., 537 U.S.
418, 433 (2003). But “that does not mean that the conse-
quences of dilution, such as an actual loss of sales or profits,
must also be proved.” Id. Instead, where the marks in question
are identical, the fact of identity alone is sufficient circum-
stantial evidence of actual dilution. Id. at 434. However,
where the marks are not identical, direct evidence of actual
dilution, e.g., consumer surveys, is required to make the req-
uisite showing. Id. Those surveys, though, must establish
more than the fact that consumers mentally associate one
mark with the other; they must indicate that the mental associ-
ation that occurs reduces the capacity of the famous mark to
identify its goods. Id. at 433-34.
[12] While a reasonable trier of fact could conclude that the
marks at issue here are nearly identical, it is not the case that
they could be considered actually identical. As a result, Mattel
must submit direct evidence of actual dilution to create a gen-
9270 JADA TOYS v. MATTEL
uine issue of material fact on this issue. See id. Here, Mattel
submitted two surveys to show actual dilution. In the first sur-
vey, respondents were exposed to the HOT RIGZ name and
asked who they believed “puts out or makes” a toy vehicle
with that name. Twenty-eight percent of respondents thought
that the toy vehicle put out under that name was either made
by Mattel or by the same company that produced HOT
WHEELS, or that whatever company did produce it required
permission from Mattel to sell the product.
In a separate survey, respondents were shown a HOT RIGZ
package and asked who they thought put out that product. Of
the respondents, 7% believed it was either made by Mattel or
by the same company that produced HOT WHEELS, or that
whatever company did produce it required permission from
Mattel to sell the product.
[13] These surveys do more than indicate that consumers
associate one mark with the other; they suggest that Mattel’s
HOT WHEELS mark does not adequately identify its product
because Jada is able to convey, through the use of its HOT
RIGZ mark, the impression that Mattel either produces or
allows the production of HOT RIGZ. Thus, a reasonable trier
of fact could conclude that this evidence was sufficient to
establish the existence of actual dilution.6 The district court’s
entry of summary judgment is, therefore, reversed.
C. MATTEL’S COPYRIGHT CLAIMS
In order to succeed in a copyright infringement claim, “a
plaintiff must show that he or she owns the copyright and that
defendant copied protected elements of the work.” Cavalier v.
Random House, Inc., 297 F.3d 815, 822 (9th Cir. 2002) (cit-
ing Shaw v. Lindheim, 919 F.2d 1353, 1356 (9th Cir. 1990)).
The protected elements of a work are those elements which
6
The evidence of actual dilution here is also enough to support the Cali-
fornia dilution statute’s requirement of a “likelihood of dilution.”
JADA TOYS v. MATTEL 9271
are “original,” which is to say they are the product of “inde-
pendent creation, not novelty.” Roth Greeting Cards v. United
Card Co., 429 F.2d 1106, 1109 (9th Cir. 1970) (citations omit-
ted).7 Copying can be proved by evidence indicating that the
infringer had access to the copyrighted work and that the pro-
tected portions of the works are substantially similar. Id. at
1110.
This Court employs a two-part test to determine whether
two works are substantially similar. The first part, the extrin-
sic test, focuses on the similarity of the ideas expressed. Sid
& Marty Krofft Television Prod., Inc. v. McDonalds Corp.,
562 F.2d 1157, 1164 (9th Cir. 1977). The extrinsic test is
objective and involves an analysis of “the type of artwork at
issue, the materials used, the subject matter, and the setting
for the subject.” Id. The second part, the intrinsic test, focuses
on the similarity in expression. Id. This test is subjective and
thus turns on the impressions of the average reasonable
observer. Id.
In this case, the district court concluded that because the
marks at issue were not similar, the extrinsic test was not met.
It also found that since the marks were not similar, no reason-
able person could believe that they conveyed a similar expres-
sion and therefore the intrinsic test had not been satisfied.
[14] We hold, however, that a reasonable trier of fact could
conclude that the marks are objectively similar. It could also
be argued that, given the similarity of the marks, a reasonable
observer of the two marks could understand the HOT RIGZ
mark to be expressing the sense that the product sold under
7
Jada does not dispute that Mattel retains copyrights for its HOT
WHEELS flame logos. Jada also only tangentially disputes that some ele-
ments of the flame logos are not protectable. However, the combination
of the words used, the stylization of the flame graphic, and the colors cho-
sen, suggest that elements of the flame logo are protectable for the pur-
poses of a copyright infringement action. Cf. Roth Greeting Cards, 429
F.2d at 1109.
9272 JADA TOYS v. MATTEL
that mark is, essentially, a HOT WHEELS product. Therefore,
the district court’s entry of summary judgment in favor of
Jada as to Mattel’s copyright claim is reversed.
IV. CONCLUSION
The district court’s reliance on a single Sleekcraft factor —
dissimilarity of the marks — in its likelihood of confusion
determination was in error; therefore, its entry of summary
judgment in Jada’s favor as to Mattel’s trademark claims is
reversed. Those claims are hereby remanded for consideration
consistent with this opinion. Mattel also raised a genuine issue
of material fact as to its dilution and copyright claims; thus,
the district court’s entry of summary judgment in favor of
Jada as to those claims is also reversed. Those claims are
hereby remanded for trial.
REVERSED AND REMANDED FOR FURTHER PRO-
CEEDINGS CONSISTENT WITH THIS OPINION.