Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
PALETERIA LA MICHOACANA, INC. et al., :
:
Plaintiffs & Counter-Defendants, : Civil Action No.: 11-1623 (RC)
:
v. : Re Document Nos.: 114, 116, 119, 128
:
PRODUCTOS LACTEOS TOCUMBO S.A. :
DE C.V., :
:
Defendant & Counter-Claimant. :
MEMORANDUM OPINION
GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT;
GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT; DENYING DEFENDANT’S MOTION TO STRIKE; AND DENYING PLAINTIFFS’
MOTION IN LIMINE
I. INTRODUCTION
Before the Court is a highly contested trademark action that raises complex factual and
legal issues. This case arrived here when Plaintiffs, Paleteria La Michoacana, Inc. and Paleteria
La Michoacana, LLC (collectively, “PLM”), brought suit against Defendant Productos Lacteos
Tocumbo S.A. De C.V. (“PROLACTO”) challenging a decision by the Trademark Trial and
Appeal Board (“TTAB”) regarding various registered and unregistered trademarks used to sell
“Mexican-style” ice cream bars, called paletas, and other frozen ice cream treats. PROLACTO
responded by filing a counterclaim that asserts several counts against PLM under various
sections of the Lanham Act, 15 U.S.C. § 1051 et seq., as well as District of Columbia common
law. PLM and PROLACTO each filed motions for partial summary judgment in which they
seek a ruling on most counts in the complaint and counterclaim. Upon consideration of the
parties’ motions, the memoranda in support thereof and opposition thereto, and the voluminous
evidentiary record submitted by both parties to supplement their summary judgment filings, the
Court will grant in part and deny in part each party’s motion.
II. BACKGROUND
At the heart of this action is a fight over the right to use certain trademarks in the sale of
paletas — which are “Mexican-style” ice cream bars traditionally made from fruit, spices, and
nuts, and sold in trucks and supermarkets — and other similar frozen ice cream treats within the
United States. PROLACTO and PLM dispute, whether for factual reasons or on evidentiary
grounds, nearly all of the hundreds of “facts” proffered to support their respective motions for
summary judgment. Nonetheless, after wading through the extensive evidentiary records
provided by both parties to support their motions, the Court finds that the following background
facts have been established. To the extent additional relevant and material facts remain in
dispute, those factual discrepancies are discussed in more detail as they arise throughout this
Memorandum Opinion.
PROLACTO is a family-owned company founded in Mexico in 1992. The family that
founded the company has a long history of operating ice cream stores (“paleterias”) and selling
ice cream and fruit bars in various cities and towns throughout Mexico stretching back to the
1940s. PROLACTO’s historic use and ownership in Mexico of the marks at issue is largely in
dispute and mostly irrelevant to the legal issues at hand, but beginning in 1995, PROLACTO
started successfully registering with the Mexican Institute of Intellectual Property many of these
marks, including the term “LA MICHOACANA NATURAL.” 1 A few years later, PROLACTO
1
“Michoacán” is the name of one of the thirty-one states that, along with the
Federal District, comprise the thirty-two Federal Entities of Mexico. It is located along the coast
in western Mexico. Michoacán is home to a sizeable population of Purépecha Indian people,
whose women’s traditional folkloric dress commonly consists of hair braids on each side, a white
2
began entering licensing agreements in the United States with close family members of the
company’s founding directors. Through these agreements, PROLACTO authorized the licensees
to use within the United States some of the marks PROLACTO had been using and registering in
Mexico. The evidentiary record shows that PROLACTO has not produced, advertised, or sold
its ice cream products directly to consumers inside the United States, and the company has not
directly operated any stores within the country. Instead, PROLACTO’s use of the disputed
marks inside the United States arises through its licensing agreements. 2
The first license occurred in 1999, when Rigoberto Fernandez, with permission from
PROLACTO, opened a paleteria called LA MICHOACANA in Homestead, Florida. In April
2001, Fernandez and his sister, Mary Fernandez, opened a second paleteria under the same name
in West Palm Beach, Florida, where they used PROLACTO’s Mexican marks for the sale of ice
cream products. In October 2002, again through a license with PROLACTO, Mary Fernandez
opened a paleteria under the name Michoacana Natural Ice Cream in Rosenberg, Texas, a suburb
of Houston. Sometime between 2004 and 2006, Mary Fernandez opened a second licensed store
in Houston. She ultimately added several additional ice cream parlors in Houston over the next
few years, although the exact number and timing is disputed. Finally, in July 2009, PROLACTO
licensed the opening of a Michoacana Natural Ice Cream store in Sonoma, California, which
makes and sells paletas, ice cream, and drinks on site. PROLACTO’s California licensee has not
operated any other ice cream parlors in the Sonoma area since July 2009. PROLACTO has no
licensees in the District of Columbia or any other state not discussed herein.
blouse, a pink skirt, and sandals — hence the origin of the “Indian Girl” design at issue in this
case.
2
The exact nature and legal significance of these licensing agreements remains in
dispute, including the level of control and supervision PROLACTO has exercised over its
licensees.
3
Turning to PLM’s history, in 1991 brothers Ruben Gutierrez and Ignacio Gutierrez
started an ice cream business called Paleteria Michoacana as an informal partnership in the city
of Turlock, which is in northern California. Shortly after Ignacio Gutierrez was married, in April
1999, the Gutierrez brothers dissolved their partnership, and from late April 1999 until 2002,
Ignacio Gutierrez operated the Paleteria Michoacan ice cream business as a sole proprietorship in
the same location in Turlock, California. In 2002, Ignacio Gutierrez created a California
corporation known as Paleteria La Michoacana, Inc. and served as its president, sole shareholder,
and sole director from 2002 until early 2011, at which time Paleteria La Michoacana, LLC, as
assignee of the assets of Paleteria La Michoacana, Inc., took over the business.
PLM’s products are made in a factory in California before being distributed throughout
various parts of the country, where they are sold at large club stores like Costco, supermarkets
like Wal-Mart, Hispanic grocery stores like El Super and Vallarta, drug stores like Walgreens,
and a variety of other retail outlets. PLM has not sold products directly to consumers in Florida.
And like PROLACTO, PLM’s products are not sold or distributed in the District of Columbia,
although PLM’s goods are sold in numerous other states across the country. In fact, although
they both sell products within the same broad category of frozen ice cream treats, PROLACTO’s
licensee’s goods and PLM’s goods cross paths in limited geographical areas within the United
States, namely Texas, where PLM has distributed ice cream products such as paletas since
sometime in 2005, and northern California, where the respective parties’ goods are sold in the
same general area within one mile or so. In at least one instance, the companies’ goods are sold
at the very same store in Houston.
Finally, the parties’ ice cream products are relatively inexpensive treats typically
purchased on impulse. For example, PLM’s four ounce single serve fruit and ice cream bars sell
4
at retail for approximately $0.89 to $1.19, while PLM’s three ounce bars are sold at retail in
packages of six for between $2.49 to $4.49. Paletas sold by PROLACTO’s United States
licensees are slightly more expensive at a retail price of approximately $1.75 to $2.00 each, but
they are larger than PLM’s bars and still remain inexpensive consumer items typically purchased
on impulse.
A. Marks In Dispute
As noted in the introduction, this action involves a dispute between PLM and
PROLACTO over the right to use certain registered and unregistered marks during the sale of ice
cream products in the United States. The central marks at issue include the so-called Indian Girl
design, as well as marks bearing various forms of the word “Michoacán.” Below is a graphic
displaying some of the marks in dispute between the companies:
Sample of Marks in Dispute
PLM’s Trademark: Registration No. 3,210,304 PROLACTO’s Trademark: Registration No. 3,249,113PLM’s Trademark: Registration No. 2,905,172 PROLACTO’s Trademark: Registration No. 2,830,4015
PLM’s Trademark: Registration No. 2,968,652 PROLACTO’s Application Serial No. 78,954,490
PLM’s Application Serial No. 77,451,471 PROLACTO’s Application Serial No. 78,771,243
B. Procedural History
Before arriving at this Court, PROLACTO filed a petition with the TTAB to cancel
PLM’s trademark No. 3,210,304 for the mark LA INDITA MICHOACANA and design, shown
above, for use on ice cream and fruit products, namely fruit bars. The TTAB granted
PROLACTO’s petition, finding a likelihood of confusion between several, but not all, of
PROLACTO’s marks and PLM’s registered trademark. See generally Productos Lacteos
Tocumbo S.A. De C.V. v. Paleteria La Michoacana, Inc., 98 U.S.P.Q.2d 1921, 2011 WL
2161071 (TTAB May 20, 2011) (“TTAB Decision”). The TTAB’s decision is discussed with
more detail in the ensuing sections.
On June 11, 2012, PLM filed a second amended complaint in which it asserted four
causes of action against PROLACTO regarding the TTAB decision and other issues in the fight
to use the various registered and unregistered marks. First, PLM seeks reversal of the TTAB
decision cancelling its registered trademark No. 3,210,304. See 2d Am. Compl., ECF No. 40, at
¶¶ 42-48. Second, PLM seeks declaratory judgment that there is no likelihood of confusion
6
between its mark and PROLACTO’s lone registered mark. See id. ¶¶ 49-51. Third, PLM asserts
a Lanham Act trademark infringement claim under 15 U.S.C. § 1114 against PROLACTO for its
use of the Indian Girl design with LA INDITA MICHOACANA and separate use of the Indian
Girl mark standing alone. See id. ¶¶ 52-56. Finally, PLM seeks cancellation of PROLACTO’s
registered trademark No. 3,249,113, also shown above. See id. ¶¶ 57-61.
On June 29, 2012, PROLACTO filed its answer to the second amended complaint and
asserted a variety of trademark counterclaims against PLM, including Lanham Act claims for
federal trademark infringement, unfair competition, passing off, false advertising, false
association, and false designation. See Answer 2d Am. Compl. & Countercls., ECF No. 41, at ¶¶
43-52. PROLACTO also asserted Lanham Act claims to cancel two of PLM’s registered marks
on the basis of fraud and abandonment, see id. ¶¶ 64-87, as well as a claim for trademark
infringement under District of Columbia common law. See id. ¶¶ 53-59. Finally, PROLACTO
brought a Lanham Act federal trademark dilution claim against PLM. See id. ¶¶ 60-63.
C. Motions For Summary Judgment
Now before the Court are the parties’ motions for summary judgment in which they seek
a decision on nearly every claim in the complaint and counterclaim. Upon a searching
examination of the parties’ filings, the attached exhibits, the relevant case law, and the entire
record herein, the Court finds that it can resolve a number of issues at this stage because no
dispute of material fact exists. The Court therefore will enter the following rulings: (1) granting
summary judgment in favor of PLM on counterclaim Count I; (2) granting summary judgment in
favor of PLM limiting counterclaim Count II for trademark infringement to the Houston, Texas,
market; (3) granting summary judgment in favor of PROLACTO on counterclaim Count II for
false advertising on the elements of falsity, deceptiveness, and interstate commerce; (4) granting
7
summary judgment in favor of PLM on counterclaim Count III; (5) granting summary judgment
in favor of PLM on counterclaim Count IV; (6) granting summary judgment in favor of PLM on
counterclaim Counts V, VI, and VII; and (7) granting summary judgment in favor of PLM on the
question of whether PROLACTO is entitled to any form of monetary relief for its trademark
counterclaims.
There exist, however, numerous other issues that cannot be dealt with at summary
judgment because contested factual questions remain for a fact-finder to decide. The Court
therefore also makes the following rulings on the parties’ motions: (1) denying summary
judgment as to both parties on complaint Count I; (2) denying summary judgment as to both
parties on counterclaim Count II for trademark infringement on the question of whether
PROLACTO has established secondary meaning for its marks; (3) denying summary judgment
as to both parties on counterclaim Count II for false designation, passing off, false association,
and unfair competition; (4) denying summary judgment as to PLM on its arguments that laches
prevents PROLACTO from bringing counterclaim Count II for false advertising, and that
PROLACATO lacks prudential standing for its false advertising claim; and (5) denying summary
judgment to both parties on counterclaim Count II for false advertising on the elements of
materiality and injury.
III. LEGAL STANDARD FOR SUMMARY JUDGMENT
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and [thus] the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a); accord Talavera v. Shah, 638 F.3d 303, 308 (D.C. Cir. 2011). “A fact is material
if it ‘might affect the outcome of the suit under the governing law,’ and a dispute about a
material fact is genuine ‘if the evidence is such that a reasonable jury could return a verdict for
8
the nonmoving party.’” Steele v. Schafer, 535 F.3d 689, 692 (D.C. Cir. 2008) (quoting Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). When Rule 56 is invoked, the moving party
has the initial burden of demonstrating the absence of a genuine dispute as to any material fact.
See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party does not bear
the burden of persuasion at trial, its burden “may be discharged by ‘showing’ — that is, pointing
out to the district court — that there is an absence of evidence to support the nonmoving party’s
case.” Id. at 325.
Once the moving party has met its burden, to defeat the motion the nonmoving party
must designate “specific facts showing that there is a genuine issue for trial.” Id. at 324 (citation
omitted). Although the Court must view this evidence in the light most favorable to the
nonmoving party and draw all reasonable inferences in that party’s favor, see Grosdidier v.
Broad. Bd. of Governors, Chairman, 709 F.3d 19, 23-24 (D.C. Cir. 2013), the nonmoving party
must show more than “[t]he mere existence of a scintilla of evidence in support of” his position
— “there must be evidence on which the jury could reasonably find for [the nonmoving party].”
Anderson, 477 U.S. at 252. Moreover, the nonmoving party “may not rest upon mere allegation
or denials of his pleading but must present affirmative evidence showing a genuine issue for
trial.” Laningham v. U.S. Navy, 813 F.2d 1236, 1241 (D.C. Cir. 1987) (internal quotation marks
and citation omitted).
When both parties file cross-motions for summary judgment, “each must carry its own
burden under the applicable legal standard.” Ehrman v. United States, 429 F. Supp. 2d 61, 67
(D.D.C. 2006); Nuzzo v. FBI, No. 95-CV-1708, 1996 WL 741587, at *1 (D.D.C. Oct. 8, 1996)
(“When both parties in a cause of action move for summary judgment, each party must carry its
own burden.”). Finally, the Court notes that “[c]redibility determinations, the weighing of the
9
evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of
a judge at summary judgment.” Barnett v. PA Consulting Grp., Inc., 715 F.3d 354, 358 (D.C.
Cir. 2013) (citation omitted). Indeed, a court’s role in deciding a summary judgment motion is
not to “determine the truth of the matter, but instead [to] decide only whether there is a genuine
issue for trial.” Id. (citation omitted).
IV. ANALYSIS
The Court now turns to the merits of the motions for summary judgment. As suggested
above, the parties seek judgment on numerous counts in the complaint and counterclaim.
Specifically, PLM seeks the following relief through its motion: (1) judgment in its favor on
counterclaim Count I for infringement on PROLACTO’s registered trademark; (2) judgment
limiting counterclaim Count II exclusively to the Houston, Texas, market; (3) judgment
preventing PROLACTO from recovering monetary relief in any form on all of its counterclaims;
(4) judgment in its favor on counterclaim Count II for false advertising; (5) judgment in its favor
on counterclaim Count III for District of Columbia common law trademark infringement; (6)
judgment in its favor on counterclaim Count IV for federal trademark dilution; and (7) judgment
in its favor on counterclaim Counts V, VI, and VII for cancellation of PLM’s registered Indian
Girl trademarks on the basis of fraud and abandonment.
In response, PROLACTO requests that the Court grant the following relief: (1) judgment
in its favor on all of counterclaim Count II for various Lanham Act violations; (2) judgment in its
favor on counterclaim Count III for District of Columbia common law trademark infringement;
(3) judgment in its favor on complaint Count I affirming the TTAB decision; (4) judgment in its
favor on counterclaim Count I overturning the TTAB decision as to PROLACTO’s registered
trademark; (5) judgment in its favor on counterclaim Counts V and VI for cancellation of PLM’s
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registered Indian Girl trademarks; and (6) judgment in its favor on counterclaim Count IV for
federal trademark dilution. 3 The Court addresses each issue below.
A. Complaint Count I: Appeal Of TTAB Decision Cancelling PLM’s Registered Mark
Upon PROLACTO’s petition before the TTAB, the board cancelled PLM’s registered
trademark No. 3,210,304 for the LA INDITA MICHOACANA and design after finding that the
mark was sufficiently similar to PROLACTO’s unregistered Indian Girl mark, as well as
PROLACTO’s marks for LA MICHOACANA, LA MICHOACANA NATURAL, and LA
MICHOACANA NATURAL and design, such that consumer confusion was likely to occur. See
generally TTAB Decision. PLM filed the initial complaint in this Court seeking judicial review
of that decision and arguing, in particular, that it has evidence contradicting the TTAB’s
conclusion regarding priority use of the marks. See generally 2d Am. Compl., ECF No. 40.
PROLACTO moves for summary judgment affirming the TTAB decision to cancel PLM’s mark.
See Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No. 116-1, at 37.
3
PROLACTO also has filed a motion to strike various portions of the declaration
of Ariel Fox Johnson, PLM’s counsel, and associated exhibits. See generally Def.’s Mot. Strike,
ECF No. 128. “At summary judgment, material will be disregarded only if it ‘cannot be
presented in a form that would be admissible in evidence’ at trial.” Ali v. D.C. Gov’t, 810 F.
Supp. 2d 78, 83 (D.D.C. 2011) (quoting Fed. R. Civ. P. 56(c)(2)). Thus, to defeat summary
judgment, a nonmovant “is not required to produce evidence in a form that would be admissible
at trial,” so long as the evidence is “capable of being converted into admissible evidence.”
Gleklen v. Democratic Congr. Campaign Comm., Inc., 199 F.3d 1365, 1369 (D.C. Cir. 2000);
see also Catrett v. Johns-Manville Sales Corp., 826 F.2d 33, 38 (D.C. Cir. 1987); Richards v.
Option One Mortg., No. 08 Civ. 0007, 2009 WL 2751831, at *1 n.3 (D.D.C. 2009) (explaining
that hearsay statements may be converted into admissible evidence if a witness with personal
knowledge can testify to them at trial).
First, the Court notes that much of the evidence PROLACTO moves to strike through its
motion is not relied on in this Memorandum Opinion, thus making those aspects of the motion
moot. Second, for the remaining limited set of evidence that the Court finds relevant, the Court
is satisfied that PLM has met its burden of demonstrating that the evidence is admissible or can
be made admissible at trial. The Court therefore denies PROLACTO’s motion to strike.
11
1. Standard Of Review For A TTAB Decision
Section 21 of the Lanham Act permits a party dissatisfied with a TTAB decision to
appeal to the United States Court of Appeals for the Federal Circuit or to bring a civil action in
federal district court. See 15 U.S.C. § 1071(a), (b); see also Material Supply Int’l, Inc. v.
Sunmatch Indus. Co., Ltd., 146 F.3d 983, 989 (D.C. Cir. 1998). In the latter case, the district
court acts as a quasi-appellate court to the TTAB and applies a hybrid standard of review,
affording deferential treatment to the board’s factual findings but confronting legal questions de
novo. See Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans, Inc., 511 F. Supp. 2d 1, 6 (D.D.C.
2007); see also Goya Foods, Inc. v. Tropicana Prods., Inc., 846 F.2d 848, 852 (2d Cir. 1988)
(“The section 1071(b) action in a district court is not, strictly speaking, an ‘appeal’ at all, but an
independent judicial proceeding provided as an alternative to a direct appeal to the Federal
Circuit[.]”); Smith v. Entrepreneur Media, Inc., No. 2:12-CV-2184, 2013 WL 2296077, at *5
(E.D. Cal. May 24, 2013) (“[W]hile new evidence and new issues may be introduced in the
district court, an appeal of a decision by the TTAB is a unique procedure because, unlike a true
de novo proceeding, findings of fact made by the TTAB are given great weight and are not upset
unless supported by substantial evidence.”).
A court reviews the TTAB’s findings of fact under the “substantial evidence” standard,
which requires a court to defer to the factual findings made by the TTAB unless new evidence
“carries thorough conviction.” Material Supply Int’l, 146 F.3d at 990 (citing 3 J. Thomas
McCarthy, McCarthy on Trademarks & Unfair Competition (“McCarthy on Trademarks”) §
21:20, at 21-24 (4th ed. 1997); see also Guantanamera Cigar Co. v. Corporacion Habanos, S.A.,
729 F. Supp. 2d 246, 251 (D.D.C. 2010); Tequila Centinela, S.A. de C.V. v. Bacardi & Co. Ltd.,
517 F. Supp. 2d 1, 4 (D.D.C. 2007). “Substantial evidence,” as described by the Supreme Court,
12
is “‘more than a mere scintilla of evidence’” and requires “‘such relevant evidence as a
reasonable mind would accept as adequate’ to support a conclusion.” In re Pacer Tech., 338
F.3d 1348, 1349 (Fed. Cir. 2003) (quoting Consol. Edison v. NLRB, 305 U.S. 197, 229 (1938)).
Importantly, the party seeking to overturn a TTAB decision may present new evidence
and raise new issues, which a court must review de novo. See Aktieselskabet AF 21. Nov. 2001,
525 F.3d at 13 (the district court “may consider both new issues and new evidence that were not
before the TTAB”); see also CAE, Inc. v. Clean Air Eng’g, Inc., 267 F.3d 660, 674 (7th Cir.
2001) (explaining that a district court’s review of a TTAB decision is de novo when parties assert
new claims); Smith, 2013 WL 2296077, at *5 (explaining that “new evidence and new issues
may be introduced in the district court” on appeal of a TTAB decision). Thus, to prevail on
appeal, PLM must either raise a new issue compelling a different result, or show that the TTAB’s
findings were unsupported by substantial evidence or contrary to “new evidence carr[ying]
thorough conviction.” Guantanamera, 729 F. Supp. 2d at 251; see also Coryn Grp. II, LLC v.
O.C. Seacrets, Inc., No. CIV. 08-2764, 2011 WL 3240456, at *3 (D. Md. July 27, 2011).
2. TTAB Factual Findings And Legal Conclusions
At the TTAB proceeding, the board found that PROLACTO had established priority use
over PLM for the following marks: LA MICHOACANA (words only); LA MICHOACANA
NATURAL (words only); LA MICHOACANA NATURAL (and design); design of an Indian
Girl doll holding an ice cream; LA FLOR DE MICHOACAN (words only); LA FLOR DE
MICHOACAN (and design); and LA MICHOACANA NAURAL (and design). See TTAB
Decision at *11. To reach its conclusion regarding priority, the board explained that PLM “filed
its application for registration on June 28, 2005, claiming first use anywhere and in commerce as
of February 21, 2005.” See id. at *9. This finding was supported by the deposition testimony of
13
PLM’s Ignacio Gutierrez and Patricia Gutierrez. Through similar evidence in the record, the
TTAB determined that PROLACTO, “through its licensees, began using [the] Indian girl in
connection with the sale of ice cream and ice cream bars in the United States in April 2001.” See
id. Based on additional testimony, the TTAB further found that PROLACTO “used the marks
LA MICHOACANA NATURAL and design, LA FLOR DE MICHOACAN, and LA
MICHOACANA in connection with ice cream and retail ice cream store services since 2001.”
See id. at *10. The TTAB concluded that, based on these facts, PROLACTO had priority over
PLM for all marks because PROLACTO used each in commerce within the United States before
PLM.
The TTAB next considered the likelihood of confusion between PROLACTO’s marks
and PLM’s registered mark. Based on competent evidence in the record, the TTAB made the
following findings: all the marks at issue are used in connection with ice cream products; PLM’s
fruit bars are sold in all normal channels of trade to all normal purchasers of such goods,
including retail ice cream stores; ice cream bars and fruit bars are inexpensive products and by
their nature are impulse purchase items consumers buy without a high degree of care;
considering the overall commercial impressions of the marks, the companies’ Indian Girl designs
are virtually identical; and PROLACTO’s mark LA MICHOACANA, and PLM’s registered
mark LA INDITA MICHOACANA and design, are similar in appearance and sound, and have
similar meanings. See id. at *12-15. Based on these findings, the board concluded that PLM’s
registered mark No. 3,210,304 was sufficiently similar to PROLACTO’s design of an Indian Girl
doll holding an ice cream, LA MICHOACANA (words only), LA MICHOACANA NATURAL
(words only), and LA MICHOACANA NATURAL and design, to create a likelihood of
14
confusion among customers. See id. at *15. The TTAB therefore concluded that PLM’s
registered mark No. 3,210,304 must be cancelled. See id. at *16.
3. New Evidence And Arguments: Tacking
On review of the TTAB decision, a district court must take into consideration new
evidence and new issues not raised before the TTAB. Here, PLM presents for the first time at
the summary judgment stage testimonial and documentary evidence suggesting that it used a
version of the Indian Girl design since at least the mid-1990s, which potentially would predate
PROLACTO’s use of similar marks in the United States. See Pls.’ Stmt Disputed Issues, ECF
No. 120, at 59, No. 6. PLM argues that it should be permitted to “tack” these earlier uses to
establish priority for its registered LA INDITA MICHOACANA mark and design over
PROLACTO’s use of similar marks. See Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp.,
174 F.3d 1036, 1048 (9th Cir. 1999) (explaining that “tacking” occurs when the “trademark
holder essentially seeks to ‘tack’ his first use date in the earlier mark onto the subsequent mark”);
see also 3 McCarthy on Trademarks §§ 17:25-28 (4th ed.) (discussing tacking). Due to pleading
issues, however, the TTAB did not consider evidence to determine whether PLM’s marks are
sufficiently similar to permit tacking as a valid defense.
When a district court hearing a TTAB appeal acts as a finder of fact with regard to new
evidence submitted by the parties, it “must examine the evidence de novo and make its own
findings of fact[.]” Shammas v. Rea, 978 F. Supp. 2d 599, 606 (E.D. Va. 2013). If a court finds
that new evidence contradicts or is inconsistent with the board’s factual findings, it must
consider whether the record, taken as a whole, warrants reversal. See id. When this standard of
review is applied in the context of a motion for summary judgment, the primary inquiry is
whether a party has presented sufficient evidence that, when considered with the board’s
15
findings, creates a genuine issue of material fact precluding summary judgment. See Bd. of
Regents of Univ. of Wis. Sys. v. Phoenix Int’l Software, Inc., 653 F.3d 448, 452 (7th Cir. 2011).
The use of an earlier mark may be tacked onto the later use of a different mark only if the
first mark is “the legal equivalent of the mark in question or indistinguishable therefrom” such
that consumers “consider both as the same mark.” See Van Dyne-Crotty, Inc. v. Wear-Guard
Corp., 926 F.2d 1156, 1159 (Fed. Cir. 1991). Tacking is permitted “only in rare instances.” Id.
at 1160 (citation and quotation marks omitted). “Legal equivalence” for tacking purposes does
not occur simply if the two marks are “confusingly similar”; instead, the marks sought to be
tacked must create the same continuing “commercial impression.” Id.; see also George & Co.
LLC v. Imagination Entm’t Ltd., 575 F.3d 383, 402 (4th Cir. 2009) (discussing tacking); Navistar
Int’l Transp. Corp. v. Freightliner Corp., No. 96 C 6922, 1998 WL 911776, at *2 (N.D. Ill. Dec.
28, 1998) (same).
There is a dispute among the federal circuit courts regarding whether tacking is a
question of law for a court or a question of fact for a jury. For example, the Federal Circuit has
stated that because “[n]o evidence need be entertained other than the visual or aural appearance
of the marks themselves,” tacking is a question of law. See In re Dial-A-Mattress Operating
Corp., 240 F.3d 1341, 1347 (Fed. Cir. 2001) (citations omitted). The Sixth Circuit agrees that
tacking is a question of law. See Data Concepts, Inc. v. Digital Consulting, Inc., 150 F.3d 620,
623 (6th Cir. 1998). The Ninth Circuit, however, has held that tacking is a question of fact
typically left for a jury to decide. See One Indus., LLC v. Jim O’Neal Distrib., Inc., 578 F.3d
1154, 1160 (9th Cir. 2009); see also Hana Fin., Inc. v. Hana Bank, 735 F.3d 1158, 1168 (9th Cir.
2013) (“[T]acking presents a question of fact that must ultimately be decided by the jury unless
the evidence is so strong that it permits only one conclusion.”).
16
The critical inquiry under a tacking analysis is whether a consumer would consider the
prior and subsequent designs to be the “same mark.” See Brookfield Commc’ns, 174 F.3d at
1048 (stating that “tacking should be allowed if two marks are so similar that consumers
generally would regard them as essentially the same”); Van Dyne-Crotty, 926 F.2d at 1159(stating that a “consumer should consider both as the same mark”). Consumer opinion is
dispositive because a fundamental purpose of trademark law is to create a marketplace in which
consumers are not deceived or confused by competing merchants using similar marks. See Park
‘N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 198 (1985) (noting that the Lanham
Act’s aim is not only to encourage investments in strong trademarks, but also “to protect the
ability of consumers to distinguish among competing producers” (citations omitted)); Malletier
v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 539 (2d Cir. 2005) (“[The Lanham]
Act seeks to eliminate the confusion that is created in the marketplace by the sale of products
bearing highly similar marks.” (citations omitted)).
As such, it is less than ideal for a court, sitting in relative isolation, to speculate about
what consumers may think regarding the similarity of two marks as a question of law. In fact,
such a conclusion would be inconsistent with the rule in this Circuit that the “likelihood of
confusion” inquiry, which requires a similar fact-intensive comparison between marks, is a
question of fact for a jury to decide. See Globalaw Ltd. v. Carmon & Carmon Law Office, 452 F.
Supp. 2d 1, 48 (D.D.C. 2006); Pro-Football, Inc. v. Harjo, 284 F. Supp. 2d 96, 117 (D.D.C.
2003); see also Louangel, Inc. v. Darden Rests., Inc., No. 2:12-CV-00147, 2013 WL 1223653, at
*2 (S.D. Tex. Mar. 22, 2013) (“The courts’ treatment of the tacking question is commensurate
with their treatment of the related issue of ‘likelihood of confusion’ in the trademark context.”).
Thus, consistent with this Circuit’s approach to the “likelihood of confusion” inquiry, the Court
17
concludes that tacking presents a question of fact that ultimately must be decided by a jury unless
evidence is so strong that it permits only one conclusion such that summary judgment is
appropriate.
Here, the Court finds that the evidence presented by PLM regarding its past use of the
Indian Girl marks creates a genuine dispute of material fact as to whether the tacking doctrine is
applicable because there is at least some evidence that a version of the Indian Girl design was
used by PLM in the 1990s, and a jury therefore could find that the earlier marks are sufficiently
similar to the later marks to create the continuity of commercial impression. See, e.g., Pls.’
Resp. Def.’s Stmt Facts, ECF No. 120-1, at 97, Nos. 120-22. But because the evidence does not
compel only one result, the Court concludes that summary judgment is inappropriate as to both
parties on PLM’s Count I for reversal of the TTAB decision cancelling its registered mark. 4
B. Counterclaim Count I: Trademark Infringement Under Lanham Act Section 32(1)
The Lanham Act provides “national protection of trademarks in order to secure to the
owner of the mark the goodwill of his business and to protect the ability of consumers to
distinguish among competing producers.” Park ‘N Fly, 469 U.S. at 198. Under Section 32(1)(a)
of the Act,
[a]ny person who shall, without the consent of the registrant [] use 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 … shall be liable in a civil action by
the registrant for the remedies hereinafter provided.
4
Separately, PROLACTO appears to admit that PLM started using LA
MICHOACANA as early as 1991. See Def.’s Stmt Facts, ECF No. 116-2, at 53, No. 111; see
also Pls.’ Resp. Def.’s Stmt Facts, ECF No. 120-1, at 98-99, No. 128. PROLACTO also argues
that the “analogous use” doctrine somehow permits foreign use to be grounds for opposing a
trademark registration. See Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No. 116-1, at 38.
None of the case law PROLACTO cites, however, supports that proposition.
18
15 U.S.C. § 1114(1). Section 32 requires that the asserted marks be registered. Globalaw, 452
F. Supp. 2d at 25 (“[B]y its very text, a Section 32(1) claim — unlike a Section 43 claim —
contemplates that a ‘registration’ has occurred and that a ‘registrant’ is seeking certain
remedies.”). Thus, to state an infringement claim under Section 32, a party must prove (1) that it
has a protectable ownership interest in a mark; and (2) that the alleged infringer’s use of the
mark is likely to cause consumer confusion. 5 See Breaking the Chain Found., Inc. v. Capitol
Educ. Support, Inc., 589 F. Supp. 2d 25, 29 (D.D.C. 2008); see also Network Automation, Inc. v.
Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1144 (9th Cir. 2011); Louis Vuitton Malletier v.
Dooney & Bourke, Inc., 454 F.3d 108, 115 (2d Cir. 2006).
PROLACTO moves for summary judgment as to its registered mark No. 3,249,113 for
the LA FLOR DE MICHOACAN and design. See Def.’s Mem. Supp. Mot. Part. Summ. J., ECF
No. 116-1, at 42. The TTAB ruled that this mark was not sufficiently similar to PLM’s
registered mark No. 3,210,304 to cause consumer confusion and require cancellation.
PROLACTO seeks reversal of that decision through its counterclaim Count I, while PLM moves
for summary judgment in its favor on the same count. Both parties focus their arguments for
summary judgment on whether the board correctly ruled that the marks were not likely to cause
consumer confusion.
5
A trademark infringement claim under Section 32 has nearly identical elements to
a claim under Section 43, except that the registration of a mark serves as prima facie evidence of
the mark’s validity and the registrant’s exclusive right to use the mark in commerce. See 1-800
Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1238 (10th Cir. 2013).
19
PLM’s and PROLACTO’s Registered Marks At Issue
PLM’s Registration No. 3,210,304 PROLACTO’s Registration No. 3,249,113Again, the Court must apply a hybrid standard of review to the appeal of a TTAB
decision, affording deferential treatment to the TTAB’s factual findings but confronting legal
questions de novo. See Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans, Inc., 511 F. Supp. 2d 1,
6 (D.D.C. 2007). The Court therefore reviews the TTAB’s findings of fact under the “substantial
evidence” standard, which requires the Court to defer to the factual findings made by the TTAB
unless new evidence “carries thorough conviction.” Material Supply Int’l, Inc. v. Sunmatch
Indus. Co., 146 F.3d 983, 990 (D.C. Cir. 1998) (citations omitted).
1. TTAB Factual Findings And Legal Conclusions
In reaching its conclusion that there was no likelihood of confusion between
PROLACTO’s registered LA FLOR DE MICHOACAN mark and PLM’s registered mark, the
TTAB made the following findings, each of which was supported by evidence in the record: all
marks and designs are used on packaging for ice cream bars; all marks move in the normal
channels of trade; ice cream bars and fruit bars are impulse purchase items, and consumers do
not exercise a high degree of care before buying; and LA FLOR DE MICHOACAN translates to
English as “the blossom of Michoacán,” while LA INDITA MICHOACANA translates to “the
Indian girl or woman from Michoacán.” See TTAB Decision, at *14. After balancing these
facts, the board concluded that PROLACTO’s mark created a different “commercial impression”
than PLM’s mark which “outweigh[ed] any similarities caused by the inclusion of the word
20
‘Michoacán.’” Id. at *15. For the reasons discussed below, the Court affirms the TTAB’s
conclusion.
2. Application Of Factors
The TTAB did not, and need not as a matter of law, utilize the same multifactor analysis
to determine consumer confusion that a district court must apply under the laws of its circuit.
See Coach House Rest., Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551, 1561 (11th Cir. 1991)
(“Although the TTAB need not utilize th[e] multi-factor analysis to be upheld by a district court
… we do require the district court to analyze the confusion issue via the multifactor analysis to
determine if the result comports with that of the TTAB.”); Coryn Grp. II, LLC v. O.C. Seacrets,
Inc., No. CIV. 08-2764, 2011 WL 3240456, at *3 (D. Md. July 27, 2011) (explaining that
“[a]lthough the TTAB analyzes the likelihood of confusion under a different set of factors than
the jury will use for [defendant’s] counterclaims, on review this Court will use the same factors
as the jury, and determine if the result under those factors comports with the TTAB’s
conclusion”).
Thus, in accordance with prior cases in this Circuit, the Court should consider
approximately seven factors to evaluate consumer confusion, none of which is individually
determinative and not all of which must be given equal weight or be present in every case to find
that confusion is likely. See Globalaw Ltd. v. Carmon & Carmon Law Office, 452 F. Supp. 2d 1,
48 (D.D.C. 2006). These factors include: (1) the strength of the party’s mark; (2) the degree of
similarity between the two marks; (3) the proximity of the products; (4) evidence of actual
confusion; (5) the defendant’s purpose or reciprocal good faith in adopting its own mark; (6) the
quality of defendant’s product; and (7) the sophistication of the buyers. See id.; see also Partido
21
Revolucionario Dominicano (PRD) v. Partido Revolucionario Dominicano, Seccional de
Maryland y Virginia, 312 F. Supp. 2d 1, 14 (D.D.C. 2004).
Notably, the comparison between marks is made in light of what happens with consumers
in the marketplace, not by viewing the marks side-by-side in a vacuum. See Globalaw, 452 F.
Supp. 2d at 49; see also Lang v. Ret. Living Publ’g Co., 949 F.2d 576, 581 (2d Cir. 1991) (“In
[determining whether marks are confusingly similar], a court should look at the general
impression created by the marks, taking into account all factors that potential purchasers will
likely perceive and remember.”); Sensient Techs. Corp. v. SensoryEffects Flavor Co., 636 F.
Supp. 2d 891, 900 (E.D. Mo. 2009) (“This analysis should not be completed in a vacuum
because the Court must attempt to recreate the conditions in which buying decisions are made,
and … what a reasonable purchaser in market conditions would do.” (citation and internal
quotation omitted; alteration in original)). Because the likelihood of confusion inquiry is
inherently fact-based and open-ended, summary judgment is disfavored unless the evidence is
clear such that “no reasonable factfinder could find that there is a likelihood of confusion based
on the evidence presently before the Court.” Jurin v. Google, Inc., No. 2:09-CV-03065, 2012
WL 5011007, at *4 (E.D. Cal. Oct. 17, 2012); see also Packman v. Chi. Tribune Co., 267 F.3d
628, 643 (7th Cir. 2001) (explaining that likelihood of confusion may be resolved at summary
judgment only when evidence is so one-sided that there is no doubt about how the question must
be answered).
Upon consideration of the Globalaw factors, the Court concludes that no reasonable jury
could find a likelihood of confusion between the marks at issue. The Court recognizes, however,
that several of the relevant factors weigh in favor of PROLACTO, or are neutral at best. For
example, the parties agree that the products compete within a few regions of the country, and
22
sometimes even in the same store, albeit rarely. See Def.’s Stmt Facts, ECF No. 116-2, at 85-86,
Nos. 193-94. The parties also agree, and the TTAB found, that paletas are relatively inexpensive
products purchased on an impulse, which increases the likelihood of confusion. See TTAB
Decision, at *12. On the other hand, PROLACTO has offered expert testimony suggesting a
discernible difference in quality between its product and that of PLM. See, e.g., Def.’s Stmt
Facts, ECF No. 116-2, at 91-106, Nos. 204, 213-14, 221. Though PLM disputes the value and
admissibility of that evidence, a noticeable difference in quality suggests against consumer
confusion. Even more importantly, however, PROLACTO has not provided a survey or other
evidence demonstrating actual consumer confusion between the two specific marks now at issue.
Although “[e]vidence of actual confusion is not necessary to prove likelihood of confusion[,]
actual confusion is substantial proof of the existence of the likelihood of confusion.” Malarkey-
Taylor Assocs., Inc. v. Cellular Telecomms. Indus. Ass’n, 929 F. Supp. 473, 477 (D.D.C. 1996).
The Court, moreover, is most influenced by the simple fact that the marks in dispute
share little visual resemblance with each other. “Similarity is a holistic consideration that turns
on the marks’ sight, sound, and overall commercial impression under the totality of the
circumstances.” Akiro LLC v. House of Cheatham, Inc., 946 F. Supp. 2d 324, 334 (S.D.N.Y.
2013). Although the marks contain similar words — a version of “Michoacán” — this fact alone
does not compel a finding that consumers are likely to be confused. Cf. Nabisco, Inc. v. Warner-
Lambert Co., 220 F.3d 43, 46 (2d Cir. 2000) (explaining that the marks “DENTYNE ICE and
ICE BREAKERS are at best marginally similar because of the common use of ‘Ice.’”);
GoSMiLE, Inc. v. Dr. Jonathan Levine, D.M.D. P.C., 769 F. Supp. 2d 630, 640 (S.D.N.Y. 2011)
(“[E]ven if the marks had contained identical words while competing head to head, that may,
standing alone, still is insufficient to establish similarity.”). Instead, “[e]ven if the marks are
23
composed of the same words and are pronounced the same, they may be distinguished by the use
of a company name in close proximity, the use of different font sizes, and dissimilar modes of
presentation.” Globalaw, 452 F. Supp. 2d at 49; see also King of the Mountain Sports v.
Chrysler, 185 F.3d 1084, 1090-91 (10th Cir. 1999) (finding that marks with the same dominant
text are dissimilar due to differences in style, presentation, and visual impact); Rush Indus., Inc.
v. Garnier LLC, 496 F. Supp. 2d 220, 226 (E.D.N.Y. 2007) (“The use of the same words … is far
from dispositive. Instead, the court must focus on the overall impression conveyed by the use of
the words.” (citations omitted)); Door Sys., Inc. v. Overhead Door Sys., Inc., 905 F. Supp. 492,
496 (N.D. Ill. 1995) (explaining that “no protection is available against confusion generated by
mere similarity of names”).
Further, the design elements and colors of the marks in dispute are quite different. For
example, PROLACTO’s registered mark features a swirl surrounding an orange popsicle, while
PLM’s mark features pink and black coloring with a drawing of a little girl holding an ice cream
cone with words above and below her image. Cf. Nabisco, 220 F.3d at 47 (“[A]lthough both
packages use blue and white colors, the shades and patterns of these colors are different. The
front panel of the DENTYNE ICE package has a light-blue background broken by a thick, dark-
blue band and two smaller white bands. Nabisco’s package, on the other hand, has a
homogenous, metallic-blue background broken only by the ICE BREAKERS mark itself.”);
Luigino’s, Inc. v. Stouffer Corp., 170 F.3d 827, 831 (8th Cir. 1999) (finding that MICHELINA’S
LEAN ‘N TASTY is not confusingly similar to STOUFFER’S LEAN CUISINE as a matter of
law because “[t]he use of different colors and typefaces, as well as the prominent display of the
house marks convey perceptible distinctions between the products”); Medici Classics Prods.,
LLC v. Medici Grp., LLC, 683 F. Supp. 2d 304, 311 (S.D.N.Y. 2010) (finding no likelihood of
24
confusion when “the overall impression created by the marks is dissimilar despite the use of the
same word. The marks use different typefaces and presentation to create different impressions:
in the plaintiff’s case, one of royalty and the renaissance, and in the defendant’s case, one of
modernity”). Indeed, even the phrases within the marks have different meanings and use
different letters, as was noted above.
For these reasons, the Court finds that the difference in meaning and commercial
impression engendered by the marks outweighs any similarities caused by the inclusion of a
version of the word “Michoacán” or the fact that both marks are used on a similar category of
products. See, e.g., Kellogg Co. v. Pack’em Enters., 951 F.2d 330, 332-33 (Fed. Cir. 1991)
(concluding that “substantial and undisputed differences” between the parties’ use of FROOTEE
ICE and FROOT LOOPS warranted summary judgment because “the dissimilarity of the marks
in their entireties itself made it unlikely that confusion would result from the simultaneous use of
the marks” (internal quotation marks omitted)); Rush Indus., 496 F. Supp. 2d at 226 (finding at
summary judgment that marks “Long ‘n Strong” and “Long & Strong” are dissimilar because
“[d]espite the fact that the words use[d] are, essentially, the same, the impression created by the
parties’ use of the words is vastly different”). As such, the Court affirms the TTAB’s decision
regarding PLM’s lack of infringement and grants summary judgment in PLM’s favor on
counterclaim Count I.
C. Counterclaim Count II: Trademark Infringement Under Lanham Act Section 43(a)
In Count II of the counterclaim, PROLACTO asserts that PLM violated Section 43(a) of
the Lanham Act, 15 U.S.C. § 1125(a), through its use of registered trademarks Nos. 3,210,304;
2,905,172; and 2,968,652 because those marks allegedly infringe on PROLACTO’s use of the
25
LA MICHOACANA marks and the Indian Girl design. 6 To prevail on a trademark infringement
claim, a party must show that (1) it owns a valid trademark, (2) its trademark is distinctive or has
acquired a secondary meaning, and (3) there is a substantial likelihood of confusion between the
party’s mark and the alleged infringer’s mark. See Globalaw Ltd. v. Carmon & Carmon Law
Office, 452 F. Supp. 2d 1, 26 (D.D.C. 2006). Whereas federal registration of a mark is prima
facie evidence that the registrant owns the mark and has the exclusive right to use the mark on
the goods and services specified in the registration, see 15 U.S.C. § 1057(b), an unregistered
mark is protectable under Section 43 of the Lanham Act only if a separate showing is made that
it would qualify for registration as a trademark. See Globalaw, 452 F. Supp. 2d at 26; see also
A&H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000).
“‘Summary judgment may be granted in trademark matters where there is no protectable
trademark interest and no likelihood of confusion.’” Globalaw, 452 F. Supp. 2d at 22-23(quoting Info. Superhighway, Inc. v. Talk Am., Inc., 395 F. Supp. 2d 44, 50 (S.D.N.Y. 2005)).
PROLACTO moves for summary judgment on this count largely by relying on the so-
called famous mark doctrine to establish nationwide priority of its marks. See, e.g., Def.’s Mem.
Supp. Mot. Part. Summ. J., ECF No. 116-1, at 33-34. Separately, PLM moves for summary
judgment limiting PROLACTO’s trademark infringement claim to the Houston, Texas, market
on the bases that, first, the famous mark doctrine is not good law in this Circuit, and second,
PLM has priority use in Sonoma, California, which it claims is the only market besides Houston
6
PLM asserts that PROLACTO incorrectly attempts to expand the PLM marks at
issue in the infringement count by raising two new marks in its motion for summary judgment.
See Pls.’ Mem. Opp’n Def.’s Mot. Summ. J., ECF No. 120, at 27. The Court agrees with PLM
that PROLACTO only pleaded in Count II an infringement claim as to PLM’s three registered
marks. The Court therefore limits its analysis to those marks properly pleaded. See DSMC, Inc.
v. Convera Corp., 479 F. Supp. 2d 68, 84 (D.D.C. 2007).
26
in which the companies actually compete. See Pls.’ Mem. Supp. Mot. Part. Summ. J., ECF No.
114, at 30. The Court addresses each argument below.
1. Validity Of A Trademark: Priority, Territoriality, And Foreign Use
It is axiomatic that under United States trademark law, a party establishes valid
ownership of a mark by being the first to use that mark in commerce. See United States v.
Steffens, 100 U.S. 82, 85 (1879); Estate of Coll-Monge v. Inner Peace Movement, 524 F.3d 1341,
1347 (D.C. Cir. 2008); Sengoku Works Ltd. v. RMC Int’l, Ltd., 96 F.3d 1217, 1219 (9th Cir.
1996); see also Jaffe v. Simon & Schuster Inc., 3 U.S.P.Q.2d 1047, 1987 WL 124312, at *4
(S.D.N.Y. 1987) (“Ownership of a mark is not determined by the race to the Patent Office, but
by the race to the market.”). It also is a basic tenet of American trademark law that foreign use
of a mark creates no cognizable right to use that mark within the United States. See Fuji Photo
Film Co., Inc. v. Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 599 (5th Cir. 1985). This is
known as the “territoriality principle,” through which “trademark rights exist in each country
solely according to that country’s statutory scheme.” Person’s Co., Ltd. v. Christman, 900 F.2d
1565, 1568-69 (Fed. Cir. 1990); see also Aktieselskabet AF 21. Nov. 2001 v. Fame Jeans, Inc.,
511 F. Supp. 2d 1, 12 n.5 (D.D.C. 2007). As such, the “‘[p]riority of trademark rights in the
United States depends solely upon priority of use in the United States, not on priority of use
anywhere in the world.’” See Grupo Gigante SA De CV v. Dallo & Co., Inc., 391 F.3d 1088,
1093 (9th Cir. 2004) (quoting 3 McCarthy on Trademarks § 29:2 (4th ed.) (internal footnote
omitted)).
There is, however, a narrow yet divisive disturbance to the force of the territoriality
principle. This is the so-called “famous mark” or “well-known mark” doctrine, under which a
mark may be deemed so well-known in a particular American market — despite no actual
27
commercial use in the market — that the territoriality principle is disregarded and priority is
established through reputation rather than actual use in the United States. See id. at 1094. The
gist of the famous mark doctrine is that “even those who use marks in other countries can
sometimes — when their marks are famous enough — gain exclusive rights to the marks in this
country.” Id. at 1095.
But to date, this exception has been adopted only within one federal circuit following a
decision by the U.S. Court of Appeals for the Ninth Circuit. 7 See generally id.; see also Kerzner
Int’l Ltd. v. Monarch Casino & Resort, Inc., 675 F. Supp. 2d 1029, 1039-40 (D. Nev. 2009)
(applying Grupo Gigante). The Ninth Circuit panel justified embracing the doctrine in Grupo
Gigante largely on policy grounds: “An absolute territoriality rule without a famous-mark
exception would promote consumer confusion and fraud. Commerce crosses borders. In this
nation of immigrants, so do people. Trademark is, at its core, about protecting against consumer
confusion and ‘palming off.’” Grupo Gigante, 391 F.3d at 1094. Before and since Grupo
Gigante, however, no other federal circuit court has adopted such a doctrine, though the
exception has been recognized in the past by the TTAB. See generally, e.g., The All England
Lawn Tennis Club (Wimbledon) Ltd. v. Creations Aromatiques, Inc., 220 U.S.P.Q. 1069, 1983
WL 51903 (TTAB Sept. 27, 1983); Mother’s Rests. Inc. v. Mother’s Other Kitchen, Inc., 218
U.S.P.Q. 1046, 1983 WL 51992 (TTAB June 2, 1983).
7
In Grupo Gigante, the Ninth Circuit adopted but did not apply the famous mark
doctrine. Instead, the matter was remanded to the district court with instructions to reevaluate
the facts in light of the test described in the circuit court’s opinion, see Grupo Gigante, 391 F.3d
at 1098-99, but the district court never reached the issue because the case settled. In addition, as
is explained below, some district courts within the Second Circuit had adopted the doctrine, but
those cases were overruled by the Second Circuit Court of Appeals’ decision in ITC Ltd. v.
Punchgini, Inc., 482 F.3d 135 (2d Cir. 2007).
28
The U.S. Court of Appeals for the Second Circuit, on the other hand, has explicitly
rejected the doctrine. See generally ITC Ltd. v. Punchgini, Inc., 482 F.3d 135 (2d Cir. 2007).
Prior to 2007, district courts within the Second Circuit differed as to whether the famous mark
rule was included in federal trademark law. Compare Empresa Cubana del Tabaco v. Culbro
Corp., 70 U.S.P.Q.2d 1650, 2004 WL 602295 (S.D.N.Y. 2004) (finding that the mark COHIBA
for premium Cuban cigars was sufficiently well-known in the United States to create rights under
Lanham Act § 44(b) senior to a United States user of the same mark for cigars), with Almacenes
Exito S.A. v. El Gallo Meat Market, Inc., 381 F. Supp. 2d 324, 327 (S.D.N.Y. 2005) (explaining
that the famous-known mark doctrine, while applicable under New York state law, is not a part
of federal trademark law under the Lanham Act). In ITC v. Punchgini, the Second Circuit
concluded that the Lanham Act lacked an express recognition of the famous mark doctrine as
embodied in the Paris Convention and the Agreement on Trade-Related Aspects of Intellectual
Property Rights. Because the operative American trademark statute did not recognize the rule in
so many words, the court concluded that it was not part of federal law. In reaching this
conclusion, the court rejected an argument that the famous mark rule is implicit in the structure
of the Lanham Act, as advocated by Professor McCarthy. Finally, although the court
acknowledged the strong policy rationales for incorporating the doctrine into federal law, it
concluded that those arguments must be directed to Congress, not the courts.
Though there are robust arguments on both sides regarding the famous mark doctrine —
including legitimate concerns over the need to protect famous international marks as commerce
becomes increasingly globalized and interconnected — the Court need not decide whether to
recognize the rule at this time because PROLACTO does not come close to establishing the
necessary fame of its marks within the United States for the doctrine to apply. Without doubt,
29
absent the famous mark doctrine, foreign trademark owners are at risk of having their marks
adopted in the United States by a seller who wants American consumers to believe they are
buying the products of a well-known foreign company. But there must be a limit to the reach of
such a doctrine, as not every foreign mark is famous enough within the United States to warrant
legal protection.
PROLACTO spends significant portions of its already-extensive summary judgment
briefing and statement of facts discussing the company’s long history in Mexico and how PLM
allegedly knew of this history when it adopted the relevant marks. But such facts are, of course,
irrelevant even under the famous mark doctrine: although the rule alters the historical
requirement that only use within the United States establishes priority, it still demands that a
mark achieve some level of awareness within this country. Thus, even assuming this Court was
to recognize the doctrine, prior use and fame within a foreign country are immaterial under the
famous mark doctrine except insofar as that familiarity actually permeates into the United States
at such a critical level that it qualifies for legal protection.
As the preeminent — and only — circuit court case approving of the doctrine, Grupo
Gigante is a logical starting point on the threshold question of how much fame is required for the
rule to apply. In that decision, the Ninth Circuit panel explained that
where the mark has not before been used in the American market, the court must
be satisfied, by a preponderance of the evidence, that a substantial percentage of
consumers in the relevant American market is familiar with the foreign mark.
The relevant American market is the geographic area where the defendant uses
the alleged infringing mark.
Grupo Gigante, 391 F.3d at 1098. The majority opinion, however, provides little guidance as to
what exactly constitutes a “substantial percentage” of consumers. The concurring opinion
suggests that 50% consumer awareness is the proper baseline, following the analysis of Professor
McCarthy. See Grupo Gigante, 391 F.3d at 1108 (Graber, J., concurring); see also 5 McCarthy
30
on Trademarks § 29:4 (4th ed.) (arguing that “‘substantial percentage’ is a reasonable rule and
that this means that at least 50% of the relevant group is an appropriate measure of ‘substantial’
in this context”). But the majority did not adopt the concurrence’s suggestion, expressing no
opinion about what the test should be on remand. See Grupo Gigante, 391 F.3d at 1098-99.
Nonetheless, it seems plausible that if the majority intended the standard to be 50%, it
would have phrased the test not as a “substantial percentage of consumers,” but as a “majority of
consumers.” To be sure, the famous mark doctrine is a narrow deviation from the long-standing
territoriality rule, which gestures at placing a relatively high burden on the party seeking to
invoke it. Thus, it appears to the Court that consistent with Grupo Gigante, the appropriate
threshold percentage should be somewhere below, but still very close to, 50% of consumers in
the relevant market if the doctrine were adopted here. Of course, as with federal dilution, no
specific percentage is required as a matter of law, but such a benchmark is helpful nonetheless
for sorting out the haves from the have-nots.
Returning to the evidence in the present case, the Court agrees with PLM’s
characterization that PROLACTO appears to seek nationwide priority of its marks through the
famous mark doctrine. But PROLACTO fails to provide evidence demonstrating sufficient
familiarity with the marks in any relevant United States market, let alone across the entire
country. Relevant factors in determining whether a substantial percentage of consumers are
familiar with a foreign mark may be borrowed from the secondary meaning context and might
include: survey evidence; direct consumer testimony; exclusivity, manner, and length of use of
the mark; amount and manner of advertising; amount of sales and number of customers;
established place in the market; and proof of intentional copying by the defendant. See, e.g.,
Filipino Yellow Pages, Inc. v. Asian Journal Publ’ns, Inc., 198 F.3d 1143, 1151 (9th Cir. 1999);
31
see also Grupo Gigante, 391 F.3d at 1098 (explaining that “such factors as the intentional
copying of the mark by the defendant, and whether customers of the American firm are likely to
think they are patronizing the same firm that uses the mark in another country” are of particular
importance because “they bear heavily on the risks of consumer confusion and fraud, which are
the reasons for having a famous-mark exception”).
Although PROLACTO’s marks may be recognized by some in the United States as
associated with high-quality paletas and other frozen ice cream treats, there simply is insufficient
evidence in the record demonstrating the extent of that fame nationwide — particularly given
that PROLACTO only sells goods in three states. Without such evidence, no reasonable jury
could conclude that consumers are familiar enough with PROLACTO’s marks for the famous
mark doctrine to apply on a national scale. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986).
The Court reaches the same conclusion regarding individual markets within the United
States, as Grupo Gigante permits. PROLACTO has not provided satisfactory market-by-market
evidence from which the Court might conclude if, where, or when its marks achieved
“substantial” familiarity such that the famous mark doctrine should apply. PROLACTO argues
that it has provided “declarations, photographic, documentary and survey evidence,
uncontradicted expert testimony, (and even the testimony of PLM’s founders), that establish that
[its] Marks are famous within the relevant consuming public here in the United States.” Def.’s
Mem. Opp’n Pls.’ Mot. Summ. J., ECF No. 121, at 14. PROLACTO then cites extensively to its
statement of facts. See id. (citing to “SOF 13-28, 37-41, 58, 68, 69, 85, 90, 101, 110, 113-116,
131-134, 151, 153, 160, 165-166, 169-176, 192, 195, 220”). The Court is not persuaded by
PROLATO’s argument.
32
First, the Court notes that “[j]udges ‘are not like pigs, hunting for truffles buried in briefs’
or the record.” Potter v. District of Columbia, 558 F.3d 542, 553 (D.C. Cir. 2009) (quoting
United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991)). Although PROLACTO makes an
effort in its brief to cite parts of its voluminous summary judgment record, much of the evidence
referenced therein is completely irrelevant to resolving the present question under the famous
mark doctrine and thus does not reduce the Court’s burden to uncover the important facts on its
own, a considerable task given the amount of evidence submitted for this motion. 8
Second, the few facts PROLACTO does cite that actually relate to the company’s
presence within the United States do not establish that its marks have achieved awareness among
a “substantial percentage” of relevant consumers in any given market. For example, evidence
that PROLACTO has licensed its marks in West Palm Beach, Florida, since April 2001 may go
to priority use in that market, but without more information, it says nothing persuasive about
consumers’ overall familiarity with the marks before or after that date. See Def.’s Stmt Facts,
ECF No. 116-2, at 32, No. 58; see also, e.g., id. at 38, No. 68 (stating that PROLACTO’s
licensed store in Homestead, Florida, was featured on Telemundo); id. at 44-45, No. 85 (stating
that in July 2003 an article appeared in the Houston Herald-Coaster about PROLACTO); id. at
49-50, No. 101 (stating that in 2011 the Napa Sun named a PROLACTO licensee’s store as the
8
For example, many of PROLACTO’s citations here and elsewhere in its briefs
relate to the company’s history in Mexico or its Mexican trademarks, yet, absent carryover of
goodwill into the United States, that background is irrelevant as a matter of law to a trademark
infringement claim. Throwing all available facts at the wall through a string cite and hoping
something sticks is not a preferred strategy for preparing a motion for summary judgment. Cf.
Hennighan v. Insphere Ins. Solutions, Inc., No. 13-CV-00638, 2014 WL 1600034, at *6 n.2
(N.D. Cal. Apr. 21, 2014) (criticizing counsel for providing string cites with as many as fifty to
one hundred factual citations without parenthetical explanations, some of which had “no
apparent relation to the proposition,” and explaining that “[w]hile counsel may suppose that he
has made a record for himself simply by throwing a spaghetti of facts against the judicial wall
and seeing what disputed material fact sticks, he is wrong”).
33
best for ice cream, and the licensee’s products have received extremely favorable reviews on
third party food websites). The famous mark doctrine is narrow and places a high burden on the
party seeking its protection. PROLACTO does not come close to meeting that burden in any
market, and the Court therefore need not determine whether the doctrine should be recognized
because the facts of this case are insufficient to warrant further judicial inquiry.
2. Validity Of A Trademark: Priority And Actual Use In The United States
Because PROLACTO fails to demonstrate substantial familiarity with its marks within
any relevant American market such that the famous mark doctrine might apply, its trademark
infringement claim, like that of the thousands of plaintiffs before it, is constrained by the
territoriality doctrine, and as such, the actual commercial use of the marks within the United
States. See John C. Flood of Va., Inc. v. John C. Flood, Inc., 642 F.3d 1105, 1109 (D.C. Cir.
2011) (“[A] party establishes ownership of a mark by being the first to use the mark in
commerce.” (citation and quotation omitted)); see also Haggar Int’l Corp. v. United Co. for
Food Indus. Corp., 906 F. Supp. 2d 96, 109 (E.D.N.Y. 2012) (“[The territoriality] rule applies
with equal force to protect a company that outright copies a mark that has been previously used
abroad but that is not famous in the United States, uses the copied mark on goods sold in the
United States, and then claims to have priority in the mark in the United States over the foreign
originator.”); 5 McCarthy on Trademarks § 26:52 (4th ed.) (explaining that when a claim is
brought under Section 43(a), “territorial rights should be determined by reference to federal
common law”).
With exception of the famous mark doctrine, it is firmly established that the adoption and
use of an unregistered trademark in a limited market within the United States does not create
exclusive ownership of that mark in all geographic markets. See Proriver, Inc. v. Red River
34
Grill, LLC, 27 F. Supp. 2d 1, 4 (D.D.C. 1998). Instead, the first party to use a mark on a product
or service in a particular market, known as the senior user, acquires rights only for those
territories in which it actually uses its mark, called the “zone of actual market penetration,” or
into which it might naturally expand, sensibly called the “zone of natural expansion.” See Tally-
Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018, 1023 (11th Cir. 1989); see also Echo Drain v.
Newsted, 307 F. Supp. 2d 1116, 1127 (C.D. Cal. 2003) (“A senior user of a trademark is entitled
to assert its trademark rights in all areas in which it has legally sufficient market penetration and
a zone of natural expansion.”). Good faith junior users who later use the same or similar mark
on alike products or services also may establish rights to the mark provided there is no
competitive overlap with the senior user. See Tally-Ho, 889 F.2d. at 1023. This is labeled the
Tea Rose-Rectanus doctrine after two landmark Supreme Court cases. See generally United
Drug Co. v. Theodore Rectanus Co., 248 U.S. 90 (1918); Hanover Star Milling Co. v. Metcalf,
240 U.S. 403 (1916) (the “Tea Rose” case).
PLM seeks summary judgment narrowing PROLACTO’s trademark infringement theory
for the LA INDITA MICHOACANA and Indian Girl designs to a single American market:
Houston, Texas. See Pls.’ Mem. Supp. Mot. Part. Summ. J., ECF No. 114, at 30. PROLACTO
does not directly respond to PLM’s argument and instead appears to rely primarily on the famous
mark doctrine to establish nationwide priority for its marks. But because PROLACTO fails to
provide sufficient evidence to trigger a famous mark defense — were this Court even to
recognize such a rule in the first place — PROLACTO’s response to PLM’s motion largely
misses the mark, as it remains only commercial use in the United States, not mere fame, that
establishes priority within a market.
35
Because commercial use of a mark in one market does not automatically create priority to
use that mark in all other markets, a market-by-market analysis is required to determine priority
in the potential markets on which PLM could have infringed. Cf. Echo Drain, 307 F. Supp. 2d at
1128 (explaining that “even if [plaintiff] was able to prove that it had a protectable trademark, its
rights in that mark would not extend beyond the Dallas-Fort Worth, Texas area”). PLM argues
that there only are three potential markets at issue for possible trademark infringement claim:
Sonoma, California; Houston, Texas; and Florida. The Court agrees that these are the only
markets potentially at issue given PROLACTO’s limited commercial use of its marks in the
United States through various licensing agreements. 9
a. Florida
Regarding the Florida market, PLM asserts that it has never sold or distributed its
products within the state, so PROLACTO cannot sustain a claim of infringement against PLM in
the market. See Pls.’ Stmt Facts, ECF No. 114, at 63, No. 4. PROLACTO disputes this fact
because PLM hosted a booth at a trade convention in Florida in 2012, where PROLACTO
asserts, without citation to any evidence, that PLM gave away samples of its products. See Pls.’
Response Def.’s Obj. Evid., ECF No. 126, at 9. The Court is aware of PLM’s attendance at the
9
Separately, PLM argues in its opposition brief that PROLACTO may have
abandoned all potential United States trademark rights through naked licensing. See Pls.’ Mem.
Opp’n Def.’s Mot. Summ. J., ECF No. 120, at 37-39. “If a trademark owner allows licensees to
depart from its quality standards, the public will be misled, and the trademark will cease to have
utility as an informational device.” TMT North America, Inc. v. Magic Touch GmbH, 124 F.3d
876, 885 (7th Cir. 1997) (citing Kentucky Fried Chicken Corp. v. Diversified Packaging Corp.,
549 F.2d 368, 387 (5th Cir. 1977)). “When this happens, a trademark-holder may involuntarily
abandon the mark through so-called ‘naked’ licensing.” Geneva Int’l Corp. v. Petrof, Spol,
S.R.O., 608 F. Supp. 2d 993, 1004 (N.D. Ill. 2009). The Court agrees that a genuine dispute of
fact exists as to whether PROLACTO engaged in naked licensing, as there is insufficient
undisputed evidence in the record regarding critical issues such as royalty payments and quality
control to make such a determination at this time, particularly given that PROLACTO appears to
have relied only on oral licenses for many years.
36
convention in Florida, having denied PROLACTO’s motion for a temporary restraining order
preventing PLM from attending the event. See Order, ECF No. 63. As the Court noted in the
Memorandum Opinion accompanying its Order, PLM “will not be selling their wares during the
convention.” Mem. Op., ECF No. 64, at 5. Further, as the Court also explained in its Opinion,
the convention was closed to the public and most participants were not based in Florida. See id.
at 6-7. Because PROLACTO does not provide evidence demonstrating PLM’s commercial use
of the marks in Florida, the Court must agree with PLM that there are no grounds for a trademark
infringement claim based in that market.
b. Northern California
Turning to California, PROLACTO provides evidence that through a licensing
agreement, “[i]n July 2009, Teresita Fernandez opened a Michoacana Natural Ice Cream store in
Sonoma, California which makes and sells paletas, ice cream and drinks on site.” Def.’s Stmt
Facts, ECF No. 116-2, at 48, No. 95. PROLACTO also admits that in 1991, PLM “started an ice
cream business called ‘Paleteria Michoacana’ as an informal partnership, in the city of Turlock,
in Northern California.” Id. at 53, No. 111; see also Pls.’ Resp. Def.’s Stmt Facts, ECF No. 120-
1, at 98-99, No. 128. In addition, PLM registered its two Indian Girl marks — Nos. 2,905,172
and 2,968,652 — in November 2004 and July 2005, respectively, and LA INDITA
MICHOACANA was registered in February 2007, with undisputed first use at least as early as
February 2005. See, e.g., TTAB Decision at *9. Federal registration provides the registrant with
“a nationwide right of exclusive use in the mark, subject only to those entities that used a similar
mark prior to the registrant in a remote geographic area.” Solutech, Inc. v. Solutech Consulting
Servs., Inc., 153 F. Supp. 2d 1082, 1087 (E.D. Mo. 2000) (citing 15 U.S.C. §§ 1115(a) & 1065);
see also Dudley v. Healthsource Chiropractic, Inc., 883 F. Supp. 2d 377, 394 (W.D.N.Y. 2012)
37
(“Federal registration is required to secure nationwide priority in a mark.” (citing 15 U.S.C. §
1057(c)). Because there is no evidence that PROLACTO used these marks anywhere in northern
California prior to 2009, the undisputed facts show that PLM has priority in the market.
c. Houston, Texas
Finally, PLM argues that there exists a genuine dispute of material fact regarding priority
in the Houston, Texas, market, particularly as to when PROLACTO actually first used the marks
on products in that area. See Pls.’ Mem. Supp. Mot. Part. Summ. J., ECF No. 114, at 18.
Evidence shows that PLM began selling its products in the Houston market sometime in 2005.
See Pls.’ Stmt Facts, ECF No. 114, at 62-63, No. 3. The parties do not dispute that PROLACTO,
through a licensee, opened a store in Rosenberg, Texas, a suburb of Houston, in October 2002.
See Pls.’ Resp. Def.’s Stmt Facts, ECF No. 120-1, at 74, No. 83. It is contested, however, when
that licensee actually started using the marks in the store and on products, as well as when
exactly between 2004 and 2006 other PROLACTO licensee stores were opened in the Houston
area and when those stores first used the marks. See, e.g., id. at 75-77, Nos. 84, 86. The Court
therefore finds that a genuine dispute exists about priority within the Houston area. As such, the
Court cannot grant summary judgment as to infringement in the Houston market, and the issue
remains suitable for trial. 10
10
PROLACTO repeatedly argues that the Court should deny PLM any rights to
these marks because it allegedly was aware of their use in Mexico but adopted them anyway.
See, e.g., Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No. 116-1, at 35. The case law,
however, simply does not support PROLACTO’s argument that awareness of foreign use creates
bad faith adoption within the United States as a matter of law. See, e.g., Int’l Bancorp, LLC v.
Societe des Bains de Mer et du Cercle des Estrangers a Monaco, 329 F.3d 359, 386 n.5 (4th Cir.
2003) (“Even if the plaintiff companies knew of SBM’s use of its foreign mark in connection
with services rendered in Monaco, this does not render the plaintiff companies bad-faith users of
the mark in the United States or preclude them from using the mark in the United States.”);
Person’s Co., Ltd. v. Christman, 900 F.2d 1565, 1570 (Fed. Cir. 1990) (“[A]n inference of bad
faith requires something more than mere knowledge of prior use of a similar mark in a foreign
38
3. Validity Of A Trademark: Distinctiveness And Secondary Meaning
Even if a party establishes priority in a specific market through commercial use, that
alone does not entitle the mark to protection under the Lanham Act. See Fernandez v. Jones, 653
F. Supp. 2d 22, 29 (D.D.C. 2009); Globalaw Ltd. v. Carmon & Carmon Law Office, 452 F.
Supp. 2d 1, 26-28 (D.D.C. 2006). Instead, a party also must demonstrate that the mark is either
inherently distinctive, in which its intrinsic nature serves to identify its particular source, or has
acquired a secondary meaning in the minds of consumers. See Globalaw, 452 F. Supp. 2d at 26;
see also Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992) (“To be entitled to
protection, a mark must be sufficiently ‘distinctive’ to distinguish the registrant’s goods from
others.”).
country.”); Buti v. Impressa Perosa, S.R.L., 935 F. Supp. 458, 473 (S.D.N.Y. 1996) (“Impressa
Perosa has not established Buti’s bad faith merely by asserting Buti’s knowledge of Impressa
Perosa’s prior use of the Fashion Cafe name in Italy.”). Of course, it remains an open question,
which the Court cannot decide today on the available evidence, whether PLM’s adoption of the
marks in a particular market was based on PROLACTO’s prior use elsewhere in the United
States such that PLM cannot be said to have acted in “good faith,” as the Tea Rose-Rectanus
doctrine requires. See Emergency One, Inc. v. Am. Fire Eagle Engine Co., Inc., 332 F.3d 264,
271 (4th Cir. 2003).
Further, it remains an unresolved factual issue whether PLM actually intended to copy
PROLACTO’s marks, or whether PLM merely sought to associate its products with marks that it
believed — rightly or wrongly — were used indiscriminately by a variety of companies without
any one, recognized source. Indeed, though a buyer need not know the corporate identity of the
source, see Tone Bros. v. Sysco Corp., 28 F.3d 1192, 1203 (Fed. Cir. 1994), a mark must
designate a single source of the product at issue in order to acquire trademark protection. See
Erchonia Corp. v. Bissoon, 410 Fed. Appx. 416, 418 (2d Cir. 2011) (“[S]econdary meaning is
established only in cases where an ordinary buyer associates the mark in question with a single
source, though that source may be anonymous.”); 2 McCarthy on Trademarks § 15:5 (4th ed.)
(explaining that a trademark acquires “secondary meaning” when it establishes “a mental
association in buyers’ minds between the alleged mark and a single source of the product”).
Here, PLM argues that the marks in question do not identify any one source of paletas in Mexico
or the United States, but rather are used by countless companies. If PLM’s position turns out to
be true, PROLACTO may indeed have no protectable trademark rights in many of the marks at
issue in this case. And if PROLACTO has no rights in the marks, many, if not all, of its claims
against PLM would fail. Finally, the Court notes that the exact contours of the Houston market
also must be determined at trial.
39
Courts have identified four general categories for classifying marks: (1) generic; (2)
descriptive; (3) suggestive; and (4) arbitrary or fanciful. See Blinded Veterans Ass’n v. Blinded
Am. Veterans Found., 872 F.2d 1035, 1039 (D.C. Cir. 1989). The classifications can be
described in the following manner:
A mark is generic if it is a common description of products [or services] and
refers to the genus of which the particular product [or service] is a species. A
mark is descriptive if it describes the product’s [or service’s] features, qualities, or
ingredients in ordinary language or describes the use to which the product [or
service] is put. A mark is suggestive if it merely suggests the features of the
product [or service], requiring the purchaser to use imagination, thought, and
perception to reach a conclusion as to the nature of the goods [or services]. An
arbitrary mark applies a common word in an unfamiliar way. A fanciful mark is
not a real word at all, but is invented for its use as a mark.
Donchez v. Coors Brewing Co., 392 F.3d 1211, 1216 (10th Cir. 2004) (citation and quotation
omitted; alteration in original). These categories “reflect both the eligibility for protection and
the degree of protection accorded” to a particular mark. Id. But as this Circuit has recognized,
“[t]hese categories, like tones in a spectrum, tend to blur at the edges and merge together. The
labels are more advisory than definitional, more like guidelines than pigeonholes. Not
surprisingly, they are somewhat difficult to articulate and to apply.” Blinded Veterans Ass’n,
872 F.2d at 1039 (citation and quotation omitted).
Categorization of a mark is a factual question. See Donchez, 392 F.3d at 1216 (citing
Courtenay Commc’ns Corp. v. Hall, 334 F.3d 210, 215 (2d Cir. 2003)). “The fact-finder is not
the designated representative of the purchasing public, and the fact-finder’s own perception of
the mark is not the object of the inquiry. Rather, the fact-finder’s function is to determine, based
on the evidence before it, what the perception of the purchasing public is.” Lane Capital Mgmt.,
Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337, 344 (2d Cir. 1999); see also Bayer Co. v. United
Drug Co., 272 F. 505, 509 (S.D.N.Y. 1921) (L. Hand, J.) (“The single question, as I view it, in
40
all these cases, is merely one of fact: What do the buyers understand by the word for whose use
the parties are contending?”).
The correct categorization, however, is extremely significant as a matter of law: “[i]f a
term is generic (the common name for a product or service), it is ineligible for protection”
because “[t]he public has an inherent right to call a product or service by its generic name.” U.S.
Search, LLC v. U.S. Search.com, Inc., 300 F.3d 517, 523 (4th Cir. 2002) (citation omitted); see
also Blinded Veterans Ass’n, 872 F.2d at 1040 (“The threshold issue for this court is whether
‘blinded veterans’ is generic, and therefore unprotectable as a trademark[.]”). By contrast,
fanciful, arbitrary, and suggestive marks are deemed inherently distinctive and therefore receive
the greatest protection against infringement. See Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d
455, 464 (4th Cir. 1996); Libya v. Miski, 889 F. Supp. 2d 144, 151 (D.D.C. 2012); see also 2
McCarthy on Trademarks § 11:1 (4th ed.). Finally, “[a] descriptive mark may be eligible for
protection, but only if it has acquired a ‘secondary meaning’ in the minds of the public.” U.S.
Search, 300 F.3d at 523; see also Conversive, Inc. v. Conversagent, Inc., 433 F. Supp. 2d 1079,
1087-88 (C.D. Cal. 2006) (“Descriptive marks, because of their particular placement — one step
above ‘generic’ — on the spectrum of distinctiveness, require proof of secondary meaning in
order to be protectable.” (internal quotation omitted)).
It is somewhat unclear what category the parties believe the marks fall into, but given
their focus on the secondary meaning inquiry, it appears that they both agree that the marks are
not inherently distinctive and instead are better defined as geographically descriptive. A
question therefore remains regarding whether PROLACTO has achieved secondary meaning for
its marks such that they are descriptive and protectable, or whether the marks are generic such
that no secondary meaning — and thus no trademark protection — exists.
41
Establishing secondary meaning requires “proof that the public recognizes only one
source of the product or service.” Blinded Veterans, 872 F.2d at 1040. “[A] term has acquired
secondary meaning when ‘the primary significance of the term in the minds of the consuming
public is not the product but the producer.’” Id. (quoting Kellogg Co. v. Nat’l Biscuit Co., 305
U.S. 111, 118 (1938)); see also Fernandez v. Jones, 653 F. Supp. 2d 22, 29-30 (D.D.C. 2009)
(“‘The prime element of secondary meaning is a mental association in buyers’ minds between
the alleged mark and a single source of the product.’” (quoting 2 McCarthy on Trademarks §
15:5 (4th ed. 2009)). “To acquire a secondary meaning in the minds of the buying public, a
labelled product, when shown to a prospective customer, must prompt the reaction, ‘That is the
product I want because I know that all products with that label come from a single source and
have the same level of quality.’” Id. (quoting 2 McCarthy on Trademarks § 15:11 (4th ed.
2009)).
In this Circuit, commonly considered evidence for ascertaining whether secondary
meaning has attached to a mark includes survey evidence, the length and manner of use of the
name, the nature and extent of advertising and promotion of the name, and instances of actual
confusion. See Miski, 889 F. Supp. 2d at 155. PROLACTO does not directly sell or advertise
products within the United States and instead relies on licensees in a limited number of markets
who use the marks. See Pls.’s Stmt Facts, ECF No. 114, at 66, No. 18. The scale of advertising
by the licensees is not entirely clear based on the facts PROLACTO provides, although it appears
to be limited and sporadic at best. The parties also dispute the length of time that PROLACTO,
through its licensees, has sold products bearing the relevant marks in the United States, and in
Texas in particular. See, e.g., Pls.’ Resp. Def.’s Stmt Facts, ECF No. 120-1, at 50-60, Nos. 51-
61.
42
Regardless, as is often the case, the most helpful factors for determining secondary
meaning become survey evidence and instances of actual consumer confusion. See Globalaw,
452 F. Supp. 2d at 41 (“Courts have consistently found that an expert survey of purchasers can
provide the most persuasive evidence of secondary meaning.” (internal citation and quotation
omitted)); see also Yankee Candle Co. v. Bridgewater Candle Co., 259 F.3d 25, 39 (1st Cir.
2001) (explaining that surveys are the “preferred” method of demonstrating secondary meaning);
Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 795 (5th Cir. 1983) (explaining
that “survey evidence is the most direct and persuasive way of establishing secondary meaning”).
PROLACTO has provided some evidence, including consumer declarations, showing
awareness that its marks emanated from a single source, but PLM disputes the probative value of
this evidence for the secondary meaning inquiry. See, e.g., Pls.’ Resp. Def.’s Stmt Facts, ECF
No. 120-1, at 154, No. 195(d). PROLACTO also cites expert testimony from Chef Fany Gerson
comparing the quality of its goods to PLM’s, but it is unclear how this information is suggestive
of secondary meaning. See Def.’s Stmt Facts, ECF No. 116-2, at 96-98, Nos. 215-17. Finally,
PROLACTO argues that its expert report from Dr. Jacob Jacoby demonstrates secondary
meaning, but the Court finds that this evidence is not probative of whether consumers identify
PROLACTO as the single source of the goods, which secondary meaning requires. 11
11
PLM has filed a motion in limine to exclude Dr. Jacoby’s expert report, survey,
and testimony under Federal Rules of Evidence 403 and 702 and Daubert. See generally Pls.’
Mot. Exclude Expert Report, ECF No. 119. PROLACTO retained Dr. Jacoby to design and
conduct a trademark survey to test for customer confusion and deception between the
companies’ respective products. As an initial matter, the Court appreciates PLM’s concerns
about the methodology Dr. Jacoby employed in conducting the survey. The Court, however,
does not find that the report necessitates exclusion under Rule 702 and Daubert. The Court also
finds that the survey need not be excluded under Rule 403 because the prejudicial effect of the
survey at this stage of proceedings is minimal at best. Cf. Adams v. Ameritech Servs., Inc., 231
F.3d 414, 428 (7th Cir. 2000) (explaining that “while it is not unheard of to exclude evidence
under Rule 403 at the summary judgment stage, normally the balancing process contemplated by
43
Because the evidence points both ways, the Court concludes that substantial questions of
material fact exist regarding the secondary meaning issue which a jury must decide. See Luv N’
Care, Ltd. v. Walgreen Co., 695 F. Supp. 2d 125, 132 (S.D.N.Y. 2010) (denying motion for
summary judgment when evidence regarding secondary meaning factors revealed triable issues
of fact for the jury); New Colt Holding Corp. v. RJG Holdings of Fla., Inc., 312 F. Supp. 2d 195,
209 (D. Conn. 2004) (same). Finally, because the Court is denying both parties’ motions for
summary judgment at this stage, it will not address the third element of an infringement claim,
likelihood of confusion, because a determination of that issue will not alter the Court’s
conclusion.
D. Counterclaim Count II: False Designation, Passing Off, False Association, And Unfair
Competition Under Lanham Act Section 43(a)
PROLACTO moves for summary judgment on its false designation, passing off, false
association, and unfair competition theories in Count II of the counterclaim. As this Court
that rule is best undertaken at the trial itself” (internal citation omitted)); Hines v. Consol. Rail
Corp., 926 F.2d 262, 274 (3d Cir. 1991) (noting that “excluding evidence under Fed. R. Evid.
403 at the pretrial stage is an extreme measure”). The Court therefore denies PLM’s motion to
exclude at this time.
The Court, however, will take into consideration the fact that it finds the survey to have
limited probative value in deciding most of the questions at issue today. Many of the survey’s
questions were leading and others demonstrated little more than respondents’ ability to read and
comprehend the stimuli. Indeed, this is not the first time that the probative value of one of Dr.
Jacoby’s surveys has been called into question by a court. See, e.g., Steak n Shake Co. v. Burger
King Corp., 323 F. Supp. 2d 983, 994 (E.D. Mo. 2004) (explaining that although “the Jacoby
study is slightly probative of the issue of secondary meaning,” “it is not worth the great weight
that Steak n Shake argues it carries”); Gillette Co. v. Norelco Consumer Products Co., 69 F.
Supp. 2d 246, 263 (D. Mass. 1999) (explaining that “the probative value of the Jacoby Study is
diminished” because it relied on the target audience as the universe, rather than a universe of
actual or potential purchasers); Hershey Foods Corp. v. Mars, Inc., 998 F. Supp. 500, 519 (M.D.
Pa. 1998) (discounting Dr. Jacoby’s results because of confusing stimuli used in the survey); Jim
Beam Brands Co., Inc. v. Beamish & Crawford, Ltd., 852 F. Supp. 196, 199 (S.D.N.Y. 1994)
(“Dr. Jacoby’s study however, I find to have questionable value because his questions were
leading.”).
44
explained in Globalaw Ltd. v. Carmon & Carmon Law Office, although these claims “may
appear to internally allege many different grievances — i.e., trademark infringement, false
designation of origin, passing off, and unfair competition — courts have announced that the
elements for each of the aforementioned causes-of-action mirror those for a claim of trademark
infringement.” 452 F. Supp. 2d 1, 26 (D.D.C. 2006) (citations omitted). Thus, because the
Court has denied summary judgment as to the trademark infringement claim, it must deny
summary judgment on these related theories as well. See, e.g., E.W., LLC v. Rahman, 896 F.
Supp. 2d 488, 505 (E.D. Va. 2012) (denying summary judgment on passing off and false
designation of origin claims after having denied judgment on trademark infringement and unfair
competition claims).
E. Counterclaim Count II: False Advertising Under Lanham Act Section 43(a)
PROLACTO charges PLM with false advertising in Count II of the counterclaim. Under
Section 43(a) of the Lanham Act,
any person who … uses in commerce any … false or misleading description of
fact, or false or misleading representation of fact, which … in commercial
advertising or promotion, misrepresents the nature, characteristics, qualities, or
geographic origin of his or her or another person’s goods, services, or commercial
activities … shall be liable in a civil action by any person who believes that he or
she is or is likely to be damaged by such act. 12
15 U.S.C. § 1125(a)(1)(B). By way of background, in its motion for summary judgment
PROLACTO sets forth numerous statements that appear either on PLM’s product packaging or
PLM’s website. A few examples of these allegedly false or misleading advertisements include:
12
Although false advertising is proscribed within the same section of the Lanham
Act as trademark infringement, it involves separate elements that require independent analysis,
unlike false designation of origin, passing off, and unfair competition. Cf. Wells Fargo & Co. v.
ABD Ins. & Fin. Servs., Inc., 758 F.3d 1069, 1072 (9th Cir. 2014), as amended (Mar. 11, 2014)
(“These tests [for false advertising and trademark infringement] are distinct, and the district court
abused its discretion when it did not separately consider the false advertisement claim.”).
45
• Using on packaging the name “LA INDITA MICHOACANA” with its ice cream
products.
• Using on packaging the Indian Girl design with its ice cream products.
• Including on PLM’s website indicia of Mexico, including pictures of places in
Mexico, a PROLACTO-affiliated store in Mexico, a statute in the town of
Tocumbo, Mexico, and maps of Mexico in its websites and catalogs.
• Claiming on PLM’s website that PLM shares its name with, and otherwise
implying that it is affiliated with, 15,000-20,000 stores in Mexico.
• Including on packaging pictures of PLM’s products that do not accurately
represent the products inside.
See Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No. 116-1, at 14-15. 13
Once again, both PROLACTO and PLM move for summary judgment on this cause of
action. Specifically, PLM argues that summary judgment is appropriate for two reasons: first,
PROLACTO has failed to demonstrate that the statements are material to consumer decision
making; and second, PROLACTO has not demonstrated any injury from the advertisements. See
Pls.’ Mem. Supp. Mot. Part. Summ. J., ECF No. 114, at 53. In turn, PROLACTO argues that no
genuine dispute of material fact exists regarding each element, and the Court therefore should
grant summary judgment in its favor. See Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No.
116-1, at 13-21.
13
PLM asserts that many of the advertisements PROLACTO cites in its motion for
summary judgment were not properly alleged in the counterclaim count for false advertising.
The Court finds, however, that the statements addressed by PROLACTO in its motion were
sufficiently pleaded such that PLM had proper notice regarding the substance of PROLACTO’s
claim. Nonetheless, it is undisputed that PLM no longer uses the following advertisement, which
was one basis for PROLACTO’s false advertising claim: “La Indita Michoacana is a family
company founded in Tocumbo Michoacán in the 1940’s. Since then we’ve continued to make
premium ice cream, fruit bars and drinks that give the flavor and tradition of Mexico.
Distinguish us by our logo.” Pls.’ Resp. Def.’s Stmt Facts, ECF No. 120-1, at 111-12, Nos. 155,
157. Because, for the reasons explained below, PROLACTO is entitled only to injunctive relief,
and because injunctive relief would have no effect as a remedy against PLM’s discontinued
advertisement, this aspect of PROLACTO’s claim is dismissed as moot.
46
1. Laches And Statute Of Limitations
In its opposition to PROLACTO’s motion for summary judgment, PLM asserts that the
false advertising claim is barred by the doctrine of laches. See Pls.’ Mem. Opp’n Def.’s Mot.
Summ. J., ECF No. 120, at 52. In determining whether a Lanham Act claim was filed in a timely
manner, “courts apply the equitable doctrine of laches because the Lanham Act does not contain
a statute of limitations.” Gaudreau v. Am. Promotional Events, Inc., 511 F. Supp. 2d 152, 158
(D.D.C. 2007) (citation and quotation omitted). “Federal courts have traditionally ‘referred to
analogous state statutes of limitations to determine whether a presumption of laches should
apply.’” Id. (quoting Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 821 (7th Cir. 1999)); see
also Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996) (“[P]rior to the
running of the most closely analogous state statute of limitations[,] there is no presumption of
laches and the burden remains on the defendant to prove the defense.”).
Relying on Gaudreau, PLM asserts that the District of Columbia’s three-year default
statute of limitations applies to PROLACTO’s claim. See D.C. Code Ann. § 12-301(8).
Gaudreau, however, involved a false designation of origin claim, not false advertising. See
Gaudreau, 511 F. Supp. 2d at 158. Nonetheless, numerous federal courts have found, and this
Court agrees, that the analogues provision for a false advertising claim is the state’s statute of
limitations for fraud. See, e.g., Conopco, 95 F.3d at 192 (finding that “New York’s six year
fraud statute” applies to Lanham Act false advertising claims); ThermoLife Int’l, LLC v. Gaspari
Nutrition, Inc., 871 F. Supp. 2d 905, 911 (D. Ariz. 2012) (finding that the proper statute of
limitations for a Lanham Act false advertising claim is “Arizona’s three year fraud limitations
period”); PBM Products, LLC v. Mead Johnson Nutrition Co., 678 F. Supp. 2d 390, 404 (E.D.
Va. 2009) (finding that “[t]he analogous state limitation period for [a Lanham Act false
47
advertising claim] is the limitations period under Virginia’s action for fraud, which has a two
year limitations period”). Because D.C. Code § 12-301(8) applies to fraud claims, the
appropriate analogous statute of limitations claim for PROLACTO’s false advertising count is
three years. See Kettey v. Saudi Ministry of Educ., No. CV 13-745, 2014 WL 2919152, at *7
(D.D.C. June 27, 2014) (“The District of Columbia statute of limitations on fraud claims is three
years.” (citing D.C. Code § 12-301(8)).
Of course, “‘whether a Lanham Act claim has been brought within the analogous state
statute of limitations is not the sole indicator of whether laches may be applied in a particular
case.’” Pro-Football, Inc. v. Harjo, 284 F. Supp. 2d 96, 139 (D.D.C. 2003) (quoting Hot Wax,
191 F.3d at 821-22). Instead, the assertion of a laches defense also “requires proof of (1) lack of
diligence by the party against whom the defense is asserted, and (2) prejudice to the party
asserting the defense.” Pro-Football, Inc. v. Harjo, 415 F.3d 44, 47 (D.C. Cir. 2005) (citing
Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 121-22 (2002)). PLM, however, makes no
argument as to which advertisements were made when, or about when PROLACTO first became
aware that a cause of action may exist based on the advertisings. The Court therefore cannot
evaluate whether the presumption of laches applies under the three-year statute of limitations.
Further, PLM does not address the required elements for a laches defense as to PROLACTO’s
Section 43(a) false advertising claim. Accordingly, the Court cannot grant summary judgment
on this issue. Cf. Nat’l Postal Prof’l Nurses v. U.S. Postal Serv., 461 F. Supp. 2d 24, 29-30
(D.D.C. 2006) (denying motion to dismiss when party failed to engage in analysis or provide
support for its argument regarding standing); M.K. v. Tenet, 99 F. Supp. 2d 12, 25 (D.D.C. 2000)
(denying motion to dismiss when “defendants have stated a legal proposition that may be
applicable” but “fail to apply the law which they cite in support of their argument”).
48
2. The New Lexmark Test For Standing
PLM next argues that PROLACTO lacks standing to assert a false advertising claim
under the Supreme Court’s recent decision in Lexmark Int’l, Inc. v. Static Control Components,
Inc., 134 S. Ct. 1377 (2014). 14 Recognizing a circuit split over how to address standing for
Lanham Act claims, the Supreme Court rejected what it referred to as “antitrust standing or the
[Associated General Contractors] factors,” the “categorical test,” and the “reasonable interest
approach.” Id. at 1385 (internal quotation marks omitted). Instead, the Court held that “a direct
application of the zone-of-interests test and the proximate-cause requirement supplies the
relevant limits on who may sue” under Section 43(a). Id. at 1391. Thus, under Lexmark,
standing is determined by a two-step process: a zone of interests inquiry and a proximate cause
analysis. Id.First, analysis of the zone of interests under Section 43(a) requires a court to employ the
“traditional tools of statutory interpretation.” Id. at 1387. As the Supreme Court explained in
Lexmark, the zone of interests is created by the statute and informed by the Lanham Act’s
statement of purpose, which is codified at 15 U.S.C. § 1127. See id. at 1388-89. The Lanham
Act’s statement of purpose leaves little doubt as to the protected interests under the statute:
The intent of this chapter is to regulate commerce within the control of Congress
by making actionable the deceptive and misleading use of marks in such
commerce; to protect registered marks used in such commerce from interference
by State, or territorial legislation; to protect persons engaged in such commerce
14
The Court recognizes that Lexmark was decided after the parties filed their
motions for summary judgment, and the issue was not raised until PLM’s reply brief. The Court
is satisfied, however, that it should address the Lexmark question at this stage for two reasons.
First, this Circuit treats prudential standing as “a jurisdictional issue which cannot be waived or
conceded.” Animal Legal Defense Fund, Inc. v. Espy, 29 F.3d 720, 723 n.2 (D.C. Cir. 1994); see
also Ass’n of Battery Recyclers, Inc. v. EPA, 716 F.3d 667, 674 (D.C. Cir. 2013). Second, the
parties already have extensively briefed the merits of PROLACTO’s false advertising claim,
which overlaps significantly with resolving the standing question. As such, supplemental
briefing on the question was not required.
49
against unfair competition; to prevent fraud and deception in such commerce by
the use of reproductions, copies, counterfeits, or colorable imitations of registered
marks; and to provide rights and remedies stipulated by treaties and conventions
respecting trademarks, trade names, and unfair competition entered into between
the United States and foreign nations.
Id. at 1389 (quoting 15 U.S.C. § 1127). Thus, the Supreme Court concluded that the Lanham
Act creates a zone of interests encompassing those who “allege an injury to a commercial
interest in reputation or sales.” Id. at 1390.
Second, a party only has standing under the Lanham Act if its “injuries are proximately
caused by violations of the statute.” Id. Proximate cause requires that the “alleged harm … is
[not] ‘too remote’ from the defendant’s unlawful conduct,” and that the “harm alleged has a
sufficiently close connection to the conduct the statute prohibits.” Id. Thus, regarding a false
advertising claim, a party “must show economic or reputational injury flowing directly from the
deception wrought by the defendant’s advertising; and that that occurs when deception of
consumers causes them to withhold trade from the plaintiff. That showing is generally not made
when the deception produces injuries to a fellow commercial actor that in turn affect the
plaintiff.” Id. at 1391.
Finally, to establish standing at the summary judgment stage a party cannot “rest on …
mere allegations, but must set forth by affidavit or other evidence specific facts, which for
purposes of the summary judgment motion will be taken to be true.” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 561 (1992) (internal quotations and citation omitted). In other words,
“[a]t summary judgment, [the party’s] burden is to show that a reasonable juror could find he has
standing.” Dominguez v. UAL Corp., 666 F.3d 1359, 1362 (D.C. Cir. 2012) (citations omitted).
Applying the Lexmark analysis and for the reasons discussed in more detail below, the
Court finds that PROLACTO has provided sufficient evidence to demonstrate commercial injury
at the summary judgment stage, at least insofar as it has offered evidence that is possesses a
50
business reputation and goodwill within the United States that PLM allegedly attempts to usurp
for its own benefit, as well as the possibility of lost sales and customers. 15 Cf. First Mariner
Bank v. Resolution Law Grp., P.C., No. CIV-12-1133, 2014 WL 1652550, at *21 (D. Md. Apr.
22, 2014) (finding standing under Lexmark when “Plaintiff has alleged that as a result of
Defendants’ false advertising, Plaintiff ‘has incurred, and likely will continue to incur,
substantial commercial injury in the form of lost sales, loss of market share, and damage to
reputation and good will.’”). Further, the Court finds that PROLACTO has provided sufficient
evidence from which a reasonable juror could conclude that those injuries, if proven at trial to
exist, were proximately caused by PLM’s advertisements. The Court therefore concludes that
PROLACTO has provided sufficient facts to survive summary judgment on the standing
question.
3. Falsity, Actually Or Likely Deceptive, And Interstate Commerce
Moving to the merits of PROLACTO’s claim, to prevail on a Lanham Act false
advertising theory a party must show that the advertising was (1) false or misleading, (2) actually
or likely deceptive, (3) material in its effect on buying decisions, (4) connected with interstate
commerce, and (5) actually or likely injurious. See Aristotle Int’l, Inc. v. NGP Software, Inc.,
714 F. Supp. 2d 1, 6 (D.D.C. 2010) (citations omitted). In its motion for summary judgment,
PROLACTO explains how those advertisements described above and others discussed in the
15
PROLACTO’s situation, as a commercial competitor to PLM, is distinguishable
from that of a consumer or retailer who purchased PLM’s product and subsequently attempted to
bring a Lanham Act false advertising claim, as the consumer or retailer would lack the necessary
commercial injury for standing. See Lexmark, 134 S. Ct. at 1390 (“A consumer who is
hoodwinked into purchasing a disappointing product may well have an injury-in-fact cognizable
under Article III, but he cannot invoke the protection of the Lanham Act — a conclusion reached
by every Circuit to consider the question…. Even a business misled by a supplier into
purchasing an inferior product is, like consumers generally, not under the Act’s aegis.” (internal
citations omitted)).
51
briefing are literally false, or at the very least misleading to consumers; how they are deceptive;
and how they are connected with interstate commerce. See Def.’s Mem. Supp. Mot. Part. Summ.
J., ECF No. 116-1, at 15-19. PLM does not make an argument or provide any evidence
contradicting PROLACTO’s assertions regarding these elements, and it therefore has conceded
the issues. See Magliore v. Brooks, 844 F. Supp. 2d 38, 43 (D.D.C. 2012) (explaining that a
party concedes an issue at summary judgment “by completely failing to address or rebut” the
moving party’s arguments).
4. Materiality
The materiality prong requires PROLACTO to demonstrate that PLM’s falsities or
misrepresentations were “likely to influence the purchasing decision” of consumers. 16 Aristotle
Int’l, 714 F. Supp. 2d at 9 (citation and quotation omitted); 3M Innovative Props. Co. v. Dupont
Dow Elastomers LLC, 361 F. Supp. 2d 958, 971 (D. Minn. 2005) (“Materiality … considers
whether the false or misleading statement is likely to make a difference to purchasers.” (internal
citation and quotation omitted)). There are two general categories within which the
advertisements at issue fall: statements on PLM’s packaging and statements on PLM’s website.
Regarding the first category, PLM argues that these statements are located on the back of the
packaging for its boxes and individual units, and consumers therefore do not read them before
16
There is a presumption in some circuits that courts can assume materiality when
statements are literally false. See, e.g., Pizza Hut v. Papa John’s Int’l, 227 F.3d 489, 497 (5th
Cir. 2000); American Council of Certified Podiatric Physicians & Surgeons v. American Bd. Of
Podiatric Surgery, Inc., 185 F.3d 606, 614 (6th Cir. 1999); Avila v. Rubin, 84 F.3d 222, 227 (7th
Cir. 1996). Other courts, however, have rejected this presumption. See, e.g., Johnson &
Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242, 1250-51 (11th Cir. 2002);
Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d 302, 312 n.10 (1st Cir. 2002);
S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir. 2001); Aviva Sports, Inc. v.
Fingerhut Direct Mktg., Inc., 829 F. Supp. 2d 802, 813 (D. Minn. 2011). To date, no such
presumption has been applied in this Circuit, and the Court finds no reason to do so for the first
time here.
52
making a purchase. See Pls.’ Mem. Opp’n Def.’s Mot. Summ. J., ECF No. 120, at 11.
PROLACTO disagrees about whether these statements influence the purchasing decision. But
even if a consumer reads these advertisements, PLM argues that there is insufficient evidence
that the statements affect buyer decision making, particularly given the fact that these are
relatively inexpensive treats purchased on an impulse. See id. at 14. PLM, however, overstates
the standard for showing materiality: PROLACTO is not required to prove actual influence on
the purchasing decision, but rather just that the advertisements are likely to affect that choice.
See, e.g., Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997);
Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., 155 F. Supp. 2d 1, 20 (S.D.N.Y.
2001); Minuteman Int’l, Inc. v. Critical-Vac Filtration Corp., No. 95 C 7255, 1997 WL 370204,
at *11 (N.D. Ill. June 27, 1997).
With this standard in mind, the Court is not convinced that, after reviewing the available
evidence in the record, either party has demonstrated there is no genuine dispute of material fact
regarding whether the advertisements on PLM’s packaging are material. Indeed, materiality is a
question of fact, and as such, it often must be left for the jury to decide. See, e.g., Reynolds
Consumer Products, Inc. v. Handi-Foil Corp., No. 13-CV-214, 2014 WL 794277, at *5 (E.D.
Va. Feb. 27, 2014) (“[A]s a general matter, questions of materiality and falsity are typically
questions of fact.”). The Court reaches the same conclusion regarding the second category of
advertisements: statements on PLM’s website. Though it is less likely that statements posted on
PLM’s website are material to a consumer’s decision given their attenuated position compared to
being placed directly on the product itself, a factual dispute about materiality remains.
Accordingly, the Court denies both parties summary judgment on the materiality question.
53
5. Injury
A party’s burden for the injury element depends on what form of relief it seeks. The
Lanham Act allows the court to grant injunctions, see 15 U.S.C. § 1116(a), and also permits the
recovery of a party’s profits, any actual damages sustained, and the costs of the action. See id. §
1117(a). A party pursuing monetary damages for false advertising in violation of Section 43(a)
must establish actual damage to its business caused by the false advertising, whereas injunctive
relief requires only a showing of “a likelihood of injury to the plaintiff in terms of declining
sales, loss of good will, etc.” Max Daetwyler Corp. v. Input Graphics, Inc., 545 F. Supp. 165,
171 (E.D. Pa. 1982); see also Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d
302, 311 (1st Cir. 2002) (“[W]hereas a showing that the defendant’s activities are likely to cause
confusion or to deceive customers is sufficient to warrant injunctive relief, a plaintiff seeking
damages must show actual harm to its business.”); Healthport Corp. v. Tanita Corp. of Am., 563
F. Supp. 2d 1169, 1181 (D. Or. 2008) (“To the extent that [the defendant] seeks injunctive relief,
it need not demonstrate actual injury to establish a Lanham Act violation occurred here.”).
In its motion for summary judgment, PROLACTO addresses only the standard for
obtaining injunctive relief; it does not argue for, nor provide evidence in support of, monetary
damages it allegedly suffered as a result of PLM’s advertisements. The Court therefore finds
that the only remaining question is if PROLACTO, PLM, or neither has satisfied the burden for
summary judgment on the issue of whether PROLACTO has demonstrated the likelihood of a
cognizable injury caused by the false advertising.
PROLACTO asserts that if a consumer is confused into buying a PLM product believing
it to be a PROLACTO product due to false or misleading advertising, its reputation and goodwill
are likely to be injured. See Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No. 116-1, at 21; see
54
also Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 244 (9th Cir.
1990) (explaining that false advertising injury requires a showing that the “plaintiff has been or
is likely to be injured as the result of the [advertisements] either by direct diversion of sales from
itself to defendant, or by lessening of the good will which its products enjoy with the buying
public”); Synygy, Inc. v. Scott-Levin, Inc., 51 F. Supp. 2d 570, 575 (E.D. Pa. 1999) (explaining
that for false advertising, a party must show that “there is a likelihood of injury … in terms of
declining sales and loss of good will”). PROLACTO’s claim is based largely on evidence that
the products of the companies are of different quality, with PROLACTO selling a more
traditional, handmade form of paletas and PLM selling a water-based product more similar to a
Popsicle. See, e.g., Def.’s Stmt Facts, ECF No. 116-2, at 91-94, 96, Nos. 204-06, 213-14. The
Court agrees with PROLACTO that given the apparent differences between the products, there is
some basis to anticipate that PROLACTO’s goodwill and reputation, in addition to potential
sales, may be harmed if consumers are misled by PLM’s advertisements into believing they are
buying PROLACTO’s fruit-based, handmade product.
The Court, however, is not convinced that no genuine dispute of material fact exists such
that summary judgment is appropriate. PROLACTO largely relies on affidavits describing
customers who were confused by and disappointed with PLM’s products. Much of these
affidavits, however, are hearsay from customers that cannot support summary judgment. See
Riggsbee v. Diversity Servs., Inc., 637 F. Supp. 2d 39, 46 (D.D.C. 2009) (“[O]n summary
judgment, statements that are impermissible hearsay or that are not based on personal knowledge
are precluded from consideration by the Court.”). Nonetheless, the affidavits do contain
nonhearsay portions that are at least probative of injury by suggesting that consumers are
conflating the brands based on PLM’s advertising, which may in turn hurt PROLACTO.
55
Depending on how a jury credits the evidence regarding the quality of the goods and consumer
decision making, as well as the weight given to Dr. Jacoby’s survey on this issue, injury to
PROLACTO may or may not be likely. The Court therefore refuses to grant either party
summary judgment on this issue.
F. Counterclaim Count III: Trademark Infringement Under District of Columbia
Common Law
PROLACTO and PLM move for summary judgment on Count III of the counterclaim for
trademark infringement under District of Columbia common law, which is evaluated under the
same standard as federal infringement claims. See AARP v. Sycle, 991 F. Supp. 2d 224, 229
(D.D.C. 2013); Breaking the Chain Found., Inc. v. Capitol Educ. Support, Inc., 589 F. Supp. 2d
25, 29 (D.D.C. 2008). As explained above, the creation of a trademark right is geographically
limited to the territories in which a party actually uses its mark in commerce or into which it
might naturally expand. See Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018, 1023 (11th
Cir. 1989). Thus, a party seeking recognition of a protectable trademark right in a specific area
must provide evidence of penetration in the market or a zone of natural expansion extending into
the market. See Laurel Capital Grp., Inc. v. BT Fin. Corp., 45 F. Supp. 2d 469, 482 (W.D. Pa.
1999). PROLACTO, however, has provided no evidence regarding actual penetration into the
District of Columbia or expectations to do so in the near future. As such, PROLACTO has no
evidence demonstrating a protectable trademark right under District of Columbia common law,
and the Court grants summary judgment to PLM on this count.
The District of Columbia common law claim also fails on procedural grounds. After
PLM moved for summary judgment on this count, PROLACTO failed to substantively address
the issue in its opposition brief. See Def.’s Mem. Opp’n Pls.’ Mot. Summ. J., ECF No. 121, at
56
48. Instead, PROLACTO merely restated the legal standard and suggested, without further
explanation, that PLM’s motion should be denied. By failing to properly address the merits of
PLM’s argument, PROLACTO conceded the issue. See Hopkins v. Women’s Div., Gen. Bd. of
Global Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003) (“It is well understood in this Circuit
that when a plaintiff files an opposition to a dispositive motion and addresses only certain
arguments raised by the defendant, a court may treat those arguments that the plaintiff failed to
address as conceded.” (citing FDIC v. Bender, 127 F.3d 58, 67-68 (D.C. Cir. 1997); Local Civil
Rule 7.1(b)). Thus, the Court can grant summary judgment for PLM on this alterative ground as
well.
G. Counterclaim Count IV: Federal Trademark Dilution Under Lanham Act Section 43(c)
Both parties move for summary judgment on PROLACTO’s counterclaim Count IV for
federal trademark dilution in violation of Section 43(c) of the Lanham Act. See 15 U.S.C. §
1125(c). To prove a violation of the Federal Trademark Dilution Act (“FTDA”), as substantially
amended by the Trademark Dilution Revision Act of 2006 (“TRDA”), a party must show that (1)
the mark is famous; (2) the defendant is making a commercial use of the mark in commerce; (3)
the defendant’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 distinguish
goods and services. See id. § 1125(c)(1); see also Sociedad Anonima Vina Santa Rita v. U.S.
Dep’t of Treasury, 193 F. Supp. 2d 6, 20 (D.D.C. 2001).
Unlike trademark infringement law, which protects marks from unauthorized use that is
likely to cause confusion, the federal trademark dilution statute “grants extra protection to strong,
well-recognized marks even in the absence of a likelihood of consumer confusion … if the
defendant’s use diminishes or dilutes the strong identification value associated with the
57
plaintiff’s famous mark.” Times Mirror Magazines, Inc. v. Las Vegas Sports News, LLC, 212
F.3d 157, 163 (3d Cir. 2000) (citation omitted); see also Appleseed Found. Inc. v. Appleseed
Inst., Inc., 981 F. Supp. 672, 677 (D.D.C. 1997) (discussing trademark infringement and
dilution). Trademark dilution can occur in two ways — by tarnishment or by blurring — but
PROLACTO only sets forth the tarnishment theory in its motion for summary judgment. 17 See
Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No. 116-1, at 51. But for the reasons explained
below, the Court does not reach the tarnishment question because PROLACTO fails to satisfy
the threshold issue for a dilution claim: fame.
1. Famous Among The General Consuming Public Of The United States
“[A] mark is famous if it is widely recognized by the general consuming public of the
United States as a designation of source of the goods or services of the mark’s owner.” 15
U.S.C. § 1125(c)(2)(A); see also Thane Intern., Inc. v. Trek Bicycle Corp., 305 F.3d 894, 911
(9th Cir. 2002) (“[F]or purposes of § 1125(c), a mark usually will achieve broad-based fame only
if a large portion of the general consuming public recognizes that mark.”). In other words, the
FTDA extends dilution protection only to those trademarks that are firmly established as a
“household name.” See Thane Intern., 305 F.3d at 911; see also Apple, Inc. v. Samsung Elecs.
Co., Ltd., No. 11-CV-01846, 2012 WL 2571719, at *7 (N.D. Cal. 2012) (explaining that “fame
requires a high standard of consumer awareness beyond the trademark owner’s specific market
— the mark should be a ‘household name’ or ‘part of the collective national consciousness.’”
17
Dilution by blurring is an “association arising from the similarity between a mark
or trade name and a famous mark that impairs the distinctiveness of the famous mark.” 15
U.S.C. § 1125(c)(2)(B). Dilution by tarnishment is an “association arising from the similarity
between a mark or trade name and a famous mark that harms the reputation of the famous mark.”
Id. § 1125(c)(2)(C); see also Appleseed Found., 981 F. Supp. at 677 (describing dilution by
tarnishment as when “a junior mark presents shoddy products or services, thereby damaging the
reputation of the senior mark”).
58
(citations omitted)); Bd. of Regents Univ. of Tex. Sys. v. KST Elec., Ltd., 550 F. Supp. 2d 657,
679 (W.D. Tex. 2008) (explaining that trademark dilution claims are restricted to “those few
truly famous marks like Budweiser beer, Camel cigarettes, Barbie Dolls and the like”).
Further, under the amended federal dilution statute, “niche fame” — that is, fame limited
to a particular channel of commerce, segment of industry, demographic, or geographic region —
is insufficient as a matter of law to maintain a dilution claim. See Coach Servs., Inc. v. Triumph
Learning LLC, 668 F.3d 1356, 1372 (Fed. Cir. 2012) (clarifying that by using “general
consuming public” as the benchmark, the TDRA eliminated the possibility of “niche fame” as
sufficient to maintain a dilution claim); Luv N’ Care, Ltd. v. Regent Baby Prods. Corp., 841 F.
Supp. 2d 753, 758 (S.D.N.Y. 2012) (same). Accordingly, the alleged awareness of
PROLACTO’s brand among Hispanic immigrants or within certain localized regions of the
country, without more, would be insufficient for a dilution claim because that is the very
definition of a niche market. See, e.g., Idylwilde, Inc. v. Umpqua Feather Merchants, LLC, No.
3:13-CV-02009, 2014 WL 199201, at *11 (D. Or. Jan. 16, 2014) (explaining that “the proper
market to consider is the general public, not just purchasers of fishing flies”); Helios Int’l
S.A.R.L. v. Cantamessa USA, Inc., No. 12 CIV. 8205, 2013 WL 3943267, at *10 (S.D.N.Y. July
31, 2013) (rejecting plaintiff’s argument that its marks are famous because they “have an
extremely high degree of recognition among consumers of luxury jewelry,” since “[t]his is the
very definition of the type of ‘niche’ fame that is insufficient to support a finding of fame for
TDRA purposes” (internal citations and quotation marks omitted)); Luv N’ Care, 841 F. Supp.
2d at 757-59 (dismissing trademark dilution claim because plaintiffs had “not alleged facts
indicating that the cups’, bottles’, pacifiers’, teething keys’, and food containers’ trademarks are
recognized beyond a niche market, i.e., the baby product market”).
59
2. Level Of Recognition Required To Be Famous
In determining whether a mark is considered famous for a dilution claim, a court should
consider “all relevant factors,” including: (1) the duration, extent, and geographic reach of
advertising and publicity of the mark; (2) the amount, volume, and geographic extent of sales of
goods or services offered under the mark; (3) the extent of actual recognition of the mark; and
(4) whether the mark is registered. See 15 U.S.C. § 1125(c)(2)(A)(i)-(iv). Although there is no
universally recognized numeric threshold for how well-known a mark must be under the dilution
statute, there are certain guideposts the Court can follow when evaluating whether PROLACTO
has achieved the requisite level of fame. 18
For example, fame may be established by “surveys showing that a large percentage of the
general public recognizes the brand, press accounts about the popularity of the brand, or pop-
culture references involving the brand would provide evidence of fame.” Thane Intern., 305
F.3d at 912 (citation omitted). Professor McCarthy explains that “the extraordinary scope of the
federal antidilution law requires proof of a relatively high level of recognition.” 4 McCarthy on
Trademarks § 24:106 (4th ed.). He describes the statute’s requirement that a mark be “widely
recognized by the general consuming public of the United States” as “a rigorous and demanding
test,” and he consequently recommends “that a minimum threshold survey response should be in
18
It is instructive to note that the level of fame required for a dilution claim appears
to be greater than that required to establish that a mark is sufficiently well-known for the famous
mark doctrine to apply. See Grupo Gigante SA De CV v. Dallo & Co., Inc., 391 F.3d 1088, 1106
(9th Cir. 2004) (Garber, J., concurring) (“Ultimately, the standard for famous or well-known
marks is an intermediate one. To enjoy extraterritorial trademark protection, the owner of a
foreign trademark need not show the level of recognition necessary to receive nation-wide
protection against trademark dilution. On the other hand, the foreign trademark owner who does
not use a mark in the United States must show more than the level of recognition that is
necessary in a domestic trademark infringement case.”). Dilution, of course, requires nationwide
fame, whereas the famous mark doctrine looks only to the relevant consumer market, which
further increases the burden on a party asserting a dilution theory.
60
the range of 75% of the general consuming public of the United States.” Id. (footnotes omitted);
see also 7-Eleven Inc. v. Lawrence I. Wechsler, 83 U.S.P.Q.2d 1715, 2007 WL 1431084, at *14
(TTAB May 17, 2007) (finding that 7-Eleven’s BIG GULP mark was famous based in part on
survey evidence of unaided awareness by 73% of consumers). But survey evidence, though
highly instructive, is not dispositive of whether a mark has achieved the requisite level of fame
because additional factors must be considered, including the amount of money spent on
advertising, the years the mark has been in use, and whether the mark is registered. Cf. Apple,
Inc. v. Samsung Electronics Co., Ltd., No. 11-CV-01846, 2012 WL 2571719, at *8 (N.D. Cal.
June 30, 2012) (denying Samsung’s motion for summary judgment despite Apple’s survey
showing that less than 60% of respondents were aware of the trade dress in the iPhone and iPad
product designs because the factors for establishing fame are non-exhaustive and there was
enough other evidence from which a jury could conclude that the trade dresses were “famous”
for establishing a dilution claim).
Turning to the present case, first, PROLACTO has provided no survey of nationwide
consumer awareness that might have demonstrated the fame necessary to sustain its dilution
claim. Second, PROLACTO has conducted very little advertising within the United States, and
any such advertising was limited to local radio or local Spanish-language newspapers, not
nationwide promotional campaigns to raise consumer awareness on a broader scale. See, e.g.,
Def.’s Stmt Facts, ECF No. 116-2, at 41, No. 77; cf. Jada Toys v. Mattel, Inc., 518 F.3d 628 (9th
Cir. 2007) (concluding that a reasonable jury could find that HOT WHEELS was a famous mark
after thirty-three years of use, $350 million spent on advertising, and total sales of 3 billion
units); Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1013 (9th Cir. 2004)
61
(agreeing that a material dispute of fact existed regarding whether NISSAN was a famous mark
despite evidence of more than $898 million in promotional expenditures).
Third, PROLACTO has offered limited information about the volume of actual sales of
products bearing its marks within the United States, including through its licensees. It is clear,
however, that these goods are sold within only a few states at the most, and PROLACTO
therefore is unable to achieve nationwide fame in that manner. Cf. Gucci Am., Inc. v. Guess?,
Inc., 868 F. Supp. 2d 207, 219 (S.D.N.Y. 2012) (finding that Gucci’s marks, including an
unregistered mark, are famous when the company sold “billions of dollars worth of products”
bearing the marks and spent more than $13 million on advertising in the United States between
2001 and 2009). Finally, all but one of PROLACTO’s marks are unregistered, and there is
insufficient evidence regarding the nationwide fame of the lone registered mark, LA FLOR DE
MICHOACAN. For these reasons, the Court concludes that no reasonable jury could find that
any of PROLACTO’s marks have achieved the level of nationwide consumer awareness among
the general public required to be considered “famous.” Accordingly, the Court grants summary
judgment to PLM on the counterclaim for federal trademark dilution and need not consider the
remaining elements of the count.
H. Counterclaim Counts V, VI, and VII: Cancellation of PLM’s Registered Trademarks
Under Lanham Act Sections 38 and 45
PROLACTO asserts through counterclaim Counts V, VI, and VII that the Court should
cancel PLM’s registered trademarks Nos. 2,905,172 and 2,968,652 for fraud under Section 38 of
the Lanham Act and abandonment under Section 45 of the Act. PLM moves for summary
judgment on all three counts, and PROLACTO concedes that summary judgment is appropriate
as to its Section 45 abandonment claim in Count VII. See Def.’s Mem. Opp’n Pls.’ Mot. Summ.
62
J., ECF No. 121, at 55. Separately, PROLACTO moves for summary judgment on the remaining
Counts V and VI, which the Court discusses below.
PLM’s Marks that PROLACTO Seeks To Cancel
Registration No.: 2,905,172 2,968,652
Design:
Date of First Use: 4/1/1994 1/1/1995
Date of Registration: 11/23/2004 7/12/2005
1. Cancellation Standard
Pursuant to Section 37 of the Lanham Act, “[i]n any action involving a registered mark
the court may determine the right to registration, order the cancellation of registrations, in whole
or in part … and otherwise rectify the register with respect to the registrations of any party to the
action.” 15 U.S.C. § 1119. This provision has been held to grant district courts authority
concurrent with that of the United States Patent and Trademark Office to conduct cancellation
proceedings pursuant to Section 14 of the Lanham Act, 15 U.S.C. § 1064. See Durox Co. v.
Duron Paint Mfg. Co., 320 F.2d 882, 886 (4th Cir. 1963); Mears v. Montgomery, No. 02 CIV.
0407, 2004 WL 964093, at *12 (S.D.N.Y. May 5, 2004). Section 14, in turn, authorizes the
filing at any time of “[a] petition to cancel a registration of a mark … by any person who
believes that he is or will be damaged by the registration of a mark … if its registration was
obtained fraudulently.” 15 U.S.C. § 1064. Section 14 also provides that a registered mark may
be cancelled “at any time if [it] is being used by … the registrant so as to misrepresent the source
of the goods[.]” Id.63
For PROLACTO to succeed on its fraud claim, it must prove by clear and convincing
evidence that PLM knowingly made false, material misrepresentations of fact and intended to
deceive the patent office in its trademark application. See In re Bose Corp., 580 F.3d 1240, 1243
(Fed. Cir. 2009); Resorts of Pinehurst, Inc. v. Pinehurst Nat’l Corp., 148 F.3d 417, 420 (4th Cir.
1998); Audiovox Corp. v. Monster Cable Prods., Inc., 544 F. Supp. 2d 155, 158 (E.D.N.Y.
2008). “The party alleging fraud carries a heavy burden of proof, and, in deciding whether fraud
has been committed, the Court has no room for speculation, inference or surmise and, obviously,
any doubt must be resolved against the charging party.” Haggar Intern. Corp. v. United Co. for
Food Indus. Corp., 906 F. Supp. 2d 96, 107-08 (E.D.N.Y. 2012) (citations and internal quotation
marks omitted).
A false representation must be material in the sense that “a reasonable examiner would
have considered it important in deciding whether to issue the registration.” Fair Isaac Corp. v.
Experian Info. Solutions Inc., 711 F. Supp. 2d 991, 998 (D. Minn. 2010) (internal citation and
quotation omitted); see also Orient Exp. Trading Co., Ltd. v. Federated Dep’t Stores, Inc., 842
F.2d 650, 653 (2d Cir. 1988) (describing a material fact as “one that would have affected the
PTO’s action on the applications”); Colt Indus. Operating Corp., 221 U.S.P.Q. 73, 1983 WL
51834, at *3 (TTAB Nov. 25, 1983) (describing a material fact as one “which, if transmitted to
the Office, would have resulted in the refusal of the registration sought”). As part of the
registration process, a trademark registrant must affirm, under oath, that he “believes” himself to
be the owner of the mark sought to be registered and that “to the best of his knowledge and
belief” no other person has the right to use the mark in commerce. See Maurag, Inc. v.
Bertuglia, 494 F. Supp. 2d 395, 399 (E.D. Va. 2007) (citing 15 U.S.C. § 1051(a)(3)(A),
(A)(3)(D)). “The oath is phrased in terms of a subjective belief, such that it is difficult to prove
64
fraud so long as the affiant or declarant has an honestly held, good faith belief.” Resorts of
Pinehurst, 148 F.3d at 420 (citations and internal alterations omitted); see also MPC Franchise,
LLC v. Tarntino, No. 11-CV-6310, 2014 WL 1920531, at *15 (W.D.N.Y. May 14, 2014) (“Fraud
will not lie if it can be proven that the statement, though false, was made with a reasonable and
honest belief that it was true.” (citation omitted)). “It is plain that the existence of another
authorized user with the identical mark is material to the USPTO in determining whether to grant
the application.” Tuccillo v. Geisha NYC, LLC, 635 F. Supp. 2d 227, 242 (E.D.N.Y. 2009).
2. Alleged Misrepresentations
In its motion for summary judgment, PROLACTO asserts that PLM made multiple
misrepresentations in its Indian Girl trademark applications, namely that: PLM knew at the time
it filed the applications that PROLACTO was using a similar Indian Girl design; PLM knew its
first use of the Indian Girl designs was after 1999, not 1994 and 1995 as it claimed in the
applications; and PLM misrepresented the source of its goods. See Def.’s Mem. Supp. Mot. Part.
Summ. J., ECF No. 116-1, at 47-48. PLM rejects each of PROLACTO’s arguments and moves
for summary judgment in its favor on Counts V and VI. The Court addresses each allegation
below.
a. Knowledge Of Prior Use
On November 19, 2003, PLM filed Application Serial No. 78/330,419 for an Indian Girl
holding an ice cream cone. See Def.’s Stmt Facts, ECF No. 116-2, at 59-60, No. 142. On the
same day, PLM filed Application Serial No. 78/330,432 for a similar design depicting an Indian
Girl holding an ice cream bar. See id. Nos. 142-43. In each application, PLM submitted a
declaration attesting that
to the best of his/her knowledge and belief no other person, firm, corporation, or
association has the right to use the mark in commerce, either in the identical form
65
thereof or in such near resemblance thereto as to be likely, when used on or in
connection with the goods/service of such other person, to cause confusion, or to
cause mistake, or to deceive[.]
Id. at 60, No. 144. PROLACTO argues that PLM knew the Indian Girl design was being used in
Mexico before filing the applications but failed to make such a disclosure. In response, PLM
raises two defenses: first, it disputes whether it knew a specific company was using the designs
in Mexico, let alone that this company was PROLACTO; and second, even if PLM knew
PROLACTO was using the designs in Mexico, commercial use in a foreign country is
insufficient to establish fraud on the trademark office as a matter of law. See Pls.’ Mem. Opp’n
Def.’s Mot. Summ. J., ECF No. 120, at 48-49. The Court finds that the latter argument is
dispositive.
PROLACTO does not cite, and this Court cannot find, any fraudulent registration case
holding a party liable for failing to disclose that another company used a similar mark in a
foreign country. To the contrary, there appears to be no legal basis for holding that knowledge
of foreign use is grounds for a cancellation cause of action. Understandably, this conclusion is
premised on the territoriality principle, through which foreign use of a mark does not create
priority in the United States. See Person’s Co. v. Christman, 900 F.2d 1565, 1568-69 (Fed. Cir.
1990). Because foreign use cannot create priority — perhaps with exception of the narrow and
largely unfollowed famous mark doctrine, which itself still requires meaningful reputational
impact in the United States — the fact that a similar mark was used in another country is
immaterial to the decision about whether to grant an application.
For example, in Buti v. Impressa Perosa, S.R.L., 935 F. Supp. 458, 474 (S.D.N.Y. 1996),
the U.S. District Court for the Southern District of New York explained that even if the registrant
had revealed his knowledge that another company was using a similar mark in Milan, Italy, this
fact was immaterial because the trademark office would have awarded the trademark anyway, as
66
foreign use is irrelevant to priority in the United States. Likewise, the TTAB confronted a
similar question in Lafont v. S.A.C.S.E., 228 U.S.P.Q. 589, 1985 WL 71974, at *4 (TTAB Dec.
10, 1985), and concluded:
Because the question of who had the superior right to U.S. registration was not
affected by respondent’s knowledge of petitioner’s European use and registration,
we cannot conclude from this record that respondent’s statement in its
applications was an attempt to deceive the Office by withholding material facts
which would lead to a refusal to register respondent’s marks. Even if the
Examining Attorney had been aware of respondent’s European use and
registration, this would not have led to a refusal of registration, because these
facts are immaterial to the issue of respondent’s right to register in the U.S.
The same decision was reached in Person’s Co. v. Christman, 9 U.S.P.Q.2d 1477, 1988 WL
252326, at *3 (TTAB Nov. 10, 1988), when the TTAB denied a fraudulent registration claim and
noted the following: “Respondent was of course aware of petitioner’s use [in] Japan, but he was
aware of no use by petitioner of the mark in the United States and was unaware of any intention
or plans of petitioner to use its mark outside of Japan.”
Finally, the TTAB held in Bonaventure Assoc. v. Westin Hotel Co., 218 U.S.P.Q. 537,
1983 WL 51970, at *4 (TTAB June 2, 1983), that “[m]ere knowledge of the existence of a
Canadian hotel named ‘BONAVENTURE,’ especially in view of the established commonality of
the name Bonaventure in the Montreal area, can hardly equate to fraudulent registration of the
same mark in the United States for restaurant, golf and construction services.” Because
PROLACTO does not set forth evidence creating a material dispute as to whether PLM was
aware of prior use of the Indian Girl designs within the United States before filing its
applications, the Court grants summary judgment to PLM on this theory of fraud in Counts V
and VI.
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b. Date Of First Use
PLM claimed in Application Serial No. 78/330,432 that it used the mark in connection
with ice cream and fruit ices at least as early as April 1, 1994. See Def.’s Stmt Facts, ECF No.
116-2, at 59-60, Nos. 142-43. PLM also filed a statement of use in Application Serial No.
78/330,419 alleging first use of the design on January 1, 1995. See id. No. 145. PROLACTO
argues that PLM’s applications were fraudulent because PLM did not use any Indian Girl design
until after at least 1999. See Def.’s Mem. Supp. Mot. Part. Summ. J., ECF No. 116-1, at 47.
PLM contends that it has testimonial evidence proving that it used the designs beginning around
1994 and 1995, and documentary evidence showing use as early as 1997. See Pls.’ Resp. Def.’s
Stmt Facts, ECF No. 120-1, at 97-99, Nos. 120-28.
A clear dispute of fact exists regarding when PLM first used the Indian Girl designs in
commerce. But to deny summary judgment, a dispute of fact must be material. See Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Federal courts and the TTAB consistently have
held that the date of first use is immaterial to a registration application so long as the actual date
of initial use predated the application. See, e.g., Pony Exp. Courier Corp. of Am. v. Pony Exp.
Delivery Serv., 872 F.2d 317, 319 (9th Cir. 1989) (explaining that the claim of a date of first use
is not a material allegation supporting a fraudulent registration claim as long as the first use in
fact preceded the application date); Miyano Mach. USA, Inc. v. MiyanoHitec Mach., Inc., 576 F.
Supp. 2d 868, 879-80 (N.D. Ill. 2008) (same); Lewis v. Microsoft Corp., 410 F. Supp. 2d 432,
437-38 (E.D.N.C. 2006) (same); W. Worldwide Enters. Grp. Inc. v. Qinqdao Brewery, 17
U.S.P.Q.2d 1137, 1990 WL 354566, at *5 (TTAB July 30, 1990) (same); CarX Serv. Sys., Inc. v.
Exxon Corp., 215 U.S.P.Q. 345, 1982 WL 52058, at *7 (TTAB Aug. 30, 1982) (same).
Although there is disagreement about the actual date of first use, PROLACTO accepts in its
68
summary judgment motion that “PLM’s first use of any Indian Girl design was after 1999,”
which still is well before PLM filed the applications. See Def.’s Mem. Supp. Mot. Part. Summ.
J., ECF No. 116-1, at 47. Thus, even if PROLACTO is correct that PLM claimed the wrong date
of first use in its applications — a question on which the Court need not take a position — it fails
to demonstrate how such an error was material. The Court therefore grants summary judgment
to PLM on this theory in Counts V and VI.
c. Source Of Goods
PROLACTO argues in its motion for summary judgment that PLM uses the Indian Girl
designs to make customers believe that its ice cream treats came from, or were authorized by,
PROLACTO. See id. at 48. PLM responds that the Court should not consider this theory
because it was not asserted in the counterclaim. See Pls.’ Mem. Opp’n Def.’s Mot. Summ. J.,
ECF No. 120, at 50. PROLACTO does not address PLM’s argument in its reply brief, perhaps
conceding that PLM is correct. Cf. Remmie v. Mabus, 846 F. Supp. 2d 91, 95 (D.D.C. 2012)
(noting that a party appeared to concede an argument by not addressing it in the reply brief);
Nat’l Sec. Counselors v. CIA, 898 F. Supp. 2d 233, 268 (D.D.C. 2012) (“[T]he Court may treat
the plaintiff’s failure to oppose the defendant’s … arguments as a decision to concede those
arguments.”). Nonetheless, the Court agrees with PLM that this argument was not contained in
counterclaim Counts V or VI, and PROLACTO therefore cannot assert the theory anew through
a motion for summary judgment. See Teltschik v. Williams & Jensen, PLLC, 683 F. Supp. 2d 33,
41 (D.D.C. 2010) (“A plaintiff may not assert new allegations at the summary judgment stage if
such allegations amount to a ‘fundamental change’ in the nature of plaintiff’s claims.” (citation
omitted)); Sharp v. Rosa Mexicano, DC, LLC, 496 F. Supp. 2d 93, 97 n.3 (D.D.C. 2007) (stating
69
that plaintiff may not, “through summary judgment briefs, raise [] new claims … because
plaintiff did not raise them in his complaint, and did not file an amended complaint”).
I. Monetary Relief: Actual Damages, Profits, Costs, And Attorney’s Fees
In addition to injunctive relief, the Lanham Act permits, “subject to the principles of
equity,” the recovery of the defendant’s profits, any actual damages sustained by the plaintiff,
and the costs of the action. See 15 U.S.C. § 1117(a). These categories of damages are intended
to constitute compensation, not a penalty. See id. Attorney’s fees also may be awarded to the
prevailing party in exceptional situations. See id.PLM moves the Court to enter summary judgment that PROLACTO is not entitled to any
type of monetary relief for its counterclaims. Indeed, PLM dedicates roughly one-third of its
motion for summary judgment arguing why PROLACTO cannot recover each category of
monetary award otherwise permitted by the Lanham Act. See Pls.’ Mem. Supp. Mot. Part.
Summ. J., ECF No. 114, at 29-39. Yet in its opposition memorandum, PROLACTO simply
ignores PLM’s arguments for summary judgment as to the monetary recovery issues, including
whether there is sufficient evidence of actual damages and whether equitable principles prohibit
the Court from awarding monetary relief. 19 When a party fails to address an issue in its
opposition brief, the Court may regard that issue as conceded and grant summary judgment to the
moving party. See COMPTEL v. FCC, 945 F. Supp. 2d 48, 55 (D.D.C. 2013) (“Where a party
fails to address arguments raised by the opposing party’s motion for summary judgment, the
Court may treat those arguments as conceded.”); Iweala v. Operational Techs. Servs., Inc., 634
19
Such an approach appears to be consistent with PROLACTO’s arguments
regarding the false advertising claim, in which it made no effort to demonstrate actual monetary
damages caused by PLM’s alleged violations and instead focused on the standard for injunctive
relief.
70
F. Supp. 2d 73, 80-81 (D.D.C. 2009) (treating as conceded defendants’ summary judgment
arguments when plaintiff failed to respond in her opposition).
Specifically, PROLACTO fails to address PLM’s argument that it has not provided
sufficient evidence of actual damages for its trademark claims. The Court therefore grants
summary judgment in PLM’s favor on this issue. 20 See, e.g., Members 1st Fed. Credit Union v.
Metro Bank, No. 1:09-CV-1171, 2010 WL 4318839, at *4 (M.D. Pa. Oct. 22, 2010) (“Plaintiff
does not address the issue of actual damages in its brief in opposition to Defendants’ motion.
Therefore, the Court must grant Defendants’ motion for summary judgment on the issue of
actual damages.”).
PROLACTO also ignores PLM’s argument that the equitable principles of laches,
acquiescence, and estoppel prohibit it from recovering any form of monetary relief, including
PLM’s profits, were PROLACTO to succeed on a counterclaim theory. See Johnson & Johnson
v. Actavis Grp. hf, No. 06 CIV. 8209, 2008 WL 228061, at *9 (S.D.N.Y. Jan. 25, 2008)
(“Because monetary awards provided by the Lanham Act are ‘subject to the principles of equity,’
the equitable defenses of laches, acquiescence, and estoppel may be relied upon … to bar
monetary as well as injunctive relief.” (quoting 15 U.S.C. § 1117(a)); 6 McCarthy on
Trademarks § 31:1 (4th ed.) (stating that “the defenses of acquiescence and laches are included
20
PROLACTO also would lose on the merits. “[A]ny award based on plaintiff’s
damages requires some showing of actual loss.” Foxtrap, Inc. v. Foxtrap, Inc., 671 F.2d 636,
642 (D.C. Cir. 1982). When assessing actual damages, the district court “must ensure that the
record adequately supports all items of damages claimed and establishes a causal link between
the damages and the defendant’s conduct, lest the award become speculative or violate section
35(a)’s prohibition against punishment.” See ALPO Petfoods, Inc. v. Ralston Purina Co., 913
F.2d 958, 969 (D.C. Cir. 1990). Here, PROLACTO provides no evidence from which the Court
can determine whether it suffered actual damages and, if so, in what amount. As such, summary
judgment in favor of PLM would be appropriate. See, e.g., Strike It Rich, Inc. v. Jos. Schlitz
Brewing Co., 505 F. Supp. 89, 92 (D.D.C. 1980) (granting motion for summary judgment on the
issue of damages because plaintiff failed to “demonstrate some actual harm”).
71
under the[] ‘principles of equity’” described in § 1117(a)); see also Tillamook Country Smoker,
Inc. v. Tillamook Cnty Creamery Ass’n, 465 F.3d 1102, 1108 (9th Cir. 2006) (noting that laches
is a valid defense to Lanham Act claims for monetary damages). By failing to address this
argument, PROLACTO concedes the issue and summary judgment is granted in PLM’s favor as
to all monetary forms of relief. See, e.g., Mack v. WP Co., LLC, 923 F. Supp. 2d 294, 302
(D.D.C. 2013) (granting summary judgment on damages question when plaintiff’s opposition
brief failed to address the issue, thus conceding it).
V. CONCLUSION
For the foregoing reasons, PLM’s motion for summary judgment is GRANTED IN
PART AND DENIED IN PART, and PROLACTO’s motion for summary judgment is
GRANTED IN PART AND DENIED IN PART. In addition, PROLACTO’s motion to strike
is DENIED, and PLM’s motion in limine is DENIED. An order consistent with this
Memorandum Opinion is separately and contemporaneously issued.
Dated: September 25, 2014 RUDOLPH CONTRERAS
United States District Judge
72