By Thomas Long, J.D.
A federal district court erred in determining that pen maker BIC Corporation and its subsidiary, Norwood Promotional Products, were completely protected by the fair use defense from claims that they infringed the trademarks "All-in-One" and "The Write Choice," the U.S. Court of Appeals in San Francisco has held. Mark owner Marketquest Group, Inc.—a producer and seller of promotional products—adequately pleaded infringement under a "reverse confusion" theory. Genuine issues of material fact precluding summary judgment as to whether the defendants’ uses of "All-in-One" were (1) other than as a trademark, (2) descriptive of the defendants’ goods, and (3) in good faith. With respect to "The Write Choice," the district court erred by applying the fair use analysis after determining that Marketquest presented no evidence of likely confusion. The district court’s order granting summary judgment was reversed and remanded (Marketquest Group, Inc. v. BIC Corp., July 7, 2017, Smith, M.).
Marketquest began using its registered trademarks "All-in-One" and "The Write Choice" since 1999 and 2000, respectively. In 2009, BIC acquired Norwood, a promotional products company, and in 2010 Norwood published a promotional products catalogue for 2011 that featured the phrase "All-in-One" on the cover of and in the catalogue. The 2011 catalogue consolidated all of Norwood’s eight "hard goods" catalogues "in one" catalogue. In 2010, BIC also used the phrase "The WRITE Pen Choice for 30 Years" in advertising and packaging for its pens. Marketquest filed suit against BIC and Norwood for trademark infringement. After the court denied Marketquest’s motion for a preliminary injunction, the parties filed cross-motions for summary judgment. The district court granted summary judgment for the defendants, holding that there was "some likelihood of confusion and therefore the potential for trademark infringement liability," but that further analysis of likelihood of confusion was unnecessary because fair use provided a complete defense. Marketquest appealed.
Reverse confusion. Marketquest’s pleading was adequate to support a cause of action for trademark infringement under a reverse confusion theory of likely confusion, the appellate court held. In contrast with forward confusion—which occurs when consumers believe that goods bearing the junior mark came from, or were sponsored by, the senior mark holder—reverse confusion occurs when consumers dealing with the senior mark holder believe that they are doing business with the junior one. Reverse confusion was not a separate claim that must be specifically pleaded, the court said. Instead, it was a theory of likely confusion that may be alleged by itself or in addition to forward confusion. When forward confusion is compatible with the theory of infringement alleged in the complaint, the plaintiff did not have to specifically plead it.
Marketquest’s complaint generally alleged that customers were confused "as to whether some affiliation, connection, or association exist[ed]" among the defendants and Marketquest, and specifically alleged that there were actual instances of forward confusion; that is, that consumers thought that the defendants’ goods came from Marketquest. Marketquest did not allege instances of reverse confusion until its motion for preliminary injunction. In its denial of the preliminary injunction, the district court recognized the reverse confusion theory. In the appellate court’s view, Marketquest did not foreclose the reverse confusion theory by failing to plead it with particularity in its complaint. The court noted that BIC was the larger, more widely-known entity, and BIC had acquired some smaller promotional products companies, such as Norwood. It was plausible that consumers would associate Marketquest’s marks with the defendants, or think that BIC had acquired Marketquest. Marketquest’s general allegation regarding likely confusion fairly encompasses this possibility of reverse confusion. The district court was correct to consider the possibility of reverse confusion as the case proceeded, the appellate court concluded.
Intent factor. The Ninth Circuit next pointed out that consideration of the "intent" factor in the Sleekcraft likelihood of confusion test was different for a forward confusion theory than a reverse confusion theory because the relevance of intent varied with the underlying theory of confusion. In a forward confusion case, the court asked whether the defendant intended to capitalize on the plaintiff’s goodwill. In a reverse confusion case, typically neither the junior nor senior user wished to "siphon off" the other party’s goodwill. No one type of evidence was required to establish intent, and the relevant evidence would vary from case to case.
"At one extreme, intent could be shown through evidence that a defendant deliberately intended to push the plaintiff out of the market by flooding the market with advertising to create reverse confusion," the court said. "Intent could also be shown by evidence that, for example, the defendant knew of the mark, should have known of the mark, intended to copy the plaintiff, failed to conduct a reasonably adequate trademark search, or otherwise culpably disregarded the risk of reverse confusion."
Fair use—"All-in-One." Genuine issues of material fact existed regarding whether the defendants’ uses of Marketquest’s "All-in-One" mark was protected by the fair use defense, the court determined. The district court therefore erred in granting summary judgment to the defendants.
To establish fair use, the defendants were required to show that the challenged use was (1) other than as a trademark, (2) descriptive of the defendants’ goods, and (3) in good faith. The district court appeared to have only examined the defendants’ use of "All-in-One" on its 2011 catalogue. Other uses—references to "the 2011 Norwood All in ONE catalogue" and "a Norwood ALL in ONE Basket"—were sufficiently distinct to require analysis for fair use, in the appellate court’s view.
First, the Ninth Circuit decided that a genuine issue of fact existed regarding whether the defendants used "All-in-One" as a trademark. Although the presentation in the 2011 catalogue made it likely that "Norwood" would be seen as the brand for the goods, rather than "All-in-One," in the other uses, there was no obvious distinction between Norwood and "All-in-One," and both could reasonably be understood to indicate source.
Second, while the defendants’ use of "All-in-One" in the 2011 catalogue arguably was descriptive in nature—due to use of the phrase as a heading—descriptive use was not apparent in the other instances involving the phrase. While the first use referred descriptively to a consolidated catalogue, the latter uses did not.
Third, with respect to intent, the court noted that the shift in focus required for assessing intent under a reverse confusion theory generally applied when considering the "good faith" element of the fair use defense in a reverse confusion case. There was no bright-line rule or required piece of evidence to establish good or bad faith. The court disagreed with Marketquest’s contention that mere knowledge of its mark established bad faith on the defendants’ part. The defendants’ knowing use of two of Marketquest’s marks was, in the court’s opinion, "thin evidence of bad faith." However, the court concluded that the question could not be decided on summary judgment.
Fair use—"The Write Choice." The district court erred by applying the fair use analysis to the defendants’ use of "The Write Choice" after determining that Marketquest presented no evidence of likely confusion, the appellate court determined. The fair use defense only came into play once the plaintiff made a showing by a preponderance of the evidence that confusion was likely. The district court could not properly find that there was no evidence of confusion, fail to conduct a Sleekcraft analysis, and still conclude that the defendants qualified for the fair use defense. The Ninth Circuit therefore remanded for the district court to consider Marketquest’s trademark infringement claim regarding the defendants’ use of "The Write Choice."
The case is No. 15-55755.
Attorneys: Gregory Harris Guillot (Gregory H. Guillot, PC) and Michael Lane (Lewis Kohn & Walker, LLP) for MarketQuest Group, Inc. Richard Paul Sybert (Gordon & Rees LLP) for BIC Corp., BIC USA, Inc. and Norwood Promotional Products, LLC, a/k/a Norwood Operating Co., LLC, d/b/a Norwood Promotional Products.
Companies: Marketquest Group, Inc.; Bic Corp.; Bic USA, Inc.; Norwood Promotional Products, LLC, a/k/a Norwood Operating Co., LLC, d/b/a Norwood Promotional Products
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