By Cheryl Beise, J.D.
The U.S. Court of Appeals in San Francisco has reversed a decision of the federal district court in Reno, Nevada, holding that Jim Beam’s use of a lips design on its Pucker brand of flavored vodka products as a matter of law did not infringe a lips design mark used by JL Beverage in connection with its Jonny Love brand of flavored vodka. In granting summary judgment to Jim Beam on JL Beverage’s trademark infringement and unfair competition claims, the district court erred by failing to place the burden of proof on Jim Beam, the moving party; failing to view the evidence in the light most favorable to JL Beverage, the nonmoving party; and failing to credit genuine disputes of material fact in its likelihood of confusion analysis (JL Beverage Company v. Jim Beam Brands Co., July 14, 2015, Wallace, J.).
Since 2005, JL Beverage has used two design marks featuring a pair of open lips in connection with its sale of the "Johnny Love" brand vodka and flavored vodkas. In 2006, JL obtained registration of a composite mark featuring the lips design plus the words JONNY LOVE VODKA. In October 2011, JL obtained federal registration for the lips design, standing alone, in connection with distilled spirits. Color was not claimed as a feature of either mark, but on JL’s flavored vodka products, the lips image was colored to denote the flavor.
In 2010, Beam purchased the "Pucker Vodka" brand from Koninklijke De Kuyper, B.V. In spring 2011, Beam nationally launched a new Pucker Vodka line of flavored vodka products using a prominent lips image, which varied by color according to the vodka flavor. Beam applied to register its new lips mark design in March 2011, but withdrew its application after discovering that its marketing firm used stock art in creating the design. The PTO also had cited JL’s registration in a preliminary notice of rejection of the application.
In March 2011, JL sued Beam for trademark infringement, false designation of origin, and unfair competition under the Lanham Act and trademark infringement and unfair competition under Nevada common law. Jim Beam counterclaimed for cancellation of JL’s lips mark registration. In September 2012, the district court denied JL Beverage’s motion for preliminary injunction, concluding that it was unlikely to succeed on the merits of its claims. In March 2013, the court granted summary judgment to Jim Beam on JL’s claims, again finding that JL was unlikely to succeed on its claims for the reasons articulated in the preliminary injunction order. The court did not rule on Jim Beam’s cancellation counterclaim.
The Ninth Circuit determined that the district court committed several reversible errors in its summary judgment opinion. First, the court continued to apply the standard used in determining preliminary injunctions instead of the standard applicable to summary judgment motions. The court placed the burden on JL, the plaintiff, to prove the merits of its claims, when it should have placed the burden of establishing that no genuine dispute of material fact existed on Jim Beam, as the moving party, and it should have viewed the evidence in the light most favorable to JL, the non-moving party. This error was especially egregious because the determination of likelihood of consumer confusion involves fact-intensive inquiry that does not easily lend itself to resolution on summary judgment, the court said.
Likelihood of confusion. In analyzing likelihood of confusion, courts in the Ninth Circuit apply the non-exhaustive eight-factor Sleekcraft test, which considers: (1) the strength of the mark; (2) the proximity or relatedness of the goods; (3) the similarity of the marks;(4) evidence of actual confusion; (5) the marketing channels used; (6) the type of goods and the degree of care likely to be exercised by the purchaser; (7) the defendant’s intent in selecting the mark; and (8) the likelihood of expansion of the product lines.
In its preliminary judgment opinion, the district court found that three factors—the relatedness of the goods, the marketing channels used, and the degree of purchaser care—favored JL. The court also found that the last factor was not relevant and the actual confusion and intent factors did not weigh in favor of either party. The court nevertheless concluded that confusion was not likely because JL’s marks were weak and that the parties’ marks were, as a whole, "dramatically different."
The Ninth Circuit posed the relevant question as whether a genuine dispute of material fact existed concerning whether factors one, three, four, and seven favored JL. The court found that the present evidence of actual confusion did not favor JL because it was mostly based on inadmissible hearsay evidence, but that material disputes of fact existed regarding the strength of JL’s lips mark, the similarity of the parties’ lips designs, and Jim Beam’s intent.
Strength of mark. Jim Beam argued that JL’s lips mark was conceptually weak because it was one in a "crowded field" of similar lips logos. Jim Beam also contended that JL had a "relatively weak" market presence, while it maintained a "relatively strong" market presence.
The Ninth Circuit pointed out that lips have no commonly understood connection with alcohol products, that even those that used lips marks did not use marks that were color-coordinated by flavor, and that most of the cited examples of third-party use involved beer, wine, or nonalcoholic beverages. Thus, a fact-finder could reasonably conclude that JL’s lips mark was arbitrary and entitled to the highest degree of trademark protection.
With regard to commercial strength, the court observed that JL alleged both forward and reverse confusion. The court explained that forward confusion involves considering the conceptual and commercial strength of the JL’s marks whereas reverse confusion involves evaluating the conceptual strength of JL’s marks and comparing it to the commercial strength of Jim Beam’s mark to determine whether consumers doing business with JL might mistakenly believe that they are dealing with Jim Beam. Thus, the strength of Jim Beam’s Pucker brand supported JL’s reverse confusion claim. In addition, there was a genuine dispute of material fact as to the commercial strength of JL’s Johnny Love Vodka in the marketplace.
Similarity of marks. The Ninth Circuit listed numerous similarities in the appearance of the parties’ lips marks: both had puckered, human lips as the focal point of their design; the lips had a similar angle and shape; and the lips were color-coordinated according to the flavor of the vodka. JL Beverage also offered a statement from the head of North Carolina’s Alcoholic Beverage Control Commission and statements from USPTO examiner who reviewed Jim Beams' application and determined that the lips designs were "highly similar" in appearance and overall commercial impression. These statements at least suggested that a dispute of fact existed as to the similarity of the marks, the court said.
Jim Beams’ intent. JL also set forth evidence to create a genuine dispute of material fact as to whether Jim Beam knew of JL Beverage’s registered trademarks, yet proceeded to use its colored-lips logo anyway, including that (1) a trademark search by Jim Beam’s legal team made them aware of JL’s composite mark registration ; (2) a Jim Beam employee was aware of Johnny Love Vodka prior to joining Jim Beam; and (3) Jim Beam rolled out its Pucker Vodka even after the USPTO denied its trademark application, citing JLs mark as a basis for denial. A reasonable fact-finder could find that Jim Beam adopted its colored lips logo with the knowledge that the mark already belonged to JL.
Balancing the Sleekcraft factors as a whole, the Ninth Circuit concluded that there was a genuine dispute of material fact as to the likelihood of consumer confusion between the parties’ lips marks. The district court’s decision was reversed and the case remanded.
The case is No. 13-17382.
Attorneys: Colin Christopher Holley, Jeremy T. Katz, and George L. Hampton (Hampton Holley) and Ryan R. Gile (Weide & Miller) for JL Beverage Company, LLC. Mark J. Liss, Claudia Stangle, and Angela Baylin (Leydig, Voit & Mayer) and Jonathan Fountain and Michael McCue (Lewis Roca Rothgerber) for Jim Beam Brands Co. and Beam Suntory Inc.
Companies: for JL Beverage Company; Jim Beam Brands Co.; Beam Suntory Inc.
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