IP Law Daily Panel restores jury’s finding that ‘Royal Palm Properties’ brokerage mark was valid
Wednesday, February 19, 2020

Panel restores jury’s finding that ‘Royal Palm Properties’ brokerage mark was valid

By Thomas Long, J.D.

Competing real-estate brokerage failed to show that a reasonable jury could only find that it had rebutted the presumption that the registered mark had acquired secondary meaning.

In a trademark dispute between competing luxury residential real-estate brokerage agencies serving the Royal Palm Yacht & Country Club community in Boca Raton, Florida, the federal district court in West Palm Beach, Florida, erred in flipping a jury’s verdict upholding the validity of the mark "Royal Palm Properties," ruling that the mark was invalid as geographically descriptive, and ordering cancellation of the mark’s federal registration, the U.S. Court of Appeals in Atlanta has decided. The rival brokerage agency challenging the validity of the mark did not meet the high bar of making such a strong showing at trial that no reasonable jury could have found that it failed to prove that the mark was invalid for lack of distinctiveness and likelihood of confusion with third-party marks (Royal Palm Properties, LLC v. Pink Palm Properties, LLC, February 18, 2020, Newsom, K.).

Royal Palm Properties, LLC, sued its rival, Pink Palm Properties, LLC, for infringing its registered service mark, "Royal Palm Properties." Pink Palm counterclaimed, seeking (1) a declaratory judgment that the mark was invalid and (2) cancellation of the mark because it was primarily geographically descriptive and was confusingly similar to previously registered marks. Following a three-day trial, the jury found that the mark was not invalid but Pink Palm did not infringe it. Pink Palm moved for judgment as a matter of law, and the district court, granting the motion in part, overturned the verdict with respect to the validity of the "Royal Palm Properties" mark and ordered the cancellation of its registration. Royal Palm appealed.

The Eleventh Circuit explained that, to be entitled to judgment as a matter of law, Pink Palm Properties would have had to make a sufficient showing at trial that no reasonable jury could have found that it failed to prove grounds for cancelling Royal Palm Properties’ mark. In the appellate court’s view, Pink Palm Properties didn’t meet this high bar, holding that it failed to decisively prove that it had won the day on either its argument that the "Royal Palm Properties" mark (1) was geographically descriptive and not distinctive and (2) was "confusingly similar" to previously registered marks.

Distinctiveness. Pink Palm contended that "Royal Palm Properties" lacked the requisite distinctiveness for trademark protection under the Lanham Act because it was geographically descriptive and had not acquired secondary meaning. The Eleventh Circuit cautioned, however, that because Royal Palm had applied to register the mark under Section 2(f) of the Lanham Act—and the USPTO granted the registration on that basis—Royal Palm was entitled to a presumption that the mark had acquired distinctiveness. The burden was on Pink Palm to rebut that presumption, and if it did so, the burden would shift back to Royal Palm to prove that the mark was inherently distinctive. The question on appeal, therefore, was whether Pink Palm Properties successfully rebutted the presumed "secondary meaning" of the "Royal Palm Properties" service mark, such that it was entitled to judgment as a matter of law. The Eleventh Circuit panel held that it did not.

The appellate court explained that Pink Palm had the burden to prove that the primary significance of the challenged mark was the "product" rather than the "producer." That is, Pink Palm had to prove that when the relevant consumers hear "Royal Palm Properties," they think of the "product"—the homes within Royal Palm Yacht & Country Club—rather than the "producer"—Royal Palm as a provider of brokerage services. Pink Palm incorrectly argued in its brief that Royal Palm had the burden of proving secondary meaning, and that it failed to present sufficient evidence that the public identified the mark with Royal Palm’s business. At oral argument, Pink Palm acknowledged that it had the burden to rebut the presumed secondary meaning of the mark, but asserted that it had met this burden because there was "overwhelming" evidence that Royal Palm’s use of the mark was not substantially exclusive. This evidence consisted of printouts of websites for third-party real-estate businesses named "Royal Palm Properties" throughout the United States.

The court rejected Pink Palm’s argument regarding exclusivity. Although evidence of substantial third-party use of a mark weakens the argument that a mark has acquired secondary meaning, the simple fact that third-party use existed was not fatal to a finding of secondary meaning. To successfully show lack of distinctiveness, Pink Palm was required to also show that third parties had used the mark to promote the same goods or services to the same consumer class. Pink Palm presented little or no evidence showing that the cited third parties had used "Royal Palm Properties" to promote the same goods or services to the same consumers. Royal Palm provided a niche service (real estate brokerage exclusively in Royal Palm Yacht & Country Club) to a small class of consumers (those looking to buy or sell property in Royal Palm Yacht & Country Club). Based on the evidence in the record, the appellate court declined to find that any of the third-party users of "Royal Palm Properties" had ever competed with Royal Palm in this highly specialized market.

Accordingly, the Eleventh Circuit held that Pink Palm’s argument that the "Royal Palm Properties" service mark lacked distinctiveness did not entitle it to judgment as a matter of law on its claim that the mark was invalid.

Likelihood of confusion. Pink Palm also challenged the validity of the "Royal Palm Properties" mark on the ground that it was "confusingly similar" to previously registered marks. According to Pink Palm, the phrase "Royal Palm Properties" is "confusingly similar" to two previously granted trademarks—"Royale Palms" and "Royale Palms at Kingston Shores"—and should therefore be invalidated. The court first held that Pink Palm—even though it didn’t own the "Royale Palms" marks—had standing under the Lanham Act to challenge the mark’s validity on this ground because the Act broadly provides that a cancellation proceeding may be initiated by "any person who believes that he is or will be damaged ... by the registration of a mark."

Turning to the merits, the court said that Pink Palm successfully showed that the "Royal Palm Properties" mark resembled the "Royale Palms" marks and that the "Royale Palms" marks were registered before "Royal Palms Properties." However, the court held that Pink Palm failed to prove that confusion was likely to result from Royal Palm’s use of its mark in connection with its services. Deeming a point-by-point breakdown of the likelihood of confusion factors unnecessary, the court said, "Suffice it to say that Pink Palm Properties didn’t conclusively prove that there is a likelihood of confusion between the ‘Royal Palm Properties’ mark and the ‘Royale Palms’ marks," adding, "For far too many of the eight factors, Pink Palm Properties failed to produce any evidence at all." Pink Palms only established that a Texas company registered the "Royale Palms" marks for use in connection with the real-estate industry, without any evidence about how the marks were used or the consumers targeted. More importantly, in the court’s view, there was no evidence of actual confusion between those marks and "Royal Palms Properties." This evidence fell far short of proving—let alone conclusively proving, as required by the procedural posture of the case—that confusion was likely. Therefore, the appellate court reversed the district court’s grant of Pink Palm’s motion for judgment as a matter of law.

This case is No. 18-14092.

Attorneys: Robert J. Hauser (Pankauski Hauser, PLLC) for Royal Palm Properties, LLC. Jerold I. Schneider (Schneider IP Law) for Pink Palm Properties, LLC.

Companies: Royal Palm Properties, LLC; Pink Palm Properties, LLC

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