By Linda Panszczyk, J.D.
Excell Brands’ knockoff fragrances "poach upon the commercial magnetism" of Coty’s fragrances and Coty has established its claims of trademark infringement, trademark dilution, and false advertising, under both federal and New York law, the federal district court in New York City has ruled, though Excell’s imitations did not cross the line far enough to constitute counterfeiting under federal law. As a result, Coty was entitled to injunctive relief, an award of Excell’s profits until the last infringing fragrances were sold, and reimbursement of its reasonable costs. However, the court declined to award enhanced monetary relief, attorney fees, or prejudgment interest (Coty Inc. v. Excell Brands, LLC, September 18, 2017, Furman, J.).
Coty, Inc., the plaintiff, is the producer or distributor of high quality fragrances associated with well-known brands such as Calvin Klein, Vera Wang, and Lady Gaga. Excell Brands, the defendant, seeking to capitalize on the success of Coty’s well-known fragrances, produced cheap versions of Coty’s fragrances, with similar product names such as, for example, "Possession" for "Obsession," and nearly identical packaging. Further, to compound matters, Excell prominently included on its packaging Coty’s own marks, albeit under words to the effect of "Our Version Of" in comparatively smaller text and, on the back of each Excell box, the company included the words "Not Associated With The Makers Of" followed by reference to the relevant Coty product.
Coty brought various intellectual property claims against Excell, including trademark infringement and unfair competition, trademark dilution, and false advertising, under both federal and state law.
Trademark infringement and unfair competition. Coty prevailed on its trademark infringement claims federal law and its unfair competition claim under New York law. All of Coty’s marks qualify for trademark protection. Coty established the distinctiveness of both the marks and trade dresses it sought to protect in this case and sought to enforce its exclusive rights in 28 registered trademarks and trade dresses. Contrary to Excell’s assertions, Coty’s 13 unregistered trade dresses all consist of original, detailed, and specific fragrance packaging combinations and thus merit trade dress protection. Excell’s entire business model rested on the distinctiveness of Coty’s trade dress and, said the court, the only reason Excell mimics Coty’s fragrances is due to the fact that Coty’s products are distinctively identifiable in the minds of consumers.
The first Polaroid factor, the strength of Coty’s marks and trade dresses, weighed heavily in Coty’s favor. Coty’s undisputed commercial success and sizeable advertising expenditures only reinforced the strength of its source identifiers. Similarly, the second Polaroid factor, the similarly of Coty’s and Excell’s marks, also strongly favored Coty as Coty persuasively demonstrated that Excell’s fragrances blatantly copy Coty’s own in a number of ways, such as in name, typeface, packaging, design, coloring, and bottle shapes of Coty’s fragrances and, for each fragrance, Excell’s packaging includes two exact replicas Coty’s house mark and product mark as part of the "Our Version Of" and "Not Associated With" legends. The third and fourth Polaroid factors, the proximity of the products and the likelihood that the plaintiff will bridge the gap, weigh in favor of Excell, said the court, but not as heavily as Excell believes, even though Coty’s products are generally sold at higher end retailers whereas Excell’s were sold at discount stores and the companies’ products are offered at different price points.
The fifth factor, whether there is evidence of actual consumer confusion, weighed in Coty’s favor because evidence of intentional copying gives rise to a presumption of actual confusion and because the record, namely survey evidence submitted by both sides, supported a finding of actual confusion. The sixth Polaroid factor, bad faith, favored Coty as the record was replete with evidence of Excell’s bad faith, starting with the fact that its business model involved little more than capitalizing on Coty’s reputation and goodwill. The seventh Polaroid factor, the quality of Excell’s products, also indisputably favored Coty as, by its own admission, Excell’s products were designed to be sold at low prices and use less expensive, synthetic oils, rather than natural oils, in its fragrances as well as cheaper packaging materials and Excell’s products were found to contain a potential carcinogen. The final Polaroid factor, the sophistication of consumers and degree of care likely to be exercised in purchasing the product was a draw, said the court. Thus, according to the court, five of the eight Polaroid factors weigh in Coty’s favor, including several that weigh heavily in favor of Coty.
The court also rejected Excell’s claim of nominative fair use as missing the mark. The Polaroid factors are firmly on the side of Coty and the manner in which Excell displayed Coty’s source identifiers belied its argument that it is merely using the marks to inform consumers that it is not the manufacturer of the original fragrance.
Trademark dilution. Coty alleged federal trademark dilution with regard to its registered Calvin Klein, Vera Wang, and Lady Gaga marks and dilution under New York law for Excell’s use of its remaining marks. Applying the dilution standards, the court concluded that Excell has diluted Coty’s marks. With regard to Coty’s federal claims, there was no real dispute that Coty’s Calvin Klein, Vera Wang, and Lady Gaga marks are famous and distinctive. Additionally, the federal statutory factors weigh in Coty’s favor. For example, the first, second, and fourth factors--the similarity between the marks as well as the distinctiveness and degree of recognition of Coty’s marks--favor Coty, given that Excell was using nearly exact replicas of Coty’s highly distinctive and recognizable marks on its packaging. The third factor also falls on Coty’s side of the scale because, Excell’s infringing products aside, there is no dispute that Coty has not engaged in substantially exclusive use of its marks. The fifth factor also swings strongly against Excell as it deliberately sought to create an association with Coty’s marks and, lastly, the sixth factor firmly favored Coty because Excell’s products have no actual association with Coty’s Calvin Klein, Vera Wang, and Lady Gaga marks. Thus, Coty has demonstrated that Excell’s versions of the Calvin Klein, Vera Wang, and Lady Gaga fragrances at issue are likely to blur Coty’s marks’ ability to clearly and unmistakably distinguish one source as unique identifiers.
For the remainder of its marks, Coty sought protection only under New York law which merely requires that the marks be distinctive or have acquired secondary meaning and, said the court, Coty’s marks easily met that standard. Thus, Coty has established the elements necessary to prevail on its claims of trademark dilution under both federal and New York law.
Further, Coty established a case of dilution by tarnishment under both federal and state law. This arises when a plaintiff’s trademark is linked to products of shoddy quality or is portrayed in an unwholesome or unsavory context likely to evoke unflattering thoughts about the owner’s product. In this instance, the court said, Excell uses inferior oils, employs cheaper packaging components, lacks any quality assurance program, and produces fragrances with potentially harmful ingredients. Coty’s marks are thus linked to products of shoddy quality and the company has established a claim of dilution by tarnishment.
False advertising. Coty also argued that Excell’s "Our Version Of" legend constituted false advertising and the court agreed. Here, the court did not need to decide whether the words "Our Version Of" were literally false as Coty established that they were likely to deceive or confuse customers. Although the words, on their own, indicate that Coty’s and Excell’s fragrances have a different provenance, they also imply that the products are similar, if not equivalent, but the only similarities between the two companies’ products are the fact that they are fragrances and the "uncanny and impermissible" resemblances between Excell’s bottles and packaging and Coty’s. Viewing the words "Our Version Of" in context, with the infringing house marks, fragrance marks, and trade dress, only reinforces that they were intended to connote a false equivalency. Coty produced extrinsic evidence that the challenged words tend to mislead or confuse consumers and also established the remaining three elements of a false advertising claim and so the court found that Excell engaged in false advertising.
The case is No. 15-CV-7029 (JMF).
Attorneys: James W. Faris (Kilpatrick Townsend & Stockton LLP) for Coty Inc., Coty B.V., Calvin Klein Trademark Trust and Calvin Klein, Inc. Simon Joel Kasha Miller (Blank Rome LLP) for Excell Brands, LLC.
Companies: Coty Inc.; Coty B.V.; Calvin Klein Trademark Trust and Calvin Klein, Inc.; Excell Brands, LLC
MainStory: TopStory Trademark NewYorkNews
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